Document:

Exhibit 10.29

 

Exhibit 10.29

THIRD AMENDMENT TO THE

ASSET PURCHASE AGREEMENT

BY AND AMONG

DIAKON LUTHERAN SOCIAL MINISTRIES, ET AL.

(“SELLER”)

AND

RE SELINSGROVE, LLC, ET AL.

(“BUYER”)

Dated as of April 30, 2005

 

 

THIRD AMENDMENT

     This THIRD AMENDMENT to the Asset Purchase Agreement (“Third Amendment”) is made and entered
into as of April 30, 2005 (“Effective Date”), by and among DIAKON LUTHERAN SOCIAL MINISTRIES,
TRESSLER LUTHERAN SERVICES, THE LUTHERAN WELFARE SERVICE OF NORTHEASTERN PENNSYLVANIA, INC., THE
LUTHERAN HOME AT TOPTON, PENNSYLVANIA AND SUSQUEHANNA HOUSING, INC. (“Seller”) and RE SELINSGROVE,
LLC, RE MIFFLIN, LLC, RE HAZLETON, LLC, RE POTTSVILLE, LLC, RE NEW BLOOMFIELD, LLC, RE MILLERSBURG,
LLC, RE EVERETT, LLC, RE FROSTBURG, LLC, RE SALISBURY, LLC, (“Buyer”) and OP SELINSGROVE, LLC, OP
MIFFLIN, LLC, OP HAZLETON, LLC, OP HAZLETON II, LLC, OP NEW BLOOMFIELD, LLC, OP MILLERSBURG, LLC,
OP EVERETT, LLC, OP FROSTBURG, LLC AND OP SALISBURY, LLC (“BUYER’S OPERATORS”).

WITNESSETH:

     WHEREAS, Seller and Buyer have entered into that certain Asset Purchase Agreement as of
February 15, 2005 (“Asset Purchase Agreement”), that certain First Amendment to the Asset Purchase
Agreement as of February 28, 2005 (“First Amendment”), and that certain Second Amendment to Asset
Purchase Agreement as of March 14, 2005 (“Second Amendment”), whereby Seller agreed to sell, and
Buyer agreed to purchase substantially all of the assets of the Facilities (the Asset Purchase
Agreement, First Amendment and Second Amendment shall be collectively referred to herein as the
“Asset Purchase Agreement”); and

     WHEREAS, Seller and Buyer have found it necessary to modify certain terms of said Asset
Purchase Agreement in order to clarify their further negotiations regarding the same; and

     WHEREAS, the parties desire to set forth those certain changes to the Asset Purchase Agreement
in this Third Amendment.

     NOW THEREFORE, for and in consideration of the premises, and the agreements, covenants,
representations and warranties hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of all of which are forever acknowledged and confessed, the parties
hereto, intending to be legally bound hereby, agree as follows:

     1. Witnesseth and Defined Terms. The Witnesseth provisions set forth above
(including, but not limited to, all defined terms set forth therein) are true and correct and are
hereby incorporated by reference into this Third Amendment and made a part hereof as if set forth
in their entirety. All capitalized terms not defined in this Third Amendment shall have the
meanings ascribed to them in the Asset Purchase Agreement.

     2. Assumed Liabilities. Seller and Buyer desire to amend and restate Section 1.3 of
the Asset Purchase Agreement in its entirety as follows:

 

 

“1.3
Assumed Liabilities

     (a) As of the Closing Date, Buyer shall assume and agree to pay, perform and discharge the
obligations of Seller under the Contracts arising subsequent to the Closing Date, plus those
other liabilities disclosed on Schedule 1.3 (collectively, the “Assumed Liabilities”),
plus: (i) Seller’s contractual obligations under current resident agreements, assuming no future
service obligations (as defined in the AICPA Audit Guide for Health Care Organizations, Chapter
14, formerly known as Statement of Position 90-8, Financial Accounting and Reporting by
Continuing Care Retirement Communities); (ii) all unearned resident entrance fees; (iii) all
deferred revenue for future services and residents’ advance deposits, including security
deposits; (iv) the contractual obligations under certain service contracts of Seller related to
pharmacy, food service, housekeeping and laundry for a period of not less than one (1) year
after Closing; (v) all liability and payment obligations related to Seller’s commitment or
obligation to pay any person or entity serving as guardian of the person of any Facility
residents; and (vi) the Farmer’s Home Administration Mortgage (“FHA Mortgage”) on the Margaret
Morne Apartments, located at Susquehanna Lutheran Village. Seller shall pay to Buyer the
principal balance of the FHA Mortgage as of the Closing Date at such time as the FHA Mortgage is
transferred to RE Millersburg, LLC, which balance as of the Closing Date, is $85,498.00.

     (b) In addition to the Assumed Liabilities set forth in subsection 1.3 (a), above, Buyer
shall assume liability for the vacation and personal day entitlement that each employee of
Seller who becomes an employee of Buyer has accrued as of the Closing Date (“Accrued Vacation
Liability”) (the Accrued Vacation Liability and the Assumed Liabilities shall be collectively
referred to as the “Assumed Liabilities”). Buyer shall pay each such Employee’s wages or salary
during his or her vacation entitlement from Buyer, when taken. Any adjustments to the Accrued
Vacation Liability calculation, a schedule of which shall be delivered by Seller to Buyer
pursuant to Section 3.4(b), shall be settled by the parties in accordance with Section 13.19.8.
The Accrued Vacation Liability assumed by the Buyer shall be a credit to the cash consideration
of the Purchase Price.

     (c) Buyer also agrees to accept the transfer of the Seller’s sick time balances in full as
of the Closing Date for all employees of Seller who become employees of Buyer as of the Closing
Date, in addition to enrolling such employees in Buyer’s sick pay benefit accrual as of the
Closing Date. In consideration for Buyer’s acceptance of the Seller’s sick time balances,
Seller shall pay Six Hundred Thousand Dollars ($600,000) to Buyer for such assumed sick time in
accordance with Section 2.6.

     (d) Seller and Buyer agree that Buyer shall assume and perform the obligations of Seller
arising subsequent to the Closing Date under each of the Contracts, regardless of whether
consent to the assignment of each such Contract is required but not obtained; provided, however,
that Seller shall indemnify and hold Buyer harmless from and against any claim related to
failure to obtain consent made against Buyer by

- 2 -

 

any party to a Contract that consent to the
assignment of such Contract by Seller to Buyer is required but has not been obtained.”

     (e) Any liability assumed by Buyer, other than the entrance fee refund and deferred
revenue liabilities, not otherwise expressly addressed in the Asset Purchase Agreement, shall be
credited towards the cash consideration portion of the Purchase Price at Closing.

     3. Excluded Liabilities. The new subpart in Paragraph 1.4, Excluded
Liabilities, at (xiii) shall be added as follows:

“Any holdbacks from the Buyer’s receivables that relate to the Medicare program, the
Medicaid program, or other third party payor programs due to the fact that Buyer is
assuming, temporarily, or otherwise, the provider number or agreements of the Seller. Any
amounts so withheld from the Buyer’s receivables from and after the Closing Date, shall be
paid by Seller to Buyer within ten (10) business days of the holdback.

     4. Section 2.3, Purchase Price Adjustments, shall now read “Intentionally Omitted.”

     5. Sick Pay. The following Section 2.6 shall be added to the Asset Purchase Agreement
as follows:

“2.5 Sick Pay. Seller agrees to pay to Buyer Six Hundred Thousand Dollars
($600,000) in order to induce Buyer to transfer the sick time balances and to make the sick
time balances available as of the Closing Date to Seller’s employees who become employees of
Buyer as of the Closing Date.” Said payment shall be in the form of a credit to the cash
portion of the consideration of the Purchase Price.

     6. Actions of Seller at Closing. The following subsections to Section 3.2 of the
Asset Purchase Agreement shall be amended and restated in their entirety as set forth below:

“3.2.11 A current list of all employees of Seller employed at the Facilities, which shall
include names, titles, rates of pay, sick pay, vacation days, personal days and any other
compensation and benefits provided to such employees as of April 8, 2005 for St. Luke
Village and Luther Ridge at Seiders Hill and as of April 15, 2005 for all other Facilities.”

“3.2.13 Intentionally omitted.”

“3.2.14 As of the Closing Date, Seller shall transfer to Buyer all resident fund balances
of the Facilities presently held by Seller as of April 30, 2005. Upon
reconciliation, any difference in the resident fund amounts transferred on the Closing Date
and the reconciliation amounts shall be settled by the parties in accordance with Section
13.19.9.”

- 3 -

 

     7. Actions of Buyer at Closing. The following subsection to Section 3.3 of the Asset
Purchase Agreement shall be amended and restated in its entirety as set forth below:

“3.3.8 Certificate of existence and active status of Buyer from the Maryland Secretary of
State dated no earlier than ten (10) business days prior to the Closing.”

     8. Post Closing Deliveries. The following Section 3.4 shall be added to the Asset
Purchase Agreement:

“3.4 Post-Closing Deliveries. Seller shall deliver to Buyer as of the dates set
forth below the following information:

     (a) No later than May 10, 2005, Seller shall deliver to Buyer: (i) an updated resident
listing as of April 30, 2005; (ii) an update reflecting acquisitions and dispositions of Fixed
Assets as listed on Schedule 4.13 as of April 30, 2005; (iii) a termination and hire listing of
all of the employees of the Facilities for the time period between the date upon which prior
reports were provided to Buyer and April 30, 2005; and (iv) an updated security deposit
calculation as of April 30, 2005, reconciled in accordance with Section 13.19.11.

     (b) On May 20, 2005, Seller shall deliver to Buyer an Accrued Vacation Liability
calculation for all of the employees of the Facilities for the period commencing January 1, 2005
through April 30, 2005. The Accrued Vacation Liability calculation shall be reconciled in
accordance with Section 13.19.10.”

     9. Additional Agreements. The following Section 11.11 shall be added to the Asset
Purchase Agreement:

“11.11 Managed Care. In the event that Buyer does not become a contracting member
of the Kairos Health System network for managed care contracting, Buyer agrees to continue
to accept the contracted per diem payments for residents of Sellers at the Facilities under
any such managed care agreements as of the Closing Date. Buyer shall be responsible to bill
and collect from the respective managed care companies for the services provided.”

     10. Post-Closing Reconciliation of Resident Funds. The following Sections 13.19.9,
13.19.10 and 13.19.11 shall be added to the Asset Purchase Agreement:

“13.19.9 Post-Closing Reconciliation of Resident Funds. Upon reconciliation by
Seller of the resident funds transferred to Buyer as set forth in Section 3.2.14, above, any
reconciling amount due from Buyer to Seller or due from Seller to Buyer shall be paid to
such party within 5 days from the delivery of the reconciliation of resident funds by Seller
to Buyer. Seller will indemnify and hold Buyer harmless from all liabilities, claims and
demands in the event that the amount of funds, if any, transferred or assigned to Buyer does
not represent the full amount of funds then or thereafter shown to have been delivered to
Seller as custodian.

“13.19.10 Post-Closing Reconciliation of Accrued Vacation Liability. Upon the
provision of the final Accrued Vacation Liability calculation by Seller as set forth in

- 4 - 

 

Section 3.4(b), any amount due from Buyer to Seller or due from Seller to Buyer shall be
paid to such party within 5 days from the delivery of the final Accrued Vacation Liability
calculation.

13.19.11 Post-Closing Reconciliation of Security Deposits. Upon the provision of
the final security deposit calculation by Seller as set forth in
Section 3.4(a)(iv), any
amount due from Buyer to Seller or due from Seller to Buyer shall be paid to such party
within 5 days from the delivery of the final security deposit calculation.”

     11. A new Section 13.21 shall be added to the Agreement, as follows:

“13.21 Pennknoll Access Easement and Water Usage/Easement. Seller and Spring House
Estates, Inc. (“Spring House”), the owner of the property immediately to the west of the
Pennknoll Village property in Bedford County, Pennsylvania, have negotiated the terms of (i)
an Access Easement Agreement providing for access to the Spring House property and (ii) a
Water Facilities Usage Agreement and Easement Agreement providing for, among other things,
the right to obtain water service to cottages on Spring House’s property, executed copies of
which have been provided to Buyer. Buyer has requested that certain modifications be made
to the Access Easement Agreement and the Water Facilities Usage Agreement and Easement
Agreement (collectively, the “Agreements”). Seller covenants and agrees to use its best
efforts to have the Agreements agreed to and executed by Spring House in the form as
provided by Buyer. Buyer covenants and agrees that it (or its appropriate affiliate) will
after Closing, immediately upon request of Seller, execute, as the owner of the Pennknoll
Village property, the Agreements, as modified by such reasonable revisions as may be
requested by Spring House and agreed to by Buyer.

     12. A new Section 13.22 shall be added to the Agreement, as follows:

“13.22 Water Supply Permit. Buyer does not assume any liability associated with
the Sellers’ failure to amend the Water Supply Permit as disclosed on Schedule 4.9,
including any compliance issues related thereto, and Seller explicitly indemnifies Buyer as
to this issue pursuant to the provisions of Section 12.1.6 of the Asset Purchase Agreement

     13. A new Section 13.23 shall be added to the Agreement as follows:

“13.23 Escrow Fund. At the Closing, Buyer will deposit One Million Five Hundred
Thousand Dollars ($1,500,000) of the Purchase Price into an escrow account (the “Escrow
Fund”) to be held and disbursed by LandAmerica Commercial Services, as escrow agent (the
“Escrow Agent”). The Escrow Fund is intended to assure
Seller’s delivery of a deed, and Buyer’s receipt of a title
report and survey, to remaining parcels surrounding the St. Luke’s Facility in Hazleton,
Pennsylvania, in accordance with the terms of the Asset Purchase Agreement, and Seller will
be entitled to the Escrow Funds immediately upon delivery by Seller
of such deed and Buyer’s acceptance of such deed, title
report and survey.

     13.23.1 The Escrow Fund shall be released by Escrow Agent to the Seller at such time as:

 - 5 -

 

          (1) Merrill Lynch Capital, a division of Merrill Lynch Business Financial
Services, Inc., has received a date down to its Loan Policy related to the RE
Hazleton, LLC property covering the additional parcels adjacent to the
property insured at Closing (Escrowee to record and insure an amendment to
Borrower’s Deposit 25), all in form reasonably acceptable to Merrill Lynch Capital,
a division of Merrill Lynch Business Financial Services, Inc.; and

          (2) Seller has transferred deeds to the RE Hazleton, LLC property covering the
additional parcels adjacent to the property insured at Closing; and

          (3) Escrowee has received written direction from Merrill Lynch Capital, a
division of Merrill Lynch Business Financial Services, Inc., LaSalle Bank National
Association, Buyer and Seller to so release such $1,500,000 from this escrow.

     14. Schedules to the Agreement. Amendments to the Schedules to the Agreement are
attached hereto and made a part hereof.

     15. Other. All other terms and conditions of the Asset Purchase Agreement shall
remain in full force and effect. This Third Amendment expresses the complete agreement between the
parties regarding the subject matter contained herein and supersedes any discussions,
correspondence, or other written or oral communications between Buyer and Seller regarding such
matters. In the event of any inconsistency, ambiguity or conflict between the Asset Purchase
Agreement and this Third Amendment, this Third Amendment shall control.

          IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be executed in
multiple originals by their duly authorized officers, all as of the date and year first above
written. This Third Amendment may be executed and delivered in multiple counterparts and each such
counterpart shall be deemed an original, but all such counterparts shall together constitute one
and the same Third Amendment.

- 6 -

 

	 	 	 
	BUYER:

	 	RE SELINSGROVE, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE MIFFLIN, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE HAZLETON, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE POTTSVILLE, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE NEW BLOOMFIELD, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary

- 7 -

 

	 	 	 
	 

	 	RE MILLERSBURG, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE EVERETT, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE FROSTBURG, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	RE SALISBURY, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	BUYER’S OPERATORS
	 
	 	 
	 

	 	OP SELINSGROVE, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP MIFFLIN, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary

- 8 -

 

	 	 	 
	 

	 	OP HAZLETON, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP HAZLETON II, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP POTTSVILLE, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP NEW BLOOMFIELD, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP MILLERSBURG, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary
	 
	 	 
	 

	 	OP EVERETT, LLC
	 

	 	By: Tandem Health Care, Inc., its Sole Member
	 
	 	 
	 

	 	By: /s/ Rosemary L. Corsetti
	 

	 	 

	 

	 	Name: Rosemary L. Corsetti
	 

	 	Title: Secretary

- 9 -

 

	 	 	 
	SELLER:

	 	DIAKON LUTHERAN SOCIAL MINISTRIES
	 
	 	 
	 

	 	By: /s/ Mark T. Pile
	 

	 	 

	 

	 	Name: Mark T. Pile
	 

	 	Title: Executive Vice President and Chief Operating
Officer
	 
	 	 
	 

	 	TRESSLER LUTHERAN SERVICES
	 
	 	 
	 

	 	By: /s/ Mark T. Pile
	 

	 	 

	 

	 	Name: Mark T. Pile
	 

	 	Title: Executive Vice President and Chief Operating
Officer
	 
	 	 
	 

	 	THE LUTHERAN WELFARE SERVICE OF NORTHEASTERN
PENNSYLVANIA, INC.
	 
	 	 
	 

	 	By: /s/ Mark T. Pile
	 

	 	 

	 

	 	Name: Mark T. Pile
	 

	 	Title: Executive Vice President and Chief Operating
Officer
	 
	 	 
	 

	 	THE LUTHERAN HOME AT TOPTON, PENNSYLVANIA
	 
	 	 
	 

	 	By: /s/ Mark T. Pile
	 

	 	 

	 

	 	Name: Mark T. Pile
	 

	 	Title: Executive Vice President and Chief Operating
Officer
	 
	 	 
	 

	 	SUSQUEHANNA HOUSING, INC.
	 
	 	 
	 

	 	By: /s/ Mark T. Pile
	 

	 	 

	 

	 	Name: Mark T. Pile
	 

	 	Title: Executive Vice President and Chief Operating
Officer

- 10 -Exhibit 10.30

 

Exhibit 10.30

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of the 22nd day
of August, 2003, by and among LaurelPharm, LLC, a Florida limited liability company (“Buyer”),
CoastalMed, Inc., a Florida corporation (“CMI”), CoastalMed of Panama City, Inc., a Florida
corporation (“CPC”) (CMI and CPC are sometimes referred to herein as a “Seller” or collectively as
“Sellers”), and Randall A. McElheney (“McElheney”). Buyer, CMI, CPC, and McElheney are sometimes
referred to herein individually as a “Party” or collectively as the “Parties.”

W I T N E S S E T H:

     WHEREAS, CMI is licensed by the State of Florida Department of Health (“DOH”) as a special
closed system pharmacy and is the owner of certain assets used in its business, which has a single
location at 700-702 East Business Highway 98, Panama City, Florida 32401 (the “Panama City Leased
Premises”); and

     WHEREAS, CPC is licensed by DOH as a special closed closed/special parenteral and enteral
pharmacy and is the owner of certain assets used in its business, which has a single business
location at 933 10th Street East, Palmetto, Florida 34221 (the “Palmetto Leased Premises”); and

     WHEREAS, Buyer desires to purchase substantially all of Sellers’ assets, and Sellers desire to
sell such assets to Buyer, all upon the terms and subject to the conditions hereinafter set forth;
and

     WHEREAS, Buyer has requested that McElheney join in the execution of this Agreement in order
to give or make certain representations, warranties and covenants, and McElheney has agreed to do
so.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration, the receipt and
consideration of which is hereby acknowledged, the Parties hereby agreed as follows:

     1. Purchase and Sale of Assets.

          (a) Purchase and Sale. At the Closing (as hereinafter defined), subject to the terms
and conditions hereof, each Seller hereby agrees to sell, convey, transfer and deliver to Buyer,
and Buyer agrees to purchase from each Seller, all of the assets (unless expressly excluded herein)
owned or used by or useful to Sellers in connection with their licensed pharmacy businesses, or
other items similar to or used or intended to be used for a purpose similar to that of any of the
foregoing, together with the business records related thereto (collectively, the “Assets”). The
Assets shall include, without limitation, all tangible and intangible assets, which includes all
rights under service contracts, furniture, fixtures, equipment, leasehold interests, hardware,
software and Sellers’ inventory, which shall have a value (determined on a cost basis, using the
first-in, first-out methodology) of not less than that of the Pre-Closing Inventory (as hereafter
defined). Certain of the Assets owned by Sellers as of the date of this Agreement are listed for
identification on Schedule l(a)(i) to this Agreement.

1

 

          (b) Excluded Assets. Notwithstanding anything to the contrary contained herein, the
Parties agree that the term “Assets” shall not include (i) Sellers’ cash and cash equivalents; (ii)
Sellers’ accounts receivable (the “Accounts Receivable”); (iii) third party settlements; (iv)
assets encumbered by capital leases not assumed by Buyer; (v) records related to either Seller’s
corporate existence, including, without limitation, its tax returns; (vi) all nontransferable
licenses and permits; (vii) any items listed on Schedule l(b) to this Agreement; and (viii)
items of inventory which are out-of-date or are unlawful to transfer (collectively, the “Excluded
Assets”).

          (c) Leases. Sellers shall assign to Buyer, and Buyer shall assume from Sellers, all
of Sellers’ rights, duties and obligations arising on or after the Closing Date under those certain
lease agreements by and between CMI as tenant and ______ as landlord for the Palmetto
Leased Premises (the “Palmetto Lease”) and by and between CPC as tenant and McElheney Properties, a
Florida general partnership, as landlord for the Panama City Leased Premises (the “Panama City
Lease”). The Palmetto Lease and the Panama City Lease are collectively referred to as the
“Leases.” At the Closing, Sellers shall deliver to Buyer consents to assignments of the Leases.

     2. Consideration.

          (a) Purchase Price. The purchase price for the Assets shall be, subject to the
conditions of this Agreement and the adjustment set forth in this Section 2, EIGHT MILLION AND
NO/100 DOLLARS ($8,000,000.00) (the “Purchase Price”). The Purchase Price shall be divided by
Sellers in accordance with Schedule 2(a) hereof. The Purchase Price shall be payable as
follows:

               (i) THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,500,000.00) in cash or
in immediately payable funds shall be paid at the Closing, subject to any assumption of
liabilities agreed to by Sellers and Buyer.

               (ii) FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00) (the
“Deferred Purchase Price”) shall be paid in accordance with the term of that certain
promissory note from Buyer to Sellers, substantially in the form attached hereto as
Exhibit 1 (the “Note”). The Note shall be for a five-year term, bear interest at
the rate of six percent (6%) per annum with a 10-year amortization, and provide for a one
percent (1%) penalty for any payment postmarked more than ten (10) days after its due date
and provide for an event of default if any payment is postmarked more than thirty one (31)
days after its due date. Documentary stamp taxes due on the Note, if any, shall be paid by
Buyer. Buyer’s payment obligations under the Note shall be guaranteed by Tandem Health
Care, Inc., a Pennsylvania corporation (“THC”). In the event that the Purchase Price is
adjusted pursuant to Section 2(d) hereof, the Note shall be modified to reflect the adjusted
Purchase Price and a new amortization and payment schedule shall be appended to the Note.

          (b) Allocation. The Parties to this Agreement hereby agree and covenant that the
Purchase Price shall be allocated for all purposes, including the determination and reporting of
any federal or state income tax liability of the Parties, in accordance with the allocation set

2

 

forth on Schedule 2(b) to this Agreement. When the transactions contemplated herein
are completed and are disclosed to the public, the tax treatment of these transactions may also be
disclosed by any Party to any governmental or regulatory agency.

          (c) Assumption of Liabilities. Buyer is assuming only those liabilities and
obligations of Sellers under those contracts listed on Schedule 2(c) hereof to the extent
such liabilities and obligations arise on or after the Closing Date (the “Assumed Liabilities”).
In addition, Buyer may, but is not required to, assume the following liabilities of Sellers:
prepaid expenses to the extent useful to and usable by Buyer, with a corresponding increase to the
Purchase Price) and accrued paid time off (“PTO”) liabilities of Sellers’ employees who become
employees of Buyer on the Closing Date (the “Transferred Employees”) and any other pre-existing
liabilities of Sellers which are expressly assumed by Buyer (with a corresponding reduction of the
payment of the cash Purchase Price). Other than as expressly provided herein, Buyer shall not and
does not assume any of Sellers’ liabilities, including but not limited to trade payables and
accruals, capital leases and other trade liabilities incurred in their business, or their debts,
taxes, contingencies or other liabilities, whether fixed or contingent (the “Excluded
Liabilities”). The Excluded Liabilities shall remain the obligation of Sellers.

          (d) Adjustments to Purchase Price. The Purchase Price was determined in part by the
supplier contracts that Sellers have with nursing homes and other health care providers (the
“Supply Contracts”), the Gross Revenues derived from the Supply Contracts, which are set forth on
Schedule 2(d) hereof, and the value of the Inventory. For purposes of this Agreement,
“Gross Revenues” are defined as total gross sales from the Supply Contracts for any particular
period, as determined utilizing generally accepted accounting principals (“GAAP”), as determined by
the accounting/auditing firm regularly utilized by Buyer.

               (i) If the Gross Revenues from the Supply Contracts for the period from the Closing
Date to the sixth month anniversary thereof (to be measured by all supply contracts in
effect on such anniversary date, including any new or replacement supply contracts obtained
in such six-month period) is less than it was for the six-month period from February 1, 2003
to July 31, 2003 (the “First Six Month Period”), the Purchase Price and the principal amount
due under the Note shall be reduced by the amount of Gross Revenues lost on the Supply
Contracts during the six-month period immediately following the Closing Date (the “Second
Six Month Period”) on a dollar for dollar basis; provided, however, in no event shall the
above-referenced adjustment for lost Gross Revenues exceed Two Million Dollars
($2,000,000.00) and provided further that in no event shall Supply Contracts include any
agreements with any of the following facilities: Oakview (Williston, Florida); Alachua
(Gainesville, Florida); or Plantation Gardens (Kissimmee, Florida), unless McElheney elects
to use all or a portion of the Gross Revenues from the contracts associated with these
facilities to replace any Gross Revenues lost on the Supply Contracts during the Second Six
Month Period pursuant to Section 5(b) of the Employment Agreement between Buyer and
McElheney. In order to determine Gross Revenues from the Supply Contracts, at or prior to
the Closing, Sellers will provide Buyer with monthly financial statements for the First Six
Month Period (“Sellers’ Monthly Financial Statements”) and, in the event Buyer seeks to
reduce the Purchase Price hereunder due to a loss in Gross Revenues, Buyer shall provide
Sellers its monthly financial statements for the Second Six Month Period.

3

 

               (ii) In the event that Inventory has a value equal to the Pre-Closing Inventory, or not
less than Twenty Thousand Dollars ($20,000.00) lower than the Pre-Closing Inventory, or not
greater than Twenty Thousand Dollars ($20,000.00) higher than the Pre-Closing Inventory, no
adjustment will be made to the Purchase Price or the principal amount due under the Note for
Inventory; provided, however, in the event that the Inventory is valued at less than Twenty
Thousand Dollars ($20,000.00) of the Pre-Closing Inventory, then the Purchase Price and the
principal amount due under the Note will be reduced by the difference between the
Pre-Closing Inventory and the value of the Inventory; and provided further, however, in the
event that the Inventory is valued at greater than Twenty Thousand Dollars ($20,000.00) over
the Pre-Closing Inventory, then the Purchase Price and the principal amount due under the
Note shall be increased by the difference between the value of the Inventory and the
Pre-Closing Inventory. At the paying Party’s option, any applicable Purchase Price
adjustment due to a fluctuation in Inventory value may be paid in cash rather than as an
adjustment to the Note.

          (e) Prorations. All other expenses related to Sellers’ businesses, which are
specifically agreed to by Buyer, including but not limited to personal property taxes, rent, wages
and payroll taxes, shall be prorated between Sellers and Buyer at Closing, pursuant to the
provisions of the Operations Transfer Agreement (as hereinafter defined). A final settlement of
all prorated items shall be submitted to Buyer by Sellers within forty five (45) days after the
Closing and payments of any remaining items shall be made by the responsible Parties no later than
sixty (60) days following the Closing Date. Notwithstanding the foregoing, as to power and utility
charges, “final readings” as of the Closing Date shall be ordered from all utility suppliers; the
cost of obtaining such “final readings,” if any, to be paid equally by the applicable Seller and
Buyer.

     3. Representations of Sellers. Sellers and McElheney hereby, jointly and severally,
represent and warrant to Buyer the following:

          (a) Organization and Standing. Each Seller is a corporation duly formed, validly
existing and has an active status under the laws of the State of Florida and has the power and
authority to carry on its business as it is now being conducted. Each Seller has previously
delivered to Buyer a true and complete copy of its Articles of Incorporation, and all amendments
thereto.

          (b) Qualification to do Business. CMI is duly qualified and licensed to do business
as a special closed system/special parenteral and enteral (“P/E”) pharmacy in the State of Florida.
CPC is duly qualified and licensed to do business as a special closed system pharmacy in the state
of Florida and prior to the Closing Date will also be licensed as a special P/E pharmacy. In
addition, each Seller has a valid Controlled Substance Registration Certificate from the U.S.
Department of Justice Drug Enforcement Administration (“DEA”). The character of their properties
or the nature of their businesses does not require either Seller to have any other license or be
qualified or licensed in any other state.

          (c) Governmental Authorizations. Each Seller has been and is in compliance with all
applicable authorizations, approvals, licenses, permits and orders of and from all governments,
courts, arbitrators, administrative agencies or commissions or other governmental

4

 

or quasi-governmental authorities having jurisdiction over it (collectively, “Governmental
Authorities,” which term shall include any state or federally sponsored health care reimbursement
or health care benefit or treatment program including, without limitation, Medicare and Medicaid)
necessary to carry on its business, to own or lease the properties and assets it owns or leases and
to perform all of its obligations under the agreements to which it is a party (collectively, the
“Governmental Authorizations”). Except as set forth on Schedule 3(c), and subject to any
post-payment audits, each Seller is (and has been at all times during the past five years) in
compliance with all applicable laws, rules, regulations and administrative orders of any country,
state or municipality to which its business is subject. Schedule 3(c) sets forth a true,
correct and complete list of all Governmental Authorizations. There are no proceedings pending or,
to the knowledge of Sellers or McElheney, threatened that may result in the revocation,
cancellation, suspension or modification of any Governmental Authorization nor does either Seller
or McElheney have any knowledge of any basis therefor.

          (d) Title. Except as otherwise noted herein, each Seller has good and marketable
title to all of the Assets, and such Assets are free and clear of any restrictions or conditions to
sale, conveyance or transfer and are free and clear of all liens, mortgages, pledges, encumbrances,
leases, agreements, rental agreements, charges, claims, security interests, taxes, conditions or
restrictions of any nature or description whatsoever (collectively, “Encumbrances”). At the
Closing, each Seller will have good and marketable title to all of its Assets free and clear of all
Encumbrances. The Assets and the Excluded Assets constitute all of the assets owned or used by
Sellers.

          (e) Litigation, Compliance with Laws. Except as set forth on Schedule 3(e):

               (i) Sellers have operated their businesses, including the Assets, in compliance with
all applicable federal, state and local laws, including, without limitation, the billing and
other requirements of the Health Insurance Portability and Accountability Act of 1996.
There is no action, suit, claim, litigation filed or proceeding or investigation by a
Governmental Authority (collectively, “Actions”) pending or, to the knowledge of either
Seller or McElheney, threatened (whether orally or in writing), or any order, injunction or
decree outstanding, against either Seller or affecting any of the Assets. Sellers and
McElheney do not know of any basis for any Actions which, if adversely determined, might
have a material adverse affect (financial or otherwise) on any of the Assets or on the
rights, duties or obligations of the Parties as set forth in this Agreement.

               (ii) Neither Seller has received any written notice of a violation of any law,
regulation or ordinance or any other requirement of any Governmental Authority with respect
to the operation of its business.

               (iii) There is no Action against any shareholder, manager, director, officer or
employee of either Seller in connection with its business which, in the event of an adverse
judgment against any such person, could have a material adverse effect (financial or
otherwise) on any of the Assets or either Seller’s business as a whole.

               (iv) No Seller and none of its assets or properties, and, in connection with such
Seller business, to the knowledge of such Seller, no shareholder, manager,

5

 

director, officer or employee of either Seller, is subject to any order, judgment,
writ, injunction, decree, ruling or decision of any Governmental Authority.

               (v) No Seller and no any present or past manager, officer, or employee of Seller acting
for or on behalf of Seller, has paid or caused to be paid, solicited or received or caused
to be received, directly or indirectly, in connection with its business: (a) any bribe,
kickback or other similar payment to any Governmental Authority or any agent of any supplier
or customer or (b) except in compliance with applicable law, any contribution to any
political party or candidate (other than from personal funds of managers, officers or
employees of Sellers not reimbursed by either Seller).

               (vi) There is no Action by either Seller currently pending or that either Seller
intends to initiate that is material to such Seller or the Assets.

               (vii) No Seller, and to the knowledge of Sellers and McElheney, no shareholder,
manager, director, officer, employee or agent of either Seller has been or is currently
being investigated, charged or implicated in any violation of any laws involving incorrect
billing or fraudulent and abusive billing practices. Each Seller has properly and legally
billed all individuals, intermediaries and third party payors, as appropriate, for services
rendered and has maintained all necessary documentation to support and reflect such billing
practices.

               (viii) No Seller, and to the knowledge of Sellers and McElheney no shareholder,
manager, director, officer, employee or agent of either Seller has engaged in any activities
which may serve as the grounds for any penalties of any kind under the Social Security Act
(42 U.S.C. §§ 1320a-7a, 1320a-7b and 1395nn), the False Claims Act (31 U.S.C. § 3729 et
seq.), the False Statements Act (18 U.S.C. § 1001), the Program Fraud Civil Penalties Act
(31 U.S.C. § 3801 et seq.), the Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) (all
as amended or superseded), and the anti-fraud and abuse provisions of the Health Insurance
Portability and Accountability Act of 1996 (18 U.S.C. § 1347, 18 U.S.C. § 669, 18 U.S.C. §
1035, 18 U.S.C. § 1518) and the corresponding fraud and abuse, false claims and anti-self
referral and prescription drug manufacturing and marketing statutes and regulations in each
state or other jurisdictions in which Sellers conduct business, or any related regulations,
or other federal or state laws and regulations.

               (ix) No Seller, and to the knowledge of Sellers and McElheney, no shareholder, manager,
director, officer, employee or agent of Sellers has: (a) knowingly and willfully made or
cause to be made any false statement or representation of a material fact in any application
for any benefit or payment under Medicare, Medicaid, or any other state or federally
sponsored health care reimbursement program or health care benefit or treatment program; (b)
knowingly and willfully made or cause to be made any false statement or representation of a
material fact for use in determining rights to any such benefit or payment; or (C) having
knowledge of the occurrence of any event affecting the initial or continued right to any
such payment, or the initial or continued right to any such benefit or payment of any other
individual on whose behalf either Seller has applied for or is receiving such benefit or
payment, concealed or failed to disclose such event with an

6

 

intent to fraudulently secure such benefit or payment either in a greater amount or
quantity than is due or when no such benefit or payment is authorized.

          (f) Accounts Receivable. Schedule 3(f) includes a summary of the Accounts
Receivable of each Seller, including an aging of such account in thirty (30) day increments for one
hundred twenty (120) days from the date of original invoice, and the total amount of all Accounts
Receivable. Each Account Receivable listed: (i) arose from valid sales or rentals in the ordinary
course of business; (ii) relates to equipment, products, medications, supplies or services provided
to patients covered under the Medicare, Medicaid or other third party public or private insurance
program, or were provided on a direct bill basis, each of which patients were qualified under such
programs to receive such products or services; (iii) relates to billings by or on behalf of Sellers
which were prepared and submitted by the Seller with sufficient forms, documents, test results and
other information necessary to receive proper payment with respect to each such Account Receivable
and which billings were prepared and submitted in conformity with all applicable laws, rules,
regulations, codes and guidelines of federal, state and local health care programs and in
conformity with the requirements of each third party payor; and (iv) has been diligently pursued
for payment in accordance with the requirements of the respective payors.

          (g) Advances. Sellers have not received nor have they applied for any cash advances
from any Medicare, Medicaid or third party public or private insurance program or carrier, whether
or not any such cash advance has been repaid to or recouped by such insurance program or carrier.
Notwithstanding anything to the contrary contained herein, on a post-Closing basis, Seller shall
within ten (10) days of its receipt of Buyer’s invoice and supporting documentation, reimburse
Buyer for the amount of any such advances which are deducted by any payor from amounts billed by
Buyer after the Closing.

          (h) Inventory. Schedule 3(h) is a complete list of all items of inventory
including any medications, supplies, products or equipment which were in stock on June 30, 2003
(the “Pre-Closing Inventory”). All products held for sale by Sellers to its customers are of a
quality and quantity usable and salable in the ordinary course of business (the “Inventory”). All
items of Inventory are, or on the Closing Date will be, owned by Sellers, free and clear of any
Encumbrances. All items of Inventory are located at either the Palmetto Leased Premises or the
Panama City Leased Premises and are fully accessible to Sellers without legal right or restriction
by any third party.

          (i) Active Customers. Schedule 3(i) is a complete and accurate list of all
customers served by each Seller within the 24-month period prior to the Closing, excluding any
customers who have requested not to be contacted by either Seller or have been classified in any
status other than “active” by either Seller for any other reasonable purpose and in accordance with
such Seller’s past practice (“Active Customers”). For each such customer, Schedule 3(i)
includes the customer’s name, address and telephone number, the customer’s physician’s name,
address and phone number, and, if applicable, the name, address and phone number of the customer’s
insurance company or other payor; the equipment, products, medications, supplies and services
supplied to such customer by Seller; and the date or dates on which such equipment, products,
medications, supplies and services were supplied. Except as disclosed on Schedule 3(i),
the relationships of each Seller with its Active Customers are good commercial working
relationships. Each customer included on Schedule 3(i) has been duly qualified by the

7

 

appropriate payor for reimbursement for services rendered by Seller, or is a customer being
provided services on a direct bill basis who otherwise has the financial capability to pay for such
services. Except as disclosed on Schedule 3(i), for each such patient, the customer file
delivered pursuant to Section 10(c)(viii) of this Agreement includes executed documentation
sufficient to allow billing of the customer’s primary payor in compliance with such payor’s
requirements. The transactions contemplated by this Agreement will not adversely affect Sellers’
relationships with any Active Customers.

          (j) Products. Schedule 3(j) sets forth a complete and accurate list of all
the product categories sold by either Seller. Sellers have heretofore furnished Buyer with copies
of their currently effective standard forms of invoice and other commercial forms or agreements
with respect to the products. Except as described in technical literature, specifications, price
schedules or written materials provided to purchasers of the products (sample copies of which have
been delivered to Buyer), Sellers have not given any written warranty concerning the nature,
merchantability, fitness for a particular purpose or expected performance in connection with the
products. Sellers do not offer a return policy.

          (k) Capitalization. Schedule 3(k) is a complete list containing the name and
number of shares held by each shareholder of CMI (the “CMI Shareholders”). McElheney is the sole
shareholder of CPC. There are no existing contracts or other agreements or commitments of either
Seller or their shareholders, directly or indirectly, involving the right of any person or entity
to become a shareholder or otherwise receive any equity or other beneficial interest in either
Seller. There are no existing contracts, agreements, purchase or buy-out rights or rights of first
refusal or any similar rights with respect to any of the equity interests in Sellers. There are no
other legal or beneficial owners or holders of any equity interests in Sellers, and there are no
claims by any person or entity with respect to any equity interests in Sellers, nor do any grounds
exist upon which any person or entity could assert any such claim.

          (l) Subsidiaries. Neither Seller has any subsidiaries.

          (m) Authority. The execution, delivery and performance of this Agreement by Sellers
have been duly authorized by each Seller’s board of directors and shareholders. No further action
is necessary on the part of either Seller or McElheney to make this Agreement valid and binding
upon each of them and enforceable against each of them in accordance with the terms hereof or to
carry out the transactions contemplated hereby.

          (n) Tax Matters. Each Seller has prepared and filed all federal, state and local tax
returns and reports as are or have been required to be filed, which returns were prepared on a
basis consistent with its financial statements, and all taxes shown thereon to be due have been
paid in full. Neither Seller has executed or filed with the Internal Revenue Service or any other
taxing authority any agreement extending the period for assessment or collection of any income or
other taxes, and neither Seller is a party to any pending action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for assessment or collection of taxes
has been asserted against either Seller. No accrued and unpaid taxes of any kind exist, and no
formal claims have been made or asserted by the United States government or by any state or local
government for income or any other taxes, except such as have been paid or (whether or not
disputed) are disclosed pursuant to this Agreement.

8

 

          (o) Leases, Contracts and Commitments. Except as disclosed on Schedule 3(o),
neither Seller nor any principal of either Seller is a party to any leases, contracts, agreements
or commitments, written or oral, of any nature that (i) affect the Assets and (ii) in any case
extend beyond one (1) year or create a liability in excess of Five Thousand Dollars ($5,000).
There is no default under, no event has occurred which, with the lapse of time or action by a third
party, would cause a default under, and no penalty has been incurred under, the Leases or any
lease, contract, agreement or commitment set forth on Schedule 3(o) or the Supply Contracts
set forth on Schedule 2(d). Neither Seller nor any principal of either Seller is a party
to any pharmacy or nursing home contract that is not disclosed in a Schedule to this Agreement.

          (p) Employees. Schedule 3(p) contains a current, correct and complete list of
the names and current hourly wage, monthly salary and other compensation of all employees of
Sellers (collectively, the “Seller Employees”), together with a summary (containing estimates to
the extent necessary) of the individual’s existing bonuses, additional compensation and other
benefits (whether current or deferred), if any, accrued, paid or payable to each such person for
services rendered or to be rendered through the fiscal period ending July 31, 2003. Except as set
forth in Schedule 3(p), all of the Seller Employees are “at will” employees. Except as set
forth in Schedule 3(p), no Seller is a party to any oral (express or implied) or written
employment agreement or agreement that contains any severance or termination pay obligations, with
any Seller Employee. Each Seller shall deliver true and correct copies (or, if not written,
accurate descriptions of the parties and terms) of such employment agreements to Buyer prior to the
Closing. Except as set forth in Schedule 3(p), as of the Closing Date, all vacation pay,
holiday pay, short or long-term disability, reimbursement of expenses, tuition reimbursement,
commissions, compensation for absences due to jury duty and funeral leave, paid time off, wages,
salaries, bonuses, sick pay, extended sick leave, insurance benefits, or other employee benefits or
reimbursements with regard to any current or former Seller Employee will have been paid by Sellers.

          (q) Employee Benefits. Except as set forth on Schedule 3(q), Seller is not a
party to, bound by or obligated to contribute to any bonus, stock option, employee welfare, pension
or retirement plan (except for Social Security), medical, hospitalization, vision, dental, life,
disability or other similar benefit plan, severance plan or policy, or any other written or oral
employee benefit arrangement, agreement or understanding, and is not a party to or bound by any
policy manual or employee handbook (all of the foregoing are collectively referred to as “Benefit
Plans”) with respect to Seller Employees. A summary of the terms of each Benefit Plan is set forth
on Schedule 3(q) indicating as to each whether it is a “qualified plan” within the meaning
of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Each such
qualified plan, if any, has since its adoption been a qualified plan within the meaning of the
Code. Each qualified plan has been operated substantially in accordance with its provisions and in
compliance with the rules and regulations applicable to such qualified plan, including but not
limited to rules, regulations and reporting requirements promulgated by the Department of Labor,
the Pension Benefit Guaranty Corporation, and the Department of Treasury pursuant to the Employment
Retirement Income Security Act of 1974 (“ERISA”) or the Code and the Equal Employment Opportunity
Commission pursuant to the Age Discrimination in Employment Act. There is no accumulated funding
deficiency within the meaning of ERISA or any liability (including but not limited to any
withdrawal liability) to any such plan, trust or agreement, or to the Pension Benefit Guaranty
Corporation established under ERISA in

9

 

connection with any qualified plan. There has been no prohibited transaction (as defined in
Section 4975 of the Code and as defined in Section 406 of ERISA) by any qualified plan, or by any
trustee or administrator thereof, that would subject Sellers or any qualified plan, or any party
dealing with any such plan, to any tax or penalty on prohibited transactions imposed by Section
4975 of the Code, nor has there been any failure to comply with the provisions of Title I of ERISA
that would subject Sellers, or any qualified plan, any trustee or administrator thereof, or any
party dealing with such qualified plan to any fine, penalty, tax or liability. True and complete
copies of the Benefit Plans have previously been delivered to Buyer. Sellers are not in default
under any Benefit Plans.

          (r) No Interest in Properties, Competitors, Etc. No manager, director, officer or
shareholder of either Seller owns, directly or indirectly, in whole or in part, any of the
properties necessary for the business of Seller as currently conducted or owns, directly or
indirectly, any interest in or controls or is an employee, officer, director or partner of,
participant in or consultant to any corporation, association, partnership, limited partnership,
joint venture or other business organization that is a competitor, supplier, customer, landlord or
tenant of Sellers or Buyer, other than the Panama City Lease.

          (s) Financial Statements. Attached to this Agreement as Schedule 3(s) are
financial statements of each Seller for the years ended December 31, 2001 and 2002, and for the
month ended July 31, 2003, which statements are in accordance with the books and records of each
Seller, are true and accurate statements and fairly set forth the financial condition and results
of operations of each Seller, have been prepared in accordance with GAAP applied on a consistent
basis, using the accrual basis of accounting and contain and reflect all necessary adjustments for
a fair presentation of the financial condition and results of operations for the periods covered by
the statements.

          (t) Approvals and Consents. Except as otherwise disclosed herein, or as set forth on
Schedule 3(t) hereof, no consent, approval or authorization is required in connection with
the execution or delivery of this Agreement by Sellers and McElheney or the consummation by any of
them of the transactions contemplated hereby.

          (u) Insurance. The Assets that are of an insurable nature and are of a character
usually insured by similar businesses have been continuously insured by Sellers since their date of
acquisition, with the types and amounts of insurance adequate to protect Sellers, the Assets and
their respective financial condition. Schedule 3(u) sets forth a complete and accurate
list and a brief description of all insurance policies currently held by Sellers with respect to
their businesses and/or the Assets. True and correct copies of all such insurance policies have
been previously delivered to Buyer by Sellers. Except as set forth on Schedule 3(u), such
insurance policies are in full force and effect and shall remain in full force and effect through
the Closing Date. Certificates of insurance evidencing such coverage shall be delivered to Buyer
at or immediately prior to the Closing.

          (v) Labor Unions. No Seller Employee or group of employees is represented by any
labor union, trade association or other employee organization, no demand for recognition has been
made by any labor union with respect to Seller Employees, and there is not and has not been any
labor union organizing activities at the Palmetto Leased Premises, the Panama City

10

 

Leased Premises or elsewhere. Neither Seller is a party to any collective bargaining
agreement or understanding with any labor union, trade association or other employee organization
with respect to any Seller Employees and no such arrangements are being negotiated.

          (w) Resignations. Neither Seller nor McElheney has received any oral or written
notice that any Seller Employee has any plans to terminate his or her employment with either
Seller.

          (x) Condition of Assets. All furniture, fixtures, equipment, Inventory, supplies and
other tangible property comprising the Assets are in Sellers’ possession, are located at the Leased
Premises and are in good, usable condition and repair, ordinary wear and tear excepted.

          (y) Disclosure. No representation or warranty made by Sellers or McElheney in this
Agreement, the Exhibits and Schedules hereto or any of the documents required to be delivered
pursuant to this Agreement or in connection with the consummation of the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or therein not misleading.

     4. Representations of Buyer. Buyer hereby represents and warrants the following:

          (a) Organization and Standing. Buyer is a limited liability company, duly organized,
validly existing and has an active status under the laws of the State of Florida and has the
corporate power and authority to carry on its business as it is now being conducted. Buyer has
previously delivered to Sellers a true and complete copy of its Articles of Organization, and all
amendments thereto.

          (b) Authority. The execution and delivery of this Agreement by Buyer has been duly
authorized by all necessary corporate action of Buyer. No further corporate action is necessary on
Buyer’s part to make this Agreement valid and binding upon it and enforceable against it in
accordance with the terms hereof or to carry out the actions contemplated hereby.

          (c) Approvals and Consents. Except as otherwise disclosed herein or as set forth on
Schedule 4(c) hereof, no consent, approval or authorization is required in connection with
the execution or delivery of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby.

          (d) Licenses and Permits. Buyer has all applicable authorizations, approvals,
licenses, permits and orders of and from all Governmental Authorities, necessary to carry on its
business, to own or lease the properties and assets it owns or leases and to perform all of its
obligations under the agreements to which it is a party. Prior to the Closing, Buyer shall have
applied for a special closed system/special P/E pharmacy license from DOH to cover both they
Palmetto and Panama City locations.

          (e) Transferred Pharmacy Records. Buyer shall maintain all prescription and other
records transferred pursuant to this Agreement as required by all applicable laws, rules,
regulations and administrative orders of the United States of America or the State of Florida.

11

 

     5. Restrictive Covenants.

          (a) Noncompetition. For a period of five (5) years after the Closing Date, neither
CMI, CPC nor the CMI Shareholders shall, directly or indirectly, within a two hundred (200) mile
radius of the Palmetto and Panama City Leased Premises, enter into, engage in, be employed by or
consult with any person or entity in connection with the nursing home pharmacy business. The
prohibition of this Section shall apply to all activities of Sellers and CMI Shareholders, whether
as an individual or corporation acting on its own behalf, or as an independent contractor, partner
or joint venturer, consultant or as an officer, director, stockholder, agent, employee or salesman
for any person, firm, partnership, corporation or other entity.

          (b) Nonsolicitation. For a period of five (5) years after the Closing Date, Sellers
and the CMI Shareholders each agree that they will not, either directly or indirectly, as
independent contractor, employee, consultant, agent, partner or joint venturer, or as an officer,
director, stockholder, agent or employee of any firm, person, partnership or corporation, or
otherwise, solicit the employees, customers or referral sources of Buyer to reduce or discontinue
their employment, customer or referral relationship with Buyer.

          (c) Customer Contact. For a period of five (5) years after the Closing Date, Sellers
and the CMI Shareholders will refrain from any direct or indirect contact with the Active Customers
in connection with the nursing home pharmacy business, except that any CMI Shareholders who become
employed by Buyer is excluded herefrom to the extent required to perform their duties under their
employment agreements with Buyer and provided further that Sellers shall be permitted to contact
such customers for billing and collection purposes as set forth in Section 13(a) or to protect its
rights in any audit, investigation or lawsuit against or affecting Sellers. Sellers and the CMI
Shareholders acknowledge that they may not bill after the Closing Date for any goods or services if
the date of service occurs after the Closing Date.

          (d) Enforcement. It is agreed and understood by and among the Parties that the
restrictive covenants set forth in Sections 5(a) through 5(c) of this Agreement are each
individually essential elements of this Agreement and that, but for the agreement of Sellers and
the CMI Shareholders each to comply with such covenants, Buyer would not have agreed to enter into
this Agreement. The existence of any claim or cause of action of either Seller or the CMI
Shareholders against Buyer, whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by Buyer of such restrictive covenants except in the event
Sellers have pursued legal action against Buyer on the payment obligations of the Note and obtained
a judgment against Buyer in such litigation. It is further agreed by the Parties that if any
portion of the restrictive covenants set forth in Sections 5(a) through 5(c) of this Agreement is
held to be unreasonable, arbitrary or against public policy, then each such covenant shall be
considered divisible as to time, geographical area and restricted activities, it being the
intention of the Parties that a lesser period of time or geographical area shall be enforced so
long as the same is not unreasonable, arbitrary or against public policy.

          (e) Enforcement by Assignees. The Parties agree that the restrictive covenants
contained herein shall inure to the benefit of, and may be enforced by, the successors and assigns
of Buyer.

12

 

     6. Conduct of Sellers Pending and After Closing. Pending the Closing, CMI and CPC,
jointly and severally, covenant that they will cause or accomplish the following:

          (a) Representations and Warranties. Neither Seller will take any action and will not
permit any action to be taken which would cause any of the Sellers’ representations and warranties
set forth in Article 3 to be untrue as if such representations were made on and as of the Closing
Date.

          (b) Sellers’ Delivery of Schedules and Exhibits. Within ten (10) days of the
execution of this Agreement, Sellers shall cause all schedules and exhibits for which they are
responsible to be delivered to Buyer.

          (c) Conduct of Business. Sellers will conduct their business in the ordinary course
of business and in the same manner as in the past. From the date hereof to the Closing Date,
without the prior written consent of Buyer, neither Seller will: (i) enter into any contract or
other transaction other than in the ordinary course of business; (ii) sell, assign, pledge, subject
to lien or otherwise transfer the Assets, other than transfers in the ordinary course of business
or liens, pledges or mortgages discharged on or prior to the Closing Date; (iii) grant any salary
increase or modify any other form of compensation payable to any employee or other personnel
performing services for the Business; or (iv) terminate any service contracts.

          (d) Conditions Precedent. Sellers shall take no action which would prevent the
satisfaction, prior to or at Closing, of all conditions precedent to the obligations of Buyer set
forth in Article 8.

          (e) Applications. Sellers shall provide reasonable cooperation to Buyer in obtaining
the permits, licenses, authorizations, consents, and approvals required by Buyer under applicable
local, state and federal law and contracts and agreements to purchase the Assets and operate the
business as currently operated by CMI and CPC.

          (f) Merger, Etc. Sellers will not merge or consolidate with or into any other entity,
sell, lease or otherwise dispose of any of the Assets (except for retirements and replacements in
the ordinary course of business), liquidate or dissolve, and shall not enter into any agreements to
do any of the foregoing.

          (g) Insurance. Sellers will maintain the insurance currently carried to insure the
Assets against liability, loss or other casualty and will continue all professional liability
insurance coverage currently carried through the Closing Date. Sellers will not, without the
consent of Buyer, amend, modify or cancel such policies currently in effect.

          (h) Maintenance. Sellers shall keep the Assets in their current state of repair,
normal wear and tear excepted, and make all necessary and appropriate repairs and maintenance.

          (i) Access to Records. Prior to and following the Closing, Sellers shall give Buyer
and Buyer’s counsel, accountants, consultants and other representatives full access, during normal
business hours, and upon request, to the Assets, the Business, and Sellers’ books, contracts,
commitments, and records concerning the Business, and Seller shall furnish Buyer during such period
with all relevant information as Buyer may reasonably request.

13

 

          (j) Cooperation of Sellers and Buyer Pending Closing. Sellers and Buyer shall each
use their best efforts and act in good faith to close the transactions contemplated by this
Agreement. After the Closing, Sellers covenant that each of them will fully and timely pay and
perform all Excluded Liabilities.

     7. Conduct of Buyer Pending and After Closing. Pending the Closing, Buyer covenants
that it will cause or accomplish the following:

          (a) Representations and Warranties. Buyer will take no action and will not permit any
action to be taken, to cause Buyer’s representations and warranties set forth in Article 4 to be
untrue as if such representations and warranties were made on and as of the Closing Date.

          (b) Buyer’s Delivery of Schedules and Exhibits. Within ten (10) days of the execution
of this Agreement, Buyer shall cause all schedules and exhibits for which it is responsible to be
delivered to Sellers.

          (c) Applications. Buyer shall apply for, and diligently pursue attainment of, all
permits, licenses, approvals and other authorizations necessary own the Assets and to operate the
business as currently operated by Sellers.

          (d) Conditions Precedent. Buyer shall take no action which would prevent the
satisfaction, prior to or at Closing, of all the conditions precedent to the obligations of Sellers
set forth in Article 9.

          (e) Cooperation of Sellers and Buyer Pending Closing. Sellers and Buyer shall
cooperate pending Closing as is provided in Section 6(i).

          (f) Post-Closing Operations. For the six (6) month period immediately following the
Closing, Buyer shall operate its business related to the Assets in the ordinary course of business
and use its good faith efforts to maintain the business represented by the Supply Contracts and to
increase its revenues thereunder. Buyer agrees that during this time period it will not make any
public announcements or disclosures concerning the purchase hereunder, other than as required by
law, and shall operate the business under a fictitious name utilizing the word “CoastalMed” and
Sellers hereby consent to Buyer’s use of “CoastalMed” for such six month period. During such
period, Randall McElheney agrees to remain employed by Buyer and use his good faith efforts to
assist Buyer in maintaining the Supply Contracts and increasing revenues thereunder.

     8. Conditions Precedent to Buyer’s Obligations to Close. Buyer’s obligation to close
the transactions contemplated hereby shall be subject to the satisfaction of the following
conditions precedent prior to or at the Closing, unless waived in writing by Buyer. The failure of
any of the following conditions to be met (through no fault of Buyer) shall cause this Agreement to
be terminated with no further obligation of the Parties except for those arising under Section
13(s) hereof:

14

 

          (a) Sellers’ Deliveries. Within ten (10) days of the execution of this Agreement,
Sellers shall deliver to Buyer those items contemplated in Section 6(b) hereof. At or prior to
Closing, each Seller shall deliver to Buyer those items set forth in Section 10(c).

          (b) Representations and Warranties True at Closing. The representations and
warranties made by CMI and CPC in this Agreement and all other agreements and documents executed in
connection herewith shall be true and correct in all respects on and as of the Closing Date, with
the same effect as though such representations and warranties had been made or given on and as of
the Closing Date.

          (c) Compliance with Agreement. Sellers shall have performed and complied with all
obligations under this Agreement in all respects which are to be performed or complied with by
Sellers prior to or at Closing.

          (d) No Adverse Change. The Assets shall not have been adversely affected in any way,
by any adverse event or condition or by any actual interference with use or fire or other casualty
or condemnation or as a result of any notice of deficiency or other adverse event with respect to
the Assets issued by any governmental authority which has not been disclosed herein or in the
Schedules or Exhibits attached hereto.

          (e) Litigation. No litigation or other proceeding, including administrative
proceedings or arbitration, other than as disclosed in this Agreement and the Schedules and
Exhibits, shall have been commenced or threatened against either for Sellers or the Assets which
would materially adversely affect the consummation of the transactions contemplated herein.

          (f) Due Diligence. Buyer and its lender shall be satisfied with the results of its
due diligence investigation of CMI and CPC.

          (g) Financing. Buyer shall have arranged equity and/or debt financing for the
Purchase Price and working capital needs on terms and conditions acceptable to Buyer.

          (h) Insurance. Buyer shall have obtained commitments from one or more insurers to
insure the Assets on terms and conditions acceptable to Buyer.

          (i) Governmental Approvals. Buyer shall have obtained all governmental approvals
necessary to take possession and title to the Assets and to operate a pharmaceutical business from
each of the Leased Premises.

     9. Conditions Precedent to Sellers’ Obligations to Close. Sellers’ obligation to
close the transactions contemplated hereby shall be subject to the satisfaction of the following
conditions precedent prior to or at the Closing, unless waived by Sellers:

          (a) Buyer’s Deliveries. Within ten (10) days of the execution of this Agreement,
Buyer shall deliver to Sellers those items contemplated in Section 7(b) hereof. At or prior to
Closing, Buyer shall deliver to Sellers those items set forth in Section 10(d).

          (b) Representations and Warranties True at Closing. The representations and
warranties made by Buyer in this Agreement and all other agreements and documents executed

15

 

in connection herewith shall be true and correct in all respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made or given on and as
of the Closing Date.

          (c) Compliance with Agreement. Buyer shall have performed and complied with all its
obligations under this Agreement in all respects which are to be performed or complied with by
Buyer prior to or at Closing.

     10. Closing; Termination.

          (a) Closing. At the closing of the transactions contemplated hereby (the “Closing”),
Sellers shall sell, assign, transfer, convey and deliver the Assets to Buyer free and clear of all
Encumbrances, and Buyer shall purchase the Assets from Sellers. Unless otherwise agreed by the
Parties, the Closing shall be held on October 1, 2003 (the “Closing Date”), at 10:00 a.m. at the
offices of Buchanan Ingersoll P C, located at 401 E. Jackson Street, Suite 2500, Tampa, Florida
33602. In connection with the Closing, the Parties shall take all reasonable actions necessary to
facilitate Sellers’ compliance with Florida Administrative Code Sections 64B16-28.201 and
64B16-28.203.

          (b) Termination. At any time before the Closing, this Agreement may be terminated:

               (i) by either Buyer or Sellers if there has been a material misrepresentation, material
breach of warranty or material breach of a covenant by the other herein and such breach is
either incapable of cure, or if such breach is not cured within fifteen (15) days after
written notice of such breach is received from the non-breaching party, of if earlier, by
the Closing Date;

               (ii) by Buyer, if any conditions set forth in Article 8 has not been satisfied at or
before the Closing;

               (iii) by Sellers, if any condition set forth in Article 9 has not been satisfied at or
before the Closing;

               (iv) upon mutual agreement of Buyer, CMI and CPC; or

               (v) by either Buyer or Sellers, if the Closing has not occurred on or before November
30, 2003.

          (c) Sellers’ Closing Deliveries. At the Closing, in accordance with the terms of this
Agreement, Sellers shall deliver to Buyer the following:

               (i) Bills of sale, assignments and all other instruments necessary or appropriate to
convey all right, title and interest in or to the Assets to Buyer.

               (ii) An employment agreement executed by Randall McElheney, which shall include among
his assigned duties helping to ensure a smooth transition from

16

 

Sellers to Buyer, maintaining and increasing revenues under the Supply Contracts and
obtaining additional Supply Contracts.

               (iii) An employment agreement executed by Lorianne McElheney, which shall include a
covenant to allow Buyer to register Ms. McElheney as its licensed pharmacist and to
designate her as prescription manager for the Panama City location.

               (iv) An employment agreement executed by ______, which shall include a
covenant to allow Buyer to register ______ as its licensed pharmacist and to
designate his/her as prescription manager for the Palmetto location.

               (v) Assignment and Assumption Agreements related to the Panama City Leased Premises and
the Palmetto Leased Premises, executed by the respective landlord to evidence its agreement
to recognize Buyer as the tenant thereunder.

               (vi) Assignment and Assumption Agreements from each Seller to Buyer, for all contracts
and agreements to be assumed by Buyer hereunder, including the Supply Contracts.

               (vii) Restrictive covenant agreements executed by McElheney and each of the CMI
Shareholders (as hereinafter defined).

               (viii) Possession of the Assets, including, without limitation: (a) full customer files
containing executed documentation sufficient to allow billing of all accounts; (b) a
certified schedule of prescriptions, together with all prescription files of Sellers, as
required by Florida Administrative Code Section 64B16-28.201; and (c) all medicinal drugs
transferred pursuant to this Agreement, together with an inventory thereof. The inventories
shall be performed on the Closing Date for both the Palmetto and Panama City locations.
Sellers shall be solely responsible for all costs associated with the inventories, and Buyer
may have representatives present for the inventories.

               (ix) A certificate executed by the President of each Seller as of the Closing Date,
certifying as to (a) the resolutions adopted by Seller and its shareholders approving the
execution of this Agreement and the consummation of the transactions contemplated hereby,
(b) the incumbent officers of Seller and the authenticity of the signatures of each, and (c)
the accuracy of the representations and warranties of Seller contained in this Agreement.

               (x) A certificate of the Secretary of State of Florida certifying that each Seller is a
corporation with an active status under the laws of the State of Florida, together with a
certified copy of each Seller’s articles of incorporation, all dated within ten (10) days
prior to the Closing Date.

               (xi) Evidence of termination of any financing statements previously on record with
respect to any of the Assets, including, without limitation, those filled by Bay Bank &
Trust Co. and Bindley Western Drug Company.

17

 

               (xii) Limited Power of Attorney from each Seller for use of its pharmacy license, DEA
and other Registration Numbers and DEA Order Forms.

               (xiii) Sellers’ Monthly Financial Statements pursuant to Section 2(d)(i) hereof. In
the event the most recent statement of the Sellers’ Monthly Financial Statements is not
available at the Closing, Sellers shall deliver the same to Buyer within ten (10) days of
the Closing Date.

               (xiv) Certificates of insurance pursuant to Section 3(u) hereof.

               (xv) An Operations Transfer Agreement, substantially in the form attached hereto as
Exhibit 2.

               (xvi) Such other instruments, agreements and documents as are required to carry out the
transactions contemplated by this Agreement or incidental thereto.

          (d) Buyer’s Closing Deliveries. At the Closing, in accordance with the terms of this
Agreement, Buyer shall deliver to Sellers the following:

               (i) The Purchase Price as provided in Section 2 of this Agreement, including, without
limitation, the cash consideration and the Note.

               (ii) A guaranty of the Note, duly executed by an authorized officer of THC.

               (iii) A certificate executed by the Chairman and CEO of Buyer, dated the Closing Date,
certifying as to (a) the corporate authority of Buyer for the execution of this Agreement
and the consummation of the transactions contemplated hereby, and (b) the incumbent officers
of Buyer and the authenticity of the signatures of each, and (c) the accuracy of the
representations and warranties of Buyer contained in this Agreement.

               (iv) A certificate of the Secretary of State of Florida certifying that the Buyer is a
corporation with an active status under the laws of the State of Florida, together with a
certified copy of each Buyer’s articles of incorporation, all dated within ten (10) days
prior to the Closing Date.

               (v) Such other instruments, agreements and documents as are required to carry out the
transactions contemplated by this Agreement or incidental thereto.

          (e) Closing Costs. Except as provided in Sections 2(a)(ii), 2(d) and 13(d) hereof,
Sellers shall be responsible for and shall pay all the fees, taxes (including sales taxes), and
other costs required to be paid on account of or in connection with the transfer of the Assets.

     11. Indemnification.

          (a) Of Buyer. Sellers jointly and severally agree to indemnify and hold harmless
Buyer in respect of any and all claims, losses and expenses, including reasonable fees

18

 

and disbursements of counsel (before and at trial, in bankruptcy proceedings and in appellate
proceedings), which may be incurred by Buyer (the “Indemnified Party”) arising out of:

               (i) any material breach by either Seller or McElheney of, any of their representations,
warranties, covenants or agreements made in this Agreement, the Schedules and Exhibits
hereto or any document or paper delivered in connection with the transactions contemplated
hereby;

               (ii) any attempt (whether or not successful) by any person to cause or require the
Indemnified Party to pay or discharge any debt, obligation, liability or commitment
inconsistent with any such representation, warranty, covenant or agreement;

               (iii) any action, suit, proceeding, assessment or judgment arising out of or incident
to any of the matters indemnified against in this Section 11(a), including reasonable fees
and disbursements of counsel (before and at trial, in bankruptcy proceedings and in
appellate proceedings).

          (b) Of Sellers. Buyer agrees to indemnify and hold harmless Sellers in respect of any
and all claims, losses and expenses, including reasonable fees and disbursements of counsel (before
and at trial, in bankruptcy proceedings and in appellate proceedings), which may be incurred by
Sellers (the “Indemnified Party”) arising out of:

               (i) any material breach by Buyer of any of its representations, warranties, covenants
or agreements made in this Agreement, the Exhibits hereto or any document or paper delivered
in connection with the transactions contemplated hereby;

               (ii) any attempt (whether or not successful) by any person to cause or require the
Indemnified Party to pay or discharge any debt, obligation, liability or commitment
inconsistent with any such representation, warranty, covenant or agreement;

               (iii) any action, suit, proceeding, assessment or judgment arising out of or incident
to any of the matters indemnified against in this Section 1l(b), including reasonable fees
and disbursements of counsel (before and at trial, in bankruptcy proceedings and in
appellate proceedings).

          (c) Claims for Indemnification. Whenever any claim shall arise for indemnification
under this Section 11, the Indemnified Party shall notify the Party or Parties (as the case may be)
against whom indemnification is sought (whether one Party or more, the “Indemnifying Party”) in
writing, by certified mail, return receipt requested, with postage prepaid, of the facts
constituting the basis for such claim. Such notice shall specify all facts known to the
Indemnified Party giving rise to such indemnification right and the amount or an estimate of the
amount of the liability arising therefrom. The right to indemnification hereunder and the amount
or the estimated amount thereof, as set forth in such notice, shall be deemed agreed to by the
Indemnifying Party unless, within fifteen (15) days after the receipt of such notice, the
Indemnified Party is notified in writing that the Indemnifying Party disputes the right to
indemnification as set forth or estimated in such notice.

19

 

          (d) Right to Defend; Third-Party Claims, Etc. If the facts giving rise to any such
indemnification right shall involve any actual or threatened claim or demand by any third party
against the Indemnified Party or any possible claim by the Indemnified Party against any third
party, such claim by or against a third party shall be referred to as a “Third-Party Claim.” The
Indemnifying Party shall, at its own expense, promptly select counsel reasonably acceptable to the
Indemnified Party or Parties and undertake full responsibility for the defense or prosecution of
such Third-Party Claim and may contest or settle it on such terms as it may choose. If the
Indemnifying Party fails to defend such Third-Party Claim, (1) the Indemnified Party may proceed in
the defense or prosecution of the Third-Party Claim (with such costs and fees to be reimbursed by
the Indemnifying Party) and in any and all settlement negotiations relating thereto, and (2) the
Indemnified Party may contest or settle the Third-Party Claim on such terms at it may choose,
although the Indemnified Party shall not reach a settlement until it has consulted in good faith
with the Indemnifying Party. Any such participation shall not relieve the Indemnifying Party of
its obligations to indemnify the Indemnified Party under this Section 6. If by reason of any
Third-Party Claim a lien, attachment, garnishment or execution is placed upon any of the property
or assets of the Indemnified Party, the Indemnifying Party, if it desires to exercise its right to
defend or prosecute such suit, shall furnish a satisfactory indemnity bond to obtain the prompt
release of such lien, attachment, garnishment or execution.

          (e) Right of Offset. With respect to any claims by Buyer for indemnification under
this Section 11 against Sellers, in furtherance and not in limitation of its rights under this
Agreement, Buyer, at its option, shall be entitled to an immediate right of offset against any
amounts owed by Buyer to such party, including, without limitation, any amounts to be paid under
Section 11 of this Agreement. Such right of offset shall be exercised by written notice to the
Party or Parties against which the right of offset is taken, which notice shall be given in
accordance with the requirements of Section 13(f) of this Agreement and shall indicate the total
amount of such offset.

     12. Transferred Employees. Seller shall terminate the employment of the Seller
Employees on the Closing Date, and Seller shall be responsible for providing any notices required
to be given to such employees under applicable law, including the Workers Adjustment and Retraining
Notification Act and the Consolidated Omnibus Budget Reconciliation Act of 1985. Buyer may, in its
discretion at any time up to and including the Closing Date, provide letters to the Seller
Employees, setting forth the terms and conditions of their proposed employment. Those Seller
Employees who accept Buyer’s offer of employment shall become employees of Buyer on the Closing
Date.

     13. General.

          (a) Collection Limitations. Following the Closing Date, Sellers shall be permitted to
collect the Accounts Receivable, but to do so, it shall only take such collection action as it has
customarily taken in the ordinary course of business prior to Closing, and it shall adhere to its
ordinary write off policies with respect to such Accounts Receivable. Notwithstanding the
foregoing, in no event may Sellers engage in any extraordinary collection action, including without
limitation litigation, without the prior written consent of Buyer. For the six (6) month period
immediately following the Closing Date, Buyer shall use its

20

 

commercially reasonable efforts to assist Sellers in the collection of their Accounts
Receivable, at no cost to Sellers, as provided in the Operations Transfer Agreement.

          (b) Brokers. Buyer utilized the services of, and is solely responsible for any
brokers fees due to, Randy Parrish. Each of the other Parties to this Agreement represents and
warrants, each to the others, that it has not utilized the services of any other finder, broker or
agent. Each of the Parties agrees to indemnify the other Parties against and hold them harmless
from any and all liabilities to any person, firm or corporation claiming any broker’s or finder’s
fee or commission of any kind on account of services rendered on behalf of such corporation in
connection with the transactions contemplated by this Agreement.

          (c) Survival of Representations, Warranties, Etc. Each of the Parties to this
Agreement covenants and agrees that its representations, warranties, covenants, statements and
agreements contained in this Agreement and the Exhibits and Schedules hereto and any document
delivered in connection herewith shall survive the Closing Date and terminate on the fifth
anniversary thereof.

          (d) Expenses. Each of the Parties to this Agreement shall pay its own expenses in
connection with this Agreement and the transactions contemplated hereby, including the fees and
expenses of its counsel and its certified public accountants and other experts. Cash expenses of
Sellers and McElheney incurred in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby are specifically agreed to be liabilities that
will not be assumed by Buyer pursuant to this Agreement.

          (e) Press Releases. Except as otherwise required by law, no statement or public
disclosure concerning the transactions contemplated by this Agreement shall be made or released to
any medium of public communication except with the prior joint written approval of Buyer and
Sellers. Upon the release of any public disclosure of the transactions contemplated hereunder, the
Parties may disclose the tax treatment of the transactions to the Internal Revenue Service or any
other interested person.

          (f) Notices. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be deemed to have been
duly given when received if personally delivered; the day after it is sent, if sent by recognized
expedited delivery service; and five (5) days after it is sent, if mailed, first class mail,
postage prepaid. In each case notice shall be sent to:

	 	 	 	 	 
	 

	 	If to Buyer:
	 	LaurelPharm, LLC
	 

	 	 	 	c/o Tandem Health Care
	 

	 	 	 	800 Concourse Parkway South, Suite 200
	 

	 	 	 	Maitland, Florida 32751
	 

	 	 	 	Attention: Mr. Lawrence R. Deering,
	 

	 	 	 	     Chairman and CEO

21

 

	 	 	 	 	 
	 

	 	with a copy to:
	 	Rosemary L. Corsetti, Esq.
	 

	 	 	 	General Counsel
	 

	 	 	 	Tandem Health Care
	 

	 	 	 	c/o One Oxford Centre
	 

	 	 	 	301 Grant Street, 20th Floor
	 

	 	 	 	Pittsburgh, Pennsylvania 15219
	 
	 	 	 	 
	 

	 	and:
	 	Linda L. Fleming, Esq.
	 

	 	 	 	Buchanan Ingersoll PC
	 

	 	 	 	401 E. Jackson Street, Suite 2500
	 

	 	 	 	Tampa, Florida 33602
	 
	 	 	 	 
	 

	 	If to CMI, CPC
	 	Mr. Randall A. McElheney
	 

	 	  or McElheney
	 	408 South Bonita Drive
	 

	 	 	 	Panama City, Florida 32401
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Nevin Zimmerman, Esq.
	 

	 	 	 	Harrison, Rivard, Zimmerman & Bennett
	 

	 	 	 	109 Harrison Avenue
	 

	 	 	 	Panama City, Florida 32401

or to such other address as such Party shall have specified by notice in writing to the other
Parties.

          (g) Entire Agreement; Amendment. This Agreement, including the Exhibits and Schedules
hereto, which are incorporated herein by this reference, constitutes the entire agreement, and
supersedes all prior agreements and understandings, oral and written, among the Parties to this
Agreement with respect to the subject matter hereof. This Agreement may not be modified or
otherwise amended except by an instrument in writing executed by the Party sought to be charged
therewith, except for delivery of schedules and exhibits pursuant to Section 13(u) hereof.

          (h) Assignability. This Agreement shall not be assignable by any of the Parties to
this Agreement without the prior written consent of all other Parties to this Agreement.
Notwithstanding the foregoing, Buyer may assign this Agreement to THC or any sister or subsidiary
corporation of Buyer.

          (i) Interpretation. All pronouns used herein shall be deemed to include masculine,
feminine and neuter genders as appropriate, and the singular shall be deemed to include the plural
as appropriate. The use of the term “including” shall mean “including without limitation” unless
otherwise specified.

          (j) Further Assurances. The Parties to this Agreement will execute and deliver, or
cause to be executed and delivered, such additional or further transfers, assignments, endorsements
or other instruments as Buyer or its counsel may reasonably request for the purpose of carrying out
the transactions contemplated by this Agreement, and to effectively

22

 

convey, transfer and assign the Assets to Buyer. After the Closing, Sellers shall take all
actions reasonably necessary to put Buyer in actual possession and operating control of the Assets.

          (k) Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument. A facsimile of a signature shall be deemed to be an original for all purposes.

          (l) Captions. The article, section and other captions contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

          (m) Governing Law. The validity, construction and enforcement of, and the remedies
under, this Agreement shall be governed in accordance with the laws of the State of Florida,
without regard to its conflict of law provisions.

          (n) Third Party Beneficiaries. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person, firm or corporation other than
the Parties hereto, and their successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, or to result in such person, firm or corporation
being deemed a third party beneficiary of this Agreement.

          (o) Construction. The Parties acknowledge that this Agreement is a result of mutual
negotiations and that they have jointly participated in the preparation hereof. Accordingly, the
Parties agree that this Agreement shall be construed in accordance with the terms hereof and shall
not be strictly construed for or against any Party.

          (p) Cooperation. The Parties to this Agreement shall execute such powers of attorney
as may be necessary or appropriate to permit participation of counsel selected by any Party hereto
and, as may reasonably be related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each Party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business records of such other
Party and will furnish to such other Party copies of all such documents as may reasonably be
requested (certified, if requested). After the Closing, Sellers authorize Buyer to open all
communications received and to deal with the context of such communications in a proper manner if
they are related to the Assets or the subject matter of this Agreement.

          (q) Severability. If any of the provisions of this Agreement shall be construed to be
illegal or invalid, such construction shall not affect the legality or validity of any of the other
provisions hereof, and except as otherwise expressly provided herein, the illegal or invalid
provisions hereof shall be deemed stricken and deleted herefrom, to the same extent as if never
incorporated herein, but all other provisions hereof shall remain in full force and effect.

          (r) No Shop. Sellers agree that prior to the earliest of the Closing or the
termination of this Agreement, that neither CMI nor CPC will enter into any discussions,
negotiations, agreements or transferring concerning the sale, lease or management of any of the
Assets with any party other than Buyer, and Sellers shall promptly notify Buyer if either Seller
receives any indication of interest from any other third party.

23

 

          (s) Confidentiality. The Parties shall hold in confidence the information contained
in this Agreement, and all information related to this Agreement, which is not otherwise known to
the public shall be held by each Party as confidential and proprietary information and shall not be
disclosed without the prior written consent of the other Parties. Accordingly, Buyer and Sellers
shall not discuss with, or provide nonpublic information to, any third party (except for its
governing boards, attorneys, accountants, directors, officers and employees, the directors,
officers and employees of any affiliate of any Party, and other consultants, representatives,
agents and professional advisors) concerning this transaction prior to the Closing, except: (i) as
required in governmental filings or judicial, administrative or arbitration proceedings; or (ii)
pursuant to public announcements made with the prior written approval of Sellers and Buyer.

          (t) Arbitration. Any dispute, controversy or claim arising out of this Agreement
shall be settled by arbitration in accordance with this section. Any arbitration under this
Section shall be conducted in accordance with the American Health Lawyers Association Alternative
Dispute Resolution Service Rules of Procedure for Arbitration, and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. The place of
arbitration shall be Orange County, Florida. The arbitrators shall decide legal issues pertaining
to the dispute, controversy or claim pursuant to the laws of the State of Florida. Subject to the
control of the arbitrators, or as the parties may otherwise mutually agree, the parties shall have
the right to conduct reasonable discovery pursuant to the Federal Rules of Civil Procedure. The
arbitrators shall have no authority to award punitive damages, but shall have authority to order
equitable relief.

          (u) Schedules and Exhibits. The parties acknowledge that this Agreement is being
executed without all schedules and exhibits attached hereto. Each party agrees to provide the
other parties all schedules and exhibits for which it is responsible within ten (10) days of
execution of this Agreement. All schedules and exhibits may be objected to for a twenty (20) day
period following their receipt by the other parties. In the event no objections are raised during
such twenty (20) day period, the schedules and exhibits so delivered shall be deemed final, and
subject to change only with the consent of all parties.

          (v) WAIVER. EACH PARTY ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE
BETWEEN THEM, THE COMMERCIAL NATURE OF THE TRANSACTIONS OUT OF WHICH THIS AGREEMENT ARISES WOULD
MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY. ACCORDINGLY BUYER, CMI, CPC AND MCELHENEY
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS
AGREEMENT OR TO ANY OTHER DISPUTE ARISING BETWEEN THEM RELATED TO THE SUBJECT MATTER HEREOF.

24

 

     IN WITNESS WHEREOF, each Party has caused this Agreement to be duly executed by its authorized
officer as of the date first above written.

	 	 	 	 	 
	 	 	LAURELPHARM, LLC
	 

	 	By:
	 	Tandem Health Care, Inc., its sole Member
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 

	 	 	 	     Lawrence R. Deering, Chairman and CEO
	 
	 	 	 	 
	 	 	COASTALMED, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Randall A. McElheney
	 

	 	 	 	 
	 

	 	 	 	     Randall A. McElheney, President
	 
	 	 	 	 
	 	 	COASTALMED OF PANAMA CITY, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Randall A. McElheney
	 

	 	 	 	 
	 

	 	 	 	     Randall A. McElheney, President
	 
	 	 	 	 
	 	 	/s/ Randall A. McElheney
	 	 	 
	 	 	RANDALL A. MCELHENEY

25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]