Document:

Exhibit 10.25

 

Exhibit 10.25

FIRST AMENDMENT TO

ASSET PURCHASE AGREEMENT

     This First Amendment to Asset Purchase Agreement dated October 28, 2004 (“First Amendment”),
by and between OP Hospice, Inc., a Michigan Corporation (“Purchaser”), and Lighthouse Hospice
Limited Partnership, a Delaware limited partnership
(“Seller”). Purchaser and Seller are sometimes
referred to collectively as the “Parties” and individually as a “Party”.

RECITALS:

     A. Purchaser
and Seller entered into an Asset Purchase Agreement dated October 28, 2004 (“Asset
Purchase Agreement”).

     B. Section 10.1
of the Asset Purchase Agreement establishes a Termination Date and Closing of
December 30, 2004.

     C. The
parties desire to extend the Termination Date and Closing to December 31, 2004 in
this Amendment.

     NOW THEREFORE, for and in consideration of the foregoing Recitals, the mutual covenants and
undertakings set forth below and other good and valuable consideration, the receipt and adequacy of
which are acknowledged, the Parties hereby agree as follows:

     1. Section 10.1
of the Asset Purchase Agreement is hereby amended to change the December
30, 2004 date to December 31, 2004.

     2. This
First Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together constitute one and the
same instrument. Fax signatures hereto shall be deemed as legally effective as a signed original for
all purposes.

     3. The
parties hereto otherwise ratify and confirm the remaining provisions of the Asset
Purchase Agreement,

[Remainder of Page Left Intentionally Blank]

 

 

     IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Asset Purchase
Agreement this 30th day of December, 2004.

	 	 	 	 	 
	 	 	OP HOSPICE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 

	 	Name:
	 	Lawrence R. Deering
	 

	 	Its:
	 	Chairman and CEO
	 
	 	 	 	 
	 	 	LIGHTHOUSE HOSPICE LIMITED PARTNERSHIP
	 
	 	 	 	 
	 

	 	By:
	 	Integrated Health Systems, Inc., an
	 

	 	 	 	Illinois corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ Laura A. Wagner
	 

	 	 	 	 
	 

	 	Name:	 	Laura A. Wagner
	 

	 	 	 	 
	 

	 	Its:	 	Vice PresidentExhibit 10.26

 

Exhibit 10.26

ASSET PURCHASE AGREEMENT

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 HAZELTON, LLC

OP POTTSVILLE, LLC

OP NEW BLOOMFIELD, LLC

OP MILLERSBURG, LLC

OP EVERETT, LLC

OP FROSTBURG, LLC

OP SALISBURY, LLC

(“BUYER’S OPERATORS”)

Dated as of February 15, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	1.	 	SALE OF ASSETS AND ASSUMPTION OF LIABILITIES	 	 	2	 
	 

	 	 	1.1	 	 	Assets
	 	 	2	 
	 

	 	 	1.2	 	 	Excluded Assets
	 	 	3	 
	 

	 	 	1.3	 	 	Assumed Liabilities
	 	 	3	 
	 

	 	 	1.4	 	 	Excluded Liabilities
	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	FINANCIAL ARRANGEMENTS	 	 	4	 
	 

	 	 	2.1	 	 	Purchase Price
	 	 	4	 
	 

	 	 	2.2	 	 	Allocation of Purchase Price
	 	 	5	 
	 

	 	 	2.3	 	 	Purchase Price Adjustments
	 	 	5	 
	 

	 	 	2.4	 	 	Prorations
	 	 	5	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.

	 	CLOSING
	 	 	 	 	6	 
	 

	 	 	3.1	 	 	Closing
	 	 	6	 
	 

	 	 	3.2	 	 	Actions of Seller at Closing
	 	 	6	 
	 

	 	 	3.3	 	 	Actions of Buyer at Closing
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	8	 
	 

	 	 	4.1	 	 	Capacity
	 	 	9	 
	 

	 	 	4.2	 	 	Corporate Powers; Consents; Absence of Conflicts With Other Agreements
	 	 	9	 
	 

	 	 	4.3	 	 	No Affiliates
	 	 	9	 
	 

	 	 	4.4	 	 	Binding Agreement
	 	 	10	 
	 

	 	 	4.5	 	 	Financial Statements
	 	 	10	 
	 

	 	 	4.6	 	 	Licenses
	 	 	10	 
	 

	 	 	4.7	 	 	Patents; Trademarks, Etc
	 	 	11	 
	 

	 	 	4.8	 	 	Medicare Participation/Accreditation
	 	 	11	 
	 

	 	 	4.9	 	 	Legal and Regulatory Compliance
	 	 	11	 
	 

	 	 	4.10	 	 	The Contracts
	 	 	12	 
	 

	 	 	4.11	 	 	Excluded Contracts
	 	 	12	 
	 

	 	 	4.12	 	 	Inventory and Supplies
	 	 	13	 
	 

	 	 	4.13	 	 	Equipment
	 	 	13	 
	 

	 	 	4.14	 	 	Real Property
	 	 	13	 
	 

	 	 	4.15	 	 	Condition of Assets
	 	 	15	 
	 

	 	 	4.16	 	 	Brokers and Finders
	 	 	15	 
	 

	 	 	4.17	 	 	Insurance
	 	 	15	 
	 

	 	 	4.18	 	 	Employee Benefit Plans
	 	 	16	 
	 

	 	 	4.19	 	 	Employees and Employee Relations
	 	 	16	 
	 

	 	 	4.20	 	 	Litigation or Proceeding
	 	 	17	 
	 

	 	 	4.21	 	 	Condemnation and Assessments
	 	 	17	 
	 

	 	 	4.22	 	 	Taxes
	 	 	17	 
	 

	 	 	4.23	 	 	Post-Balance Sheet Results
	 	 	18	 
	 

	 	 	4.24	 	 	Payments
	 	 	18	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.25	 	 	Certain Affiliate Transactions
	 	 	19	 
	 

	 	 	4.26	 	 	Environmental Matters
	 	 	19	 
	 

	 	 	4.27	 	 	Construction in Progress
	 	 	20	 
	 

	 	 	4.28	 	 	Computer Software, Etc
	 	 	21	 
	 

	 	 	4.29	 	 	Immigration Act
	 	 	21	 
	 

	 	 	4.30	 	 	Reports, Statements and Copies
	 	 	21	 
	 

	 	 	4.31	 	 	Chief Executive Office
	 	 	21	 
	 

	 	 	4.32	 	 	HIPAA Compliance
	 	 	22	 
	 

	 	 	4.33	 	 	Disclosure
	 	 	22	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	22	 
	 

	 	 	5.1	 	 	Corporate Capacity
	 	 	22	 
	 

	 	 	5.2	 	 	No Conflicts
	 	 	23	 
	 

	 	 	5.3	 	 	Corporate Powers; Consents; Absence of Conflicts With Other
Agreements, Etc
	 	 	23	 
	 

	 	 	5.4	 	 	Financial Statements
	 	 	23	 
	 

	 	 	5.5	 	 	Binding Effect
	 	 	24	 
	 

	 	 	5.6	 	 	Brokers and Finders
	 	 	24	 
	 

	 	 	5.7	 	 	Disclosure
	 	 	24	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	COVENANTS OF SELLER	 	 	24	 
	 

	 	 	6.1	 	 	Access and Information
	 	 	24	 
	 

	 	 	6.2	 	 	Operations
	 	 	25	 
	 

	 	 	6.3	 	 	Negative Covenants
	 	 	26	 
	 

	 	 	6.4	 	 	Governmental Approvals
	 	 	26	 
	 

	 	 	6.5	 	 	Exclusive Agreement
	 	 	27	 
	 

	 	 	6.6	 	 	Closing Conditions
	 	 	27	 
	 

	 	 	6.7	 	 	Employees
	 	 	27	 
	 

	 	 	6.8	 	 	Cooperation
	 	 	27	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	COVENANTS OF BUYER	 	 	27	 
	 

	 	 	7.1	 	 	Governmental Approval
	 	 	27	 
	 

	 	 	7.2	 	 	Survey
	 	 	28	 
	 

	 	 	7.3	 	 	Closing Conditions
	 	 	28	 
	 

	 	 	7.4	 	 	Cooperation
	 	 	28	 
	 

	 	 	7.5	 	 	Employees
	 	 	28	 
	 

	 	 	7.6	 	 	Meetings at Facilities
	 	 	29	 
	 

	 	 	7.7	 	 	Financing Commitment
	 	 	29	 
	 

	 	 	7.8	 	 	Title and Survey Matters
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER	 	 	30	 
	 

	 	 	8.1	 	 	Representations/Warranties
	 	 	30	 
	 

	 	 	8.2	 	 	Opinion of Seller’s Counsel
	 	 	30	 
	 

	 	 	8.3	 	 	Pre-Closing Confirmations
	 	 	31	 
	 

	 	 	8.4	 	 	Action/Proceeding
	 	 	31	 
	 

	 	 	8.5	 	 	No Adverse Change
	 	 	31	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	8.6	 	 	Vesting/Recordation
	 	 	32	 
	 

	 	 	8.7	 	 	Title to Real Estate
	 	 	32	 
	 

	 	 	8.8	 	 	Recent Agreements and Commitments
	 	 	32	 
	 

	 	 	8.9	 	 	Closing Documents
	 	 	32	 
	 

	 	 	8.10	 	 	Casualty
	 	 	32	 
	 

	 	 	8.11	 	 	Consents to Assignments
	 	 	33	 
	 

	 	 	8.12	 	 	Appraisal
	 	 	33	 
	 

	 	 	8.13	 	 	Environmental Survey and Physical Plant Inspections
	 	 	33	 
	 

	 	 	8.14	 	 	Financial Statements
	 	 	33	 
	 

	 	 	8.15	 	 	Due Diligence
	 	 	33	 
	 

	 	 	8.16	 	 	Allocation of Purchase Price
	 	 	34	 
	 

	 	 	8.17	 	 	Financing
	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER	 	 	34	 
	 

	 	 	9.1	 	 	Representations/Warranties
	 	 	34	 
	 

	 	 	9.2	 	 	Opinion of Buyer’s Counsel
	 	 	34	 
	 

	 	 	9.3	 	 	Action/Proceeding
	 	 	35	 
	 

	 	 	9.4	 	 	Pre-Closing Confirmations
	 	 	35	 
	 

	 	 	9.5	 	 	Extraordinary Liabilities/Obligation
	 	 	35	 
	 

	 	 	9.6	 	 	Allocation of Purchase Price
	 	 	35	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	NONCOMPETITION	 	 	36	 
	 

	 	 	10.1	 	 	Restrictions
	 	 	36	 
	 

	 	 	10.2	 	 	Enforcement
	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	ADDITIONAL AGREEMENTS	 	 	36	 
	 

	 	 	11.1	 	 	Termination Prior to Closing
	 	 	36	 
	 

	 	 	11.2	 	 	Post-Closing Access to Information
	 	 	37	 
	 

	 	 	11.3	 	 	Preservation and Access to Patient Records After the Closing
	 	 	37	 
	 

	 	 	11.4	 	 	Tax, Medicare, and Medicaid Effect
	 	 	38	 
	 

	 	 	11.5	 	 	Seller’s Cost Reports
	 	 	38	 
	 

	 	 	11.6	 	 	Employee Matters
	 	 	38	 
	 

	 	 	11.7	 	 	Press Releases
	 	 	39	 
	 

	 	 	11.8	 	 	Non-Transfer of Assets
	 	 	39	 
	 
	 	 	 	 	 	 	 	 	 	 
	12.	 	INDEMNIFICATION	 	 	40	 
	 

	 	 	12.1	 	 	Indemnification by Seller
	 	 	40	 
	 

	 	 	12.2	 	 	Limitations/Seller
	 	 	41	 
	 

	 	 	12.3	 	 	Indemnification by Buyer
	 	 	41	 
	 

	 	 	12.4	 	 	Limitations/Buyer
	 	 	41	 
	 

	 	 	12.5	 	 	Indemnification Threshold
	 	 	42	 
	 

	 	 	12.6	 	 	Indemnification Procedure
	 	 	42	 
	 

	 	 	12.7	 	 	Survival of Representations
	 	 	43	 
	 

	 	 	12.8	 	 	Other Indemnities Included Herein
	 	 	43	 

iii

 

	 	 	 	 	 	 	 	 	 	 	 
	13.

	 	GENERAL
	 	 	 	 	43	 
	 

	 	 	13.1	 	 	Interpretation
	 	 	43	 
	 

	 	 	13.2	 	 	Schedules
	 	 	44	 
	 

	 	 	13.3	 	 	Consented Assignment
	 	 	45	 
	 

	 	 	13.4	 	 	Consents, Approvals and Discretion
	 	 	45	 
	 

	 	 	13.5	 	 	Expenses; Legal Fees and Costs
	 	 	45	 
	 

	 	 	13.6	 	 	Choice of Law; Arbitration
	 	 	46	 
	 

	 	 	13.7	 	 	Benefit Assignment
	 	 	46	 
	 

	 	 	13.8	 	 	Accounting Date
	 	 	46	 
	 

	 	 	13.9	 	 	No Third-Party Beneficiaries
	 	 	46	 
	 

	 	 	13.10	 	 	Waiver of Breach
	 	 	47	 
	 

	 	 	13.11	 	 	Notices
	 	 	47	 
	 

	 	 	13.12	 	 	Severability
	 	 	48	 
	 

	 	 	13.13	 	 	Gender and Number
	 	 	48	 
	 

	 	 	13.14	 	 	Divisions and Headings
	 	 	48	 
	 

	 	 	13.15	 	 	Time of Essence
	 	 	48	 
	 

	 	 	13.16	 	 	Confidentiality
	 	 	48	 
	 

	 	 	13.17	 	 	Entire Agreement/Amendment
	 	 	49	 
	 

	 	 	13.18	 	 	Drafting
	 	 	49	 
	 

	 	 	13.19	 	 	Post Closing Period
	 	 	49	 
	 

	 	 	13.20	 	 	Incorporation by Reference
	 	 	50	 

iv

 

ASSET PURCHASE AGREEMENT

THIS ASSET
PURCHASE AGREEMENT (“Agreement”) is made and entered into
as of February 15, 2005, 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 and RE EVERETT, LLC, RE FROSTBURG,
LLC, RE SALISBURY, LLC, (“Buyer”) AND OP SELINSGROVE, LLC, OP MIFFLIN, LLC, OP HAZELTON, LLC, OP
NEW BLOOMFIELD, LLC,, OP MILLERSBURG, LLC, OP EVERETT, LLC, OP FROSTBURG, LLC AND OP SALISBURY, LLC
(“BUYER’S OPERATORS).

WITNESSETH:

     WHEREAS, Seller owns and operates nursing homes, assisted living facilities and independent
living facilities located throughout Pennsylvania and Maryland, specifically identified on Exhibit
“A” attached hereto, (collectively referred to as the “Facilities”);

     WHEREAS, Seller has determined that it is best able to fulfill its charitable mission by
delivering services to seniors at retirement living communities (independent living, assisted
living and skilled nursing facilities on a single campus) and, therefore, has decided to sell the
Facilities, which Facilities have only one or two components of retirement living services.

     WHEREAS, the board of directors and members of Seller have determined that it is in the best
interest of Seller to sell substantially all assets, real, personal and mixed, tangible and
intangible, owned or leased by Seller and associated with or employed in the operations of the
Facilities, and substantially all other related operations owned, leased or managed by Seller which
are used in or utilized by the Facilities (other than the Excluded Assets as hereinafter defined
and provided) (such transferred assets being referred to as the “Assets” and the Facilities and
such other operations conducted at the Facilities being referred to collectively as the “Business”)
to Buyer;

     WHEREAS, subject to the terms and conditions hereof, Buyer desires to acquire the Assets under
the terms and conditions set forth herein.

     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. SALE OF ASSETS AND ASSUMPTION OF LIABILITIES

1.1 Assets.

          Subject to the terms and conditions of this Agreement, Seller agrees to sell, convey, transfer
and deliver to Buyer and Buyer agrees to purchase as of Closing (as hereinafter defined) all
assets, real, personal and mixed, tangible and intangible owned or used by Seller and associated
with or employed in the operation of the Business, other than the Excluded Assets, which assets
shall include the following (collectively, the “Assets”): (i) fee or leasehold title to the real
property described in Schedule 4.14 hereto, together with all improvements, buildings and
fixtures located thereon or therein (collectively, the “Real Property”); (ii) all major, minor or
other equipment, furniture and furnishings, including those listed on Schedule 4.13 hereto
(“Equipment Depreciation Schedule”); (iii) all supplies and inventory used in the normal course of
business or required by regulation; (iv) all prepaid expenses to the extent useable by Buyer which
are not refundable to Seller; (v) claims of Seller for refunds against third parties and Seller’s
rights to offset amounts against claims made by third parties with respect to Assumed Liabilities,
all as of the Closing Date (as hereinafter defined); (vi) all
resident medical
and personnel records, subject to the conditions described on
Schedule 1.1 (vi) (including, without limitation, all equipment records, medical/administrative
libraries, medical records, documents, catalogs, books, records, files, and current personnel records); (vii) all of the interest of Seller in all
commitments, contracts, leases, and agreements outstanding in respect of the Assets which are
described in Schedule 4.10 and other contracts which constitute routine supply or service
contracts pursuant to which Seller expects to pay or receive less than $5,000 for any one such
contract or $50,000 for all such contracts during its current fiscal year, whether or not listed on
Schedule 4.10, to the extent assignable and provided that such contracts may be terminated by
Seller (and, if assigned, by Buyer) upon no more than 90 days notice (collectively, the “Contracts”),
including all capital leases and operating leases described in Schedule 4.10 and/or any
such operating and capital leases associated with copy and facsimile machines, postage meters, dishwashers,
telephone systems and other equipment listed on Schedule 4.13 hereto, (the “Assumed Capital
Leases”); (viii) all licenses and permits to the extent assignable, held by Seller relating to the
ownership, development and operations of the Assets and the Business (including any pending or
approved governmental approvals regarding the Business); (ix) all logos, names, trade names,
trademarks and service marks (or variations thereof) associated with the Assets and the Business,
all of which are set forth on Schedule 4.7; (“Intellectual Property”) (excluding the names:
Diakon Lutheran Social Ministries, Tressler Lutheran Services, The Lutheran Welfare Service of
Northeastern Pennsylvania, Inc., Lutheran Services Northeast and The Lutheran Home at Topton, Pennsylvania or variations thereof
or any Facilities name that includes the word “Lutheran”); (x) subject to the terms and conditions
imposed by lessors and licensers, all computer software, programs owned by or
licensed to Seller or used in the conduct of the Business, all of which are set forth on
Schedule 4.28 hereto (“Computer Software”); (xi) Seller’s goodwill in the Business,
including the fictitious names; (xii) all telephone numbers associated with the Business; (xiii)
all certificates of need and provider agreements, to the extent transferable; and (xiv) Seller’s
interest in all property, real, personal and mixed, tangible
and intangible, arising or acquired in the ordinary course of Seller’s Business between the
date hereof and Closing which are not otherwise Excluded Assets
subject to Section 1.2 below. Except as set forth on Schedule
4.13, Seller shall convey good title to the Assets and all parts thereof to

2

 

Buyer free and clear of all
liens, pledges, rights of first refusal, options, restrictions, encumbrances, liabilities, claims,
assessments, security interests and defects in title, except as permitted or provided herein to the
contrary.

1.2 Excluded Assets.

          Any provision hereof to the contrary notwithstanding, the following items which are related to
the Assets are not intended by the parties to be a part of the sale and purchase hereunder and are
excluded from the Assets (collectively, the “Excluded Assets”): (i) assets reflected on the
Financial Statements (as hereinafter defined) in the entries entitled: “Cash and cash equivalents,”
“Accounts Receivable (as of the Closing Date) and “Investments”; (ii) pension plan assets; (iii)
rights to settlements and retroactive adjustments, if any, for cost reporting periods ending on or
prior to the Closing Date arising from or against the United States government under the terms of
the Medicare program and against the Commonwealth of Pennsylvania under the Medicaid program and
against Blue Cross and Blue Shield and other third-party payor programs; (iv) all equipment,
inventory and prepaid expenses disposed of or exhausted prior to Closing in the ordinary course of
business; (v) the Excluded Contracts (as hereinafter defined); (vi) all suits, claims, judgments,
and causes of action by and in favor of Seller; (vii) all refunds, rebates or other payments from
the Bureau of Workers’ Compensation attributable to periods prior to Closing; (viii) all prepaid
expenses, taxes, or other refunds and other claims or choses in action of the Seller, other than
identified in Section 1.1(iv) above; (ix) any other refunds due from any person or entity,
including governmental entities not set forth herein, the right to which arose prior to Closing;
(x) all prepayments of other insurance on the Assets pro-rated to the date of the Closing; (xi)
assets encumbered by capital leases not assumed by Buyer and as identified as an Excluded Contract;
(xii) self-insurance trust funds; (xiii) Seller’s corporate minute books and any other records
which Seller, by law, is required to retain in its possession, provided, however, that reasonable
access will be granted to the Buyer, such policies and procedures to be transitioned to Buyer over
the course of the Transition Period described in Section 13.19; (xiv) all personal items belonging
to residents and employees in the Facilities; (xv) donor — restricted assets and future charitable gifts; (xvi)
the assets related to the low income housing units at Frostburg Village (the “Housing Units”);
(xvii) assets with historic value as listed on Schedule 1.2; and
(xviii) such other assets, if any, as are set forth on Schedule 1.2 hereto.

1.3 Assumed Liabilities.

          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; and
(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;
and (v) all liability and payment obligations related to Seller’s commitment or obligation to pay
any person

3

 

or entity serving as guardian of the person of any Facility residents. 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 any party to a Contract that consent to the assignment of such Contract by Seller to Buyer is
required but has not been obtained.

1.4 Excluded Liabilities.

          Except for the Assumed Liabilities, Buyer shall not assume or be obligated to pay nor shall
the Assets be subject to or bound by any liability of Seller, whether fixed or contingent, recorded
or unrecorded, including the following (collectively, the “Excluded Liabilities”): (i) the
accounts payable of Seller; (ii) accrued expenses of Seller; (iii) prorated portions of capital
lease obligations of Seller attributable to periods before the Closing as set forth on Schedule
1.4; (iv) any gain on sale and any recapture that may be recognized under the Medicare,
Medicaid and other third-party payor programs based on the transactions herein contemplated; (v)
long-term debt of Seller (including the current portion thereof); (vi) liabilities associated with
any pension plan, welfare benefit plan, or any other benefit plan or arrangement sponsored by
Seller; (vii) third-party payor settlements and retroactive adjustments, if any, for cost reporting
periods ending on or prior to the Closing Date arising under the Medicare Program, the Medicaid
Program and other third-party payor programs; (viii) liabilities or obligations arising out of any
breach by Seller of any Contract; (ix) the Excluded Contracts; (x) professional liability claims or
other claims for acts or omissions of Seller occurring prior to Closing; (xi) employee claims made
by employees of Seller for acts or omissions on or prior to the Closing; and (xii) Seller’s
liability for the mortgage (the “Mortgage”) related to the Housing Units.

2. FINANCIAL ARRANGEMENTS

2.1 Purchase Price.

          2.1.1.  Subject to the terms and conditions hereof, Buyer agrees to assume at Closing the
Assumed Liabilities and tender to Seller Eighty-Two Million Dollars ($82,000,000.00) (the “Purchase
Price”). The Purchase Price will be paid at Closing as follows:

          (a)
Eight hundred twenty-thousand dollars ($820,000) (the
“Deposit”) shall be paid by Buyer as follows: In
cash within five (5) days following execution of this Agreement, fifty-percent of which or Four Hundred and Ten Thousand Dollars ($410,000.00)
shall be paid in Cash (the “Cash Deposit”) and the other fifty percent or $410,000.00 shall be paid
with or secured promissory note from Tandem Health Care, Inc. to Seller (the “Note Deposit”);
provided, however, that Seller shall return the Note Deposit to Buyer upon Seller’s receipt from
Buyer of evidence that Buyer has obtained binding commitments in the form of debt and equity financing
satisfactory to Buyer as set forth in Section 8.17. The Cash Deposit shall be deposited in an
interest bearing account, and all interest earned on the Cash Deposit shall belong to Buyer. The
Cash Deposit shall be applied against the Purchase Price at Closing. If the Closing does not
occur, the Cash Deposit shall be paid as follows: If Buyer does not close the Transaction with

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Seller because of Buyer’s breach of the Agreement, or if Buyer does not obtain financing sufficient
to close the transaction, then Seller shall retain the Deposit. If the Seller beaches the
Agreement, or if the Closing does not occur for any other reason including, without limitation,
regulatory disapprovals, then the Deposit shall be returned in full, along with any accrued
interest, to the Buyer.

          (b) At the Closing, Buyer shall pay to Seller, by wire transfer, the total amount of the
Purchase Price less the Cash Deposit, which amount is equal to Eighty-One Million Five Hundred
Ninety Thousand Dollars ($81,590,000).

2.2 Allocation of Purchase Price.

          Seller and Buyer shall agree prior to Closing to an allocation (the “Allocation”) of the
Purchase Price among the various classes of Assets and the covenant not to compete set forth in
Section 10 consistent with the financing appraisal received by Buyer in accordance with Section
8.12 hereof, and, with respect to any allocation made to intangible
assets, in accordance with Financial Accounting Standards Board
Statement
141, Appendix A. The parties agree that any tax returns or other tax information they may file
or cause to be filed with any governmental agency shall be prepared and filed consistently with the
Allocation.

2.3 Purchase Price Adjustments.

          In accordance with the terms of this Agreement, the Purchase Price shall be adjusted on the
Closing Date for any amounts which are due and payable by either party to the other on the Closing
Date or which are to become due and payable after the Closing Date which are attributable to
services or goods received or taxes associated with the period prior to Closing, and any amounts
which are paid prior to the Closing Date which are attributable to services or goods to be received
or taxes associated with the period subsequent to Closing, with respect to (i) the Contracts; (ii)
ad valorem taxes, if any, on the Assets; (iii) property taxes on the Assets; and (iv) utilities
(the “Prorations”).

2.4 Prorations.

          The parties agree that the Pennsylvania Department of Public Welfare (“DPW”) Intergovernmental
Transfer Agreement payment (“Payment”) related to the Assets for the period from July 1, 2004 to
June 30, 2005, shall be allocated on the basis of
calendar days prior to and after the Closing as between the Seller and Buyer. The party that
receives such payment shall remit the applicable pro rata share of such payment to the other party
within seventy-two (72) hours of receipt. To the extent not otherwise prorated pursuant to this
Agreement, Buyer and Seller shall prorate as of Closing power and other utility charges, real
estate and personal property lease payments, interest and real estate and personal property taxes,
plus all other income and expenses which are normally prorated upon the sale of assets of a
going concern, provided that once final invoices for such taxes are sent out by the taxing
authorities, Buyer and Seller shall adjust such prorations promptly to reflect the final amount of
taxes due. As to power and utility charges, “final readings” as of Closing will be ordered from the
utilities. Seller shall be entitled to the return of any deposits paid to such utilities or such
deposits may be applied by

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Seller to its payment pursuant to the preceding sentence. If any of the
aforesaid prorations cannot be calculated accurately on Closing (except for taxes which, if
necessary, shall be initially prorated at Closing using the prior year’s invoices with final
adjustment only after final invoices are delivered), then the same shall be calculated and payment
made within 60 days after Closing.

3. CLOSING

3.1 Closing.

          Subject to the satisfaction or waiver by the appropriate party of all the conditions precedent
to Closing specified in Articles 8 and 9 hereof, the consummation of the transactions (the
“Closing”) shall take place at the offices of Buchanan Ingersoll Professional Corporation, One
Oxford Centre, 301 Grant Street, 20th Floor, Pittsburgh, Pennsylvania, 15219, at 8:30 a.m. on or
before March 31, 2005 or at such later or earlier date and/or such other location as the parties
hereto may mutually agree in writing or as otherwise provided in this Agreement (the “Closing
Date”). The Closing shall be effective as of 12:01 a.m.
then prevailing Eastern time on April 1,
2005 (the “Effective Time”).

3.2 Actions of Seller at Closing.

          At the Closing and unless otherwise waived in writing by Buyer, Seller shall deliver to Buyer
the following:

          3.2.1 Deeds containing special or limited warranty of title, duly executed by Seller in
recordable form, conveying to Buyer good and marketable fee title to the Real Property described in
Schedule 4.14, subject only to the liens and encumbrances permitted herein;

          3.2.2 General Bills of Sale and Assignment duly executed by Seller, conveying to Buyer good
and valid title to all tangible and intangible assets which are a part of the Assets and owned by
Seller, which title shall be free and clear of all liens, security interests, pledges, rights of
first refusal, options, restrictions, encumbrances, and
defects in title, except for current taxes not yet due and payable and except as provided or
permitted herein;

          3.2.3 Assignments of Contracts, duly executed by Seller conveying to Buyer Seller’s interest
in the Contracts and in all Assets which are leased by Seller;

          3.2.4 Copy of resolutions duly adopted by the board of directors and, members of Seller
authorizing and approving the performance by Seller of the transactions set forth herein and the
execution and delivery of this Agreement and the documents described herein, certified as true and
of full force as of Closing by an appropriate officer of Seller;

          3.2.5 Certificate of the President of Seller, in his or her official capacity, certifying that
(a) each covenant and agreement of Seller to be performed prior to or as of Closing pursuant to
this Agreement has been performed in all material respects, and (b) as of Closing all of the
respective representations and warranties by or on behalf of Seller contained in this Agreement are
true and correct in all material respects;

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          3.2.6 Certificates of incumbency for the respective officers of Seller executing this
Agreement or making certifications for Closing dated as of Closing;

          3.2.7 Certificate of existence and active status of Seller from the Pennsylvania Secretary of
State, dated no earlier than ten (10) business days prior to Closing;

          3.2.8 A certificate from the Secretary of State of the State of Maryland, no earlier than ten
(10) business days prior to Closing, showing that Seller is qualified to conduct business in
Maryland.

          3.2.9 The opinion of Seller’s counsel as described in and provided by Section 8.2 hereof;

          3.2.10 Closing Statement that has been agreed to by each party;

          3.2.11 A current list of all employees of Seller employed at the Facilities, which shall
include names, titles, rates of pay, vacation days, and any other compensation and benefits
provided to such employees;

          3.2.12 Assignment of the fictitious trade name(s) in a form acceptable to the Pennsylvania
Secretary of State;

          3.2.13 Assignment of the fictitious trade name(s) in a form acceptable to the Maryland
Secretary of State;

          3.2.14 Seller will, on the Closing Date, transfer to Buyer all patient and/or resident funds
presently held by Seller. Buyer agrees to assume custody of, and total responsibility for such
accounts and deal with them in the fiduciary capacity required by
law. 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 the funds then or thereafter shown to have been delivered to Seller as
custodian;

          3.2.15 Wire instructions for payment of the Purchase Price less the Cash Deposit shall be
delivered to Buyer prior to the Closing; and

          3.2.16 The executed Operations Transfer Agreement as set forth at Schedule 13.19.5.

          3.2.17 Such other instruments and documents, including consents to assignments of Contracts,
as Buyer reasonably deems necessary to effect the transactions contemplated hereby.

3.3 Actions of Buyer at Closing.

          At the Closing and unless otherwise waived in writing by Seller, Buyer shall deliver to Seller
the following:

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          3.3.1 The Purchase Price in same-day funds less the Cash Deposit;

          3.3.2 An Assumption Agreement, duly executed by Buyer, assuming the future payment and
performance of the Assumed Liabilities;

          3.3.3 One or more down-dated Title Commitments covering the Real Property as described in and
provided by Section 8.7 hereof;

          3.3.4 Copies of resolutions duly adopted by the board of directors of the sole member of the
Buyer authorizing and approving Buyer’s performance of the transactions set forth herein and the
execution and delivery of this Agreement and the documents described herein, certified as true and
of full force as of Closing by an appropriate officer of Buyer;

          3.3.5 Certificate of the Chairman and CEO of the sole member of the Buyer, in his official
capacity, certifying that (a) each covenant and agreement of Buyer to be performed prior to or as
of Closing pursuant to this Agreement has been performed in all material respects, and (b) as of
Closing all of the respective representations and warranties by or on behalf of Buyer contained in
this Agreement are true and correct in all material respects;

          3.3.6 Certificates of incumbency for the respective officers of Buyer executing this Agreement
or making certifications for Closing dated as of Closing;

          3.3.7 Certificate of existence and active status of Buyer from the Pennsylvania Secretary of
State, dated no earlier than ten (10) days prior to Closing;

          3.3.8 A certificate from the Secretary of State of the Commonwealth of Pennsylvania , dated no
earlier than 10 days prior to Closing, showing that Buyer is qualified to conduct business in
Pennsylvania.

          3.3.9 Closing Statement that has been agreed to by each party;

          3.3.10 Buyer’s opinion letter as referenced in Section 9.2 herein.

          3.3.11 The executed Operations Transfer Agreement as set forth at Schedule 13.19.5.

          3.3.12 Such other instruments and documents as are ordinarily required to effect the
transactions that are necessary and appropriate to consummate the transactions contemplated by this
Agreement.

4. REPRESENTATIONS AND WARRANTIES OF SELLER

          As of the date hereof, Seller represents and warrants to Buyer that the following facts and
circumstances are and, at the Closing Date, will be true and correct:

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4.1 Capacity.

          Seller consists in part of several nonprofit corporations duly organized, validly existing and
of active status under the laws of the Commonwealth of Pennsylvania. Seller has the requisite
power and authority to execute, deliver, and perform its obligations under this Agreement and all
transactions contemplated hereby. Seller has taken all requisite action to authorize the
execution, delivery, and performance of Seller’s obligations hereunder. Seller has the requisite
power and authority to conduct its business as now being conducted. Seller is duly authorized,
qualified and licensed under all applicable laws, regulations, ordinances and orders of
governmental authorities having jurisdiction over the Assets and operations of the Business to own
its properties and conduct its business in the place and manner now conducted.

4.2 Corporate Powers; Consents; Absence of Conflicts With Other Agreements.

          The execution, delivery and performance of this Agreement by Seller and all other agreements
referenced in or ancillary hereto to which Seller is a party or is to become a party at the Closing
and the consummation of the transactions set forth herein by Seller:

          4.2.1 are within Seller’s powers, are not in contravention of law and have been duly
authorized by all necessary action of Seller;

          4.2.2 do not and will not conflict with any provision of Seller’s articles of incorporation
orbylaws;

          4.2.3 do not require any approval or consent of, or filing with, any governmental agency or
authority which is required by law or the regulations of any such agency or authority, except as
disclosed on Schedule 4.2.3;

          4.2.4 except as disclosed on Schedule 4.10, will neither conflict with nor result in any
breach of or constitute a default (or an event which, with or without notice or lapse of time, or
both, would constitute a default) under or contravention of, nor cause the acceleration of the
maturity of the Contracts or the Assumed Liabilities, or the creation of any lien, charge or
encumbrance affecting any of the Assets;

          4.2.5 will not violate any statute, law, rule or regulation of any governmental authority to
which Seller, the Business, or the Assets may be subject if such violation would have a material
adverse affect on the Business or the Assets; and

          4.2.6 will not violate any order, writ, injunction, decree, or judgment of any court or
governmental authority to which Seller, the Business, or the Assets may be subject.

4.3 No Affiliates.

          Seller does not own or control, is not owned or controlled by and is not under common
ownership or control with any other Person and does not have any investments in any other entity,
except as disclosed on Schedule 4.3.

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4.4 Binding Agreement.

          This Agreement and all agreements to which Seller is or will become a party hereunder or
pursuant hereto are and will constitute the valid and legally binding obligation of Seller and are
and will be enforceable against Seller, in accordance with the respective terms hereof or thereof,
except as enforceability may be restricted, limited or delayed by applicable bankruptcy or other
laws affecting creditors’ rights generally and except as enforceability may be subject to general
principles of equity (the “Enforceability Exceptions”).

4.5 Financial Statements.

          4.5.1
Seller has delivered to Buyer copies of the audited consolidated financial statements of Seller as of
December 31, 2003 and 2002, (the “Audited Financial Statements”) which statement also include
information related to the facilities and businesses of Seller that are not being sold to Buyer
pursuant to this Agreement (collectively, with the Interim Financial Statement, as defined in
Section 8.14, the “Financial Statements”).:

          4.5.2
The Audited Financial Statements are true, complete and accurate and fairly present the financial
condition and results of operations of Seller as at the respective dates thereof and for the
periods therein referenced, have been prepared in accordance with GAAP; the Interim Financial
Statements are true, complete and accurate and fairly
present the financial condition and results of operations of Seller as at the respective dates
thereof and for the periods therein referenced, have been prepared in
accordance with GAAP, except for certain estimates that are subject
to adjustment at year end as set forth on Schedule 4.5.2; and the
Financial Statements reflect the consistent application of such accounting principles throughout
the periods involved.

          4.5.3 Since the furnishing of the Financial Statements, no material adverse change has occurred.
The Financial Statements do not contain any untrue statement or omission of a material fact and are
not misleading in any regard. Seller is solvent and no bankruptcy, insolvency or similarly
proceeding is pending against Seller.

4.6 Licenses.

          Seller has all material licenses and permits relating to the ownership of the Assets and the
operation of the Business as are currently necessary and required for such ownership and operation,
as currently conducted. Attached hereto is an accurate list and summary description of and copy
(Schedule 4.6) of all licenses and permits, owned or held by Seller relating to the
ownership or operations of the Facilities, the Business, or the Assets, including the number of
beds currently licensed at each of the Facilities, all of which are now and as of Closing shall be
in good standing and not subject to meritorious challenge, i.e., a challenge that has merit. There
are no provisions in, or agreements relating to, any such licenses or permits which would preclude
or limit Buyer from operating the Facilities and using all the beds of the Facilities as they are
currently classified. As of the Closing Date, there shall be no change in the number of beds
listed on Schedule 4.6 with respect to any of the Facilities, except as otherwise
disclosed.

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4.7 Patents; Trademarks, Etc.

          Seller does not own, or have any interest whatsoever, in Intellectual Property registrations,
applications therefor, licenses (other than normal governmental licenses for operation of the
Business), franchises or other assets of like kind with respect to the Facilities, other than those
listed on Schedule 4.7. Seller has the right to use, free and clear of any royalty or
payment obligations, claims of infringement of other liens of all such items disclosed on
Schedule 4.7.

4.8 Medicare Participation/Accreditation.

          Seller is eligible to receive payment under Titles XVIII and XIX of the Social Security Act
and is a “provider” under existing provider agreements with the Medicare and Medicaid Programs (the
“Programs”) through the applicable intermediaries, the Pennsylvania Department of Public Welfare
(“DPW”) and the Maryland Department of Health and Mental
Hygiene (“DHMH”).To seller’s Knowledge, the Facilities are in
substantial compliance with the conditions of participation in the Programs. There is not pending,
nor to the best Knowledge of Seller threatened, any proceeding or investigation under the Programs
involving the Facilities or any of the Assets. The cost reports of the Facilities for the Programs
for the fiscal years through 2003, have been filed. After the Closing, cost reports of the
Facilities for the Programs for the fiscal year ending 2004 will be filed on
or before their due dates, and Seller shall promptly provide Buyer with copies thereof. The
cost reports of the Facilities were filed when due. Seller hereby agrees to indemnify and hold
Buyer harmless for any Losses (as hereinafter defined) that result from the filing of any such cost
reports. True and correct copies of all such reports for the three (3) most recent fiscal years of
the Facilities have been furnished to Buyer. There are no claims, actions or appeals pending
before DPW and/or DHMH any intermediary or carrier, the Provider Reimbursement Review Board or the
Administrator of the Centers for Medicaid and Medicare Services, with respect to any federal or
state Medicare or Medicaid cost reports or claims filed by Seller on or before the date hereof, or
any disallowances in connection with any audit of such cost reports. Seller shall provide to Buyer
a copy of all cost reports that Seller is required to file after the
date of this Agreement (14) days of Seller’s filing of the same. All cost reports have been and shall be
prepared and shall be timely filed in accordance with and in compliance with all applicable
government rules and regulations. To Seller’s Knowledge, the Facilities are in substantial
compliance with all rules, regulations and requirements of all governmental agencies having
jurisdiction over the Programs in which the Facilities participate.

4.9 Legal and Regulatory Compliance.

          To
seller’s Knowledge, and except as set forth on Schedule 4.9, Seller is in compliance with all applicable
laws of federal, state and local authorities and all applicable rules, regulations and requirements
of all federal, state and local commissions, boards, bureaus and agencies having jurisdiction over
the Assets and of the operations of the Business; and Seller has timely filed all reports, data and
other information required to be filed with such commissions, boards, bureaus and agencies.

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4.10 The Contracts.

          Attached hereto is a true and complete list (Schedule 4.10) of all Contracts.
Notwithstanding the foregoing, all contracts between Seller and any Facilities resident are on one
of the contracts that are attached hereto as a part of Schedule 4.10 and the name of each
resident and the type of standard form contract in effect for such resident are listed on
Schedule 4.10. Other than the contracts between Seller and Facilities residents, Seller
has delivered true and correct copies of all Contracts listed on Schedule 4.10 to Buyer.

          Except as disclosed in Schedule 4.10:

          4.10.1 The Contracts constitute valid and legally binding obligations of Seller and, to
Seller’s Knowledge, are enforceable in accordance with their terms, subject to the Enforceability
Exceptions;

          4.10.2 The copy of each of the Contracts delivered by Seller to Buyer constitutes the entire
agreement by and between the respective parties thereto with respect to the subject matter thereof;

          4.10.3 All material obligations required to have been performed by Seller under the terms of
the Contracts have been performed, and no act or omission has occurred or failed to occur which,
with the giving of notice, the lapse of time, or both, would constitute a default or breach of any
Contract by Seller, upon which a cause of action may be maintained in a court of competent
jurisdiction;

          4.10.4 No other party or parties to any Contract is in material default thereunder, nor has
any event occurred which with the giving of notice or the lapse of time, or both, would constitute
a material default by any other party, with respect to any term or condition of any of the
Contracts;

          4.10.5
Seller has not received notice to the effect that, nor has Seller any Knowledge that,
any party to any of the Contracts intends to cancel, terminate or amend any of the Contracts; and

          4.10.6 Schedule 4.10 accurately identifies all parties to the Contracts and, where
applicable, specifies the relationship of each such party to Seller or any of Seller’s
board of directors, officers, or other affiliates.

4.11 Excluded Contracts.

          Attached hereto is a true and complete list (Schedule 4.11) of all commitments,
contracts, leases and agreements which Seller shall not assign to Buyer and Buyer shall not assume
as of Closing (the “Excluded Contracts”). True and complete copies of the Excluded Contracts have
been made available to Buyer for review. The Contracts listed on Schedule 4.10, other
contracts which constitute routine supply or service contracts pursuant to which Seller expects to
pay or receive less than $5,000 for any one such contract or $50,000 for all such contracts during
its current fiscal year whether or not listed on Schedules 4.10 and which may be

12

 

terminated by
Seller upon not more than 90 days notice, and the Excluded Contracts collectively constitute all commitments,
contracts, leases and agreements to which Seller is a party relating to the Assets and the
Business.

4.12 Inventory and Supplies.

          All items of supplies on hand on the date of this Agreement and to be on hand on the Closing
Date consist and will consist of items of a quality usable or saleable in the ordinary course of
the Business. The quantities of all supplies are, in Seller’s experience, reasonable and justified
under the normal operations of the Facilities; and are and will be as of the Closing Date, in
compliance with all applicable regulations for Facilities.

4.13 Equipment.

          Attached hereto is a depreciation schedule as of November 30, 2004 by Facility and a list of
licensed equipment (Schedule 4.13) which together list all the equipment owned or leased by
Seller constituting any part of the Assets. Since the above-
referenced date, Seller has not sold or otherwise disposed of any item of equipment
constituting any part of the Assets except in the ordinary course of business and, in the case of
any item of equipment having a value in excess of $2,500 per Facility, without comparable
replacement therefor. All of the Assets consisting of equipment are adequately maintained and in
functional condition, except for reasonable wear and tear. Seller has good and valid title to such
equipment (except for equipment leased to Seller as to which Seller has good and valid leasehold
interest). Seller will convey to Buyer at Closing all of Seller’s interest in all equipment owned
or leased by Seller at the Facilities free and clear of any lien or security interest or other
encumbrance other than security interests of lessors, as disclosed on
Schedule 4.13. No person other than Seller owns
any equipment situated on the Real Property, except for items leased
to Seller and items belonging to third party contractors and disclosed in
Schedule 4.13.

4.14 Real Property.

          4.14.1 Seller owns fee or leasehold title to the real property described in Schedule 4.14
hereto, together with all buildings, improvements and fixtures thereon and all appurtenances and
rights thereto (collectively, the “Real Property”), except
as otherwise disclosed on Schedules 4.10 or 4.13 attached hereto. The Real Property will be conveyed to Buyer at
Closing by special or limited warranty deed subject only to the following (collectively, the
“Permitted Encumbrances”): (i) current taxes, that are a lien not yet due and payable on the
Closing Date; (ii) rights of tenants in possession under leases or contracts described in
Schedule 4.10; (iii) easements, conditions, or restrictions of record; (iv) dedicated
streets, roads, and rights of way; (v) all applicable zoning and other laws which do not interfere
with existing use; (vi) matters disclosed on the Survey (as defined in Section 7.2) and (vii) other
matters on the Title Commitment (as hereinafter defined) to which Buyer does not object. The Real
Property comprises all of the real property in the Business.

          4.14.2
Seller has good, indefeasible and insurable fee simple title to
or leasehold interest in each parcel of owned
Real Property, free and clear of any and all mortgages, liens,

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charges, claims, collateral
assignments, leases, attachments, levies, encroachments, rights-of-way, equities, restrictions,
assessments, and all other title matters whatsoever, except those to be paid at the Closing and the
Permitted Encumbrances;

          4.14.3
Seller has not received notice, nor has Knowledge of any violation of any applicable ordinance or other law, order, regulation
or requirement (which violation has not been cured) relating to any part of the Real Property,
including building, zoning, environmental laws and the Americans With Disabilities Act of 1990, as
amended;

          4.14.4
To the Knowledge of Seller, there is not existing and there is not presently
contemplated or proposed, any eminent domain, condemnation or similar action, or zoning action or
proceeding, with respect to any portion of the Real Property;

          4.14.5
To the Knowledge of Seller, there is not present, any contemplated or proposed
moratorium or similar impediment to land development, building construction, or hook-up to usage of
water or sewer or other utility services that could materially adversely affect the use of the Real
Property as it is currently being utilized;

          4.14.6
The Real Property and its operations are in material compliance with all applicable zoning
ordinances, local building codes and ordinances or are operating
under valid zoning variances; the
use and operation of the Facilities as a Facilities is a permitted use under the applicable zoning
code(s); Seller has received no notice that the Facilities is in violation, which violation has not
been cured, of local building codes, ordinances or zoning laws; and
to Seller’s Knowledge, the consummation of the
transactions set forth herein will not result in a violation of any applicable zoning ordinance or
the termination of any applicable zoning variance now existing;

          4.14.7 Seller has not received any notice which currently remains uncured that indicates that
Seller has failed to obtain any license, permit, approval, certificate or other authorizations
required by applicable statutes, laws, ordinances or regulations for the use and occupancy of the
Real Property;

          4.14.8
To Seller’s Knowledge, no part of the Real Property contains or is located within any tideland, wetland, or
marshland;

          4.14.9
There are no parties in possession of the Real Property or any portion thereof as
managers, lessees, tenants, or to the Knowledge of Seller, trespassers;.

          4.14.10
There is access to the Real Property from a dedicated public
right-of-way. To Seller’s Knowledge, no fact or
condition exists which would result in the termination or reduction of the current access to or
from the Real Property to such right-of-way;

          4.14.11
Except as disclosed on Schedule 4.14.10, to the Knowledge of
Seller, propane gas, water, sanitary sewer lines,
storm sewers, electrical, and telephone services currently serving the Real Property are in
reasonable operating condition and are adequate for use of the Real Property for the operation of
the Facilities. Except as may be disclosed on the

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property
surveys, and to seller’s Knowledge the Real Property has access
to utility lines located in a dedicated public right-of-way. There is no, and on the Closing Date,
there will be no, pending or, to the Knowledge of Seller, threatened governmental or third party
proceeding which would impair or result in the termination of such utility availability;

          4.14.12
Seller has not received and has no Knowledge of any notice or request, formal
or informal, from any insurance company or board of fire underwriters (i) identifying any defects
in the Facilities which would adversely affect the insurability of the Facilities, or (ii)
requesting the performance of any work or alteration with respect to the Facilities; and

          4.14.13
Seller has no Knowledge nor has received any notice of any public improvements which
have been ordered to be made and/or which have not hereto fore been
assessed, and, to seller’s Knowledge, there are no
special, general or other assessments pending, threatened against, affecting or to affect the
Facilities.

4.15 Condition of Assets.

          Except
as disclosed on Schedule 4.15, to the Knowledge of Seller, all of the mechanical and electrical systems, heating
and air conditioning systems, plumbing, water and sewer systems, and all other items of mechanical
equipment or appliances and tangible personal property are in good working order, condition, and
repair, normal wear and tear excepted, of sufficient size and capacity to service the Facilities
and comply in all material respects with all applicable ordinances and regulations, and with all
building, zoning, fire, safety, and other codes, laws and orders. Except as disclosed on Schedule
4.15, and to Seller’s Knowledge all buildings and improvements, including the roof and the foundation are and, as of the
Closing Date, will be structurally sound and free from leaks and other defects, normal
wear and tear excepted.

4.16 Brokers and Finders.

          Seller has engaged, and will be solely responsible for all fees, charges, costs and expenses
of any broker or finder which has been used or engaged by Seller, including, but not limited to,
those listed on Schedule 4.16 hereof.

4.17 Insurance.

          Schedule 4.17 sets forth a true and complete list of all insurance policies or
self-insurance funds of any nature whatsoever maintained by Seller as of the date hereof covering
the ownership and operation of the Assets, which reflects the policies’ numbers, terms, identity of
insurers, amounts and coverage. Seller has not as of the date hereof (i) received any written
notice from any such insurance company canceling or materially amending any of said insurance
policies, or (ii) failed to give any required notice or present any claim which is still
outstanding under any of said policies. Seller hereby represents and warrants that during the
years 2000 through 2002 Seller had an occurrence-based professional liability insurance policy in
place with coverage of at least $1,000,000.00 per occurrence and from 2003 to the present Seller
has had a claims-made professional liability insurance policy in place with at least $1,000,000 in
coverage for each year.

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4.18 Employee Benefit Plans.

          Except as set forth on Schedule 4.18, Seller does not currently, nor for the last five
(5) years did Seller sponsor, maintain, or contribute to any “employee benefit plans” as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder (“ERISA”) including, without limitation, any
“multi-employer plan” as defined in Section 3(37) of
ERISA. Neither Seller nor, to the Knowledge of Seller, any other person has engaged in a
transaction with respect to any employee benefit plan listed or required to be listed on
Schedule 4.18 which could subject any such plan or Buyer to a penalty for engaging in a
prohibited transaction under ERISA or an excise tax under subtitle D, Chapter 43 of the Code.
Each of the employee benefit plans listed or required to be listed on
Schedule 4.18, to the
Knowledge of Seller, has been operated and administered in compliance with applicable
law, except for any such failure which would not subject Buyer to any penalty or other liability
and except for any such failure which would not have an adverse effect upon the applicable plan or
any participant therein. Seller has not incurred nor presently expects to incur any liability
under Title IV of ERISA that could result in liability to Buyer. Each employee benefit plan listed
or required to be listed on Schedule 4.18 that is a group health plan within the meaning of
Section 5000(b)(1) of the Code is, to the Knowledge of Seller, in compliance with the
provisions of Section 4980B(f) of the Code, except for any such noncompliance which would not
subject Buyer to any penalty or liability and except for any such failure which would not have a
material adverse effect upon the applicable plan or any participant therein. Except as disclosed
on Schedule 4.18, there is not any pending or, to the Knowledge of Seller, threatened
claim by or on behalf of any employee benefit plan, by any employee covered under any such plan, or
otherwise involving any employee benefit plan (other than routine noncontested claims for
benefits).

4.19 Employees and Employee Relations.

          Schedule 4.19 attached hereto sets forth a complete list (as of the date set forth
therein) of names and positions, of all full-time and part-time employees of Seller employed in the
Business and indicating whether such employee is a part-time or full-time employee. There is no
pending or, to the Knowledge of Seller, threatened employee strike, work stoppage or labor
dispute. Except as otherwise disclosed in Schedule 4.19, no union representation question
exists respecting any employees of Seller, no collective bargaining agreement exists or is
currently being negotiated by Seller, no demand has been made for recognition by a labor
organization by or with respect to any employees of Seller, to the Knowledge of Seller, during
the past three (3) years, no union organizing activities by or with respect to any employees of
Seller are taking place, and none of the employees of Seller are represented by any labor union or
organization. There is no unfair labor practice claim against Seller before the National Labor
Relations Board, or any strike, dispute, slowdown, or stoppage pending or threatened against or
involving the Business. Seller is in compliance with all federal and state laws respecting
employment and employment practices, terms and conditions of employment, and wages and hours.
Seller is not engaged in any unfair labor practices. Except as set forth on Schedule 4.20,
there are no claims or charges pending with any Federal, State, or local agency, or, to the
Knowledge of Seller, threatened claims or charges which relate to Equal Employment Opportunities,
wage and hour

16

 

claims, unemployment compensation claims, workers’ compensation claims or the like
against Seller.

4.20 Litigation or Proceeding.

          Attached hereto is an accurate list and summary description (Schedule 4.20) of all
litigation or proceedings with respect to the Business or the Assets to which Seller is a party,
including charges of discrimination and administrative agency complaints. Except to the extent set
forth on Schedule 4.20; (i) there are no claims, actions, suits, proceedings or
investigations by any governmental agency or regulatory body pending or, to the Knowledge of
Seller, threatened against or affecting Seller; (ii) Seller has not received notice of any
threatened actions, suits, proceedings or investigations against Seller, the Business, or the
Assets, at law or in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality wherever located; (iii) there are
no outstanding judgments against Seller, the Business or the Assets; (iv) there is no labor dispute
affecting the Business; and (v) Seller has no Knowledge of any facts or circumstances which might
reasonably form the basis for any such action, suit or proceeding.

4.21 Condemnation and Assessments.

          Seller has not received notice of, and there are no pending or, to the Knowledge of
Seller, threatened, condemnation, assessment, or similar proceeding affecting or relating to the
Real Property, or any portion thereof, any utilities, sewers, roadways or other public
improvements.

4.22 Taxes.

          Seller has, within the time and in the manner prescribed by law, filed or properly requested
extensions for all federal, state and local tax and other information return and reports (“Tax
Returns”) required to be filed by it and has collected and remitted all payroll taxes required by
federal and state law, and, if required, has paid in full or made adequate provisions for the
payment of all known taxes (including income, franchise, sales and use, excise, severance,
property, gross receipts and payroll taxes, together with any interest, penalties, assessments or
deficiencies, hereinafter referred to collectively as “Taxes” or singularly as a “Tax”), for all
periods ending on or before the date hereof and on or before the Closing Date. All such Tax
Returns are and will be true, correct and complete in all material respects and in compliance in
all material respects with the laws, rules and regulations applicable to such Tax Returns. Seller
is not a party to any action or proceeding by a government authority for the assessment or
collection of Taxes which may adversely affect Seller, the Business, or the Assets or affect future
rights in or use of the Assets, and no such claim against Seller for additional Taxes, penalties or
interest is pending or, to the Seller’s Knowledge, threatened.

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4.23 Post-Balance Sheet Results.

          Except as otherwise disclosed herein (including the Schedules hereto) or as disclosed on
Schedule 4.23 hereto, since December 31, 2003 to the date of this Agreement, there has not
been:

          4.23.1 any material adverse change in the financial condition, assets, liabilities (contingent
or otherwise), income or business of the Business;

          4.23.2 any material damage, destruction or loss (whether or not covered by insurance)
affecting the Assets;

          4.23.3 any increase in the compensation payable or to become payable by Seller or any bonus
payment or arrangement made to or with any employees employed at the Facilities, except in the
ordinary course of business in accordance with existing personnel policies, and Seller has not
employed any additional senior management personnel;

          4.23.4 any labor dispute, law or regulation or any event or condition of any character
materially and adversely affecting the Business;

          4.23.5 any sale, assignment, transfer or disposition of any item of plant, property or
equipment having a value in excess of Two Thousand Five Hundred Dollars $2,500 (other than
supplies), except in the ordinary course of business or with comparable replacement thereof;

          4.23.6 the occurrence of any material liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) except in the ordinary and regular course of the Business;

          4.23.7 the payment, discharge or satisfaction of any liability or obligation (whether
absolute, accrued, contingent or otherwise) other than by payment, discharge or satisfaction in the
ordinary and regular course of the Business;

          4.23.8 any change in any method of accounting or accounting practice;

          4.23.9 any incurring or assumption of indebtedness by Seller for borrowed money, any guarantee
of Seller, directly or indirectly, of indebtedness or others, except in the ordinary course of the
Business; or

          4.23.10 the payment of any amount to any federal, state or local government or authority or
any other third-party for any claim, obligation, liability, loss, damage or expenses, of whatever
kind or nature, incurred or imposed or based upon any provision of federal, state or local law or
regulations or common law pertaining to environmental protection.

4.24 Payments.

     Neither Seller nor anyone acting on behalf of Seller has, directly or indirectly, paid or
delivered or agreed to pay or deliver any fee, commission or other sum of money or item

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of
property, however characterized, to any Person who is in any manner related to the Business that is
illegal under any federal, state or local law.

4.25 Certain Affiliate Transactions.

          Except as disclosed on Schedule 4.25, no officer or member of the board of directors of Seller
(“Interested Person”) and no member of the immediate family of an Interested Person of Seller
(“Family Member”), directly or indirectly, (i) owns any interest in any corporation, partnership,
proprietorship or other entity which sells to or purchases from Seller products or services; (ii)
has any cause of action or claim whatsoever against Seller, the Assets, or the Business; or (iii)
holds a beneficial interest in any contract or agreement relating to the Business to which Seller
is a party or by which Seller may be bound.

4.26 Environmental Matters.

          4.26.1(1) For purposes of this Agreement, the term “Environmental Laws” shall mean any and all
applicable bylaws, statutes, ordinances, rules, regulations or orders of any Government Authority
pertaining to health or the environment, whether now in existence or hereafter enacted and in
effect at the time of closing, in any and all jurisdictions in which the Real Property is located.

               (2) For purposes of this Agreement, the terms “Hazardous Substances” and “release” (or “threatened
release”) have the meanings specified in the federal Comprehensive Environmental Response,
Compensation, and Liability Act (“CERCLA”); and the terms “solid waste” and “disposal” (or
“disposed”) have the meanings specified in the federal Resource Conservation Recovery Act (“RCRA”);
provided, however, that to the extent the applicable laws, ordinances, rules, regulations or common
law of the state in which the Real Property is located establish a meaning for “hazardous
substance,” “release,” “solid waste,” or “disposal” that is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply. Notwithstanding any provision of this Agreement
to the contrary, the term, “Hazardous Substances” shall not include naturally-occurring substances
that are present in the environment as a result of natural processes.

               (3) For purposes of this Agreement, the term “Governmental Authority” includes the United
States, the state, county, city, and political subdivisions in which the Real Property is located
or that exercise jurisdiction over the Real Property, and any agency, court, department,
commission, board, bureau or instrumentality or any of them that exercises jurisdiction over the
Real Property.

               (4) For purposes of this Agreement, the term “Environmental Condition” shall mean (a) any
release or threatened release of a Hazardous Substance from, in, on, under, or onto the Real
Property in violation of any Environmental Law; (b) any releases or threatened release of a
Hazardous Substance from the Real Property in, on, under, or onto any other property that results
in damages, loss, cost, expenses, or other liability; (c) any violation of any Environmental Law
relating to the manufacture, processing, distribution, transportation, storage, use, discharge,
handling, emission, or disposal of Hazardous Substances by or in

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connection with the Business; or
(d) any
release or threatened release of a Hazardous Substance from, in, on, under, or onto the Real
Property resulting in liability to non-governmental third parties in tort.

          4.26.2
Seller represents that, to the Knowledge of Seller:

               (1) The Real Property is in substantial compliance with all applicable Environmental Laws,
there are not any Environmental Conditions existing on or resulting from Seller’s operation of the
Real Property that may give rise to any on-site or off-site remedial
obligations under the Environmental Laws.

               (2) The
Real Property is not subject to any existing, pending or, to the Knowledge of
Seller, threatened action, suit, investigation, inquiry or proceeding by or before any Governmental
Authority under any Environmental Law.

               (3) All notices, permits, licenses or similar authorizations, if any, required to be obtained
or filed by Seller under any Environmental Law in connection with the Real Property, including
those relating to the treatment, storage, disposal or release of a Hazardous Substance or solid
waste into the environment, have been duly obtained or filed and Seller is in compliance with the
terms and conditions of all such notices, permits, licenses and similar authorizations.

               (4) There is no pending claim against Seller or known by Seller against any other person or
entity of any nongovernmental third-party in tort in connection with any release or threatened
release of any Hazardous Substances, solid wastes, petroleum, petroleum products, asbestos, or
poly-chlorinated biphenyls (“PCBs”) into the environment as a result of or with respect to the Real
Property.

               (5) Seller has not: (a) entered into or been subject to any consent decree, compliance order,
or administrative order with respect to any Environmental Conditions at the Real Property or any
facilities or operations thereon; (b) received notice under the citizen suit provision of any
Environmental Law in connection with the Real Property or any facilities or operations thereon; (c)
received any request for information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim or suit with respect to any Environmental Condition relating to the
Real Property or any facilities or operations thereon; or (d) been subject to or threatened with
any governmental or citizen action with respect to any Environmental Conditions at the Real
Property or any facilities or operations thereon; and Seller has no reasonable basis to believe
that any of the above will be asserted.

4.27 Construction in Progress.

          Schedule 4.27 contains a list of all material construction in progress on the Real
Property and any contracts related thereto (the “Projects”), indicating the status of payment for
and completion of each of the Projects as of the date hereof. All material approvals, consents,
permits and licenses from all applicable local, state and federal authorities for the Projects have

20

 

been obtained and are in full force and effect. Since the
commencement date for each Project there have been no material change orders not disclosed in
Schedule 4.27.

4.28 Computer Software, Etc.

          Except as disclosed on Schedule 4.28, Seller has the right to use, free and clear of any
royalty or other payment obligations or claims of infringement, all computer software, programs and
similar systems owned by or licensed to Seller or used in the conduct of the Business; except for
shrink wrap licensed or similar store bought software, and as
otherwise listed in Schedule
4.28 and all computer software programs and similar systems which are used by or utilized in
connection with the Business, along with the name of the owner or licensor thereof where known by
Seller; and Seller is not in conflict with or in violation or infringement of, nor has Seller
received any notice of any conflict with or violation or infringement of or any claims conflict
with, any asserted rights of any other Person with respect to any intellectual property or any
computer software, programs or similar systems, and to the Knowledge of Seller, no other
Person is in conflict with or in violation or infringement of any such items of intellectual
property or computer software, programs or similar systems.

4.29 Immigration Act.

          Seller is in compliance with the terms and provisions of the Immigration Reform and Control
Act of 1986, as amended (“IRCA”). For each employee (as defined in 8 C.F.R. 274a.l(f)) of Seller
for whom compliance with the IRCA by Seller is required, Seller has obtained and retained a
complete and true copy of each such employee’s Form I-9 (Employment Eligibility Verification Form)
and all other records or documents prepared, procured or retained by Seller pursuant to the
Immigration Act. Seller has not been cited, fined, served with a Notice of Intent to Fine or with
a Cease and Desist Order, nor has any action or administrative proceeding been initiated or, to the
Knowledge of Seller, threatened against Seller, by reasons of any actual or alleged failure to
comply with the IRCA.

4.30 Reports, Statements and Copies.

          All representations and warranties made herein or in any certificate or other document
delivered in connection herein, are true and correct in all material respects and do not omit to
state any material fact or circumstance necessary to make the statements contained therein, in
light of the circumstances, under which they are made, not misleading. All other reports,
statements, certificates and other data furnished by or on behalf of Seller to Buyer in connection
with this Agreement or the transactions contemplated hereunder are true and correct in all material
respects, and the copies of all agreements, instruments, and other documents provided to Buyer are
true, correct, and complete copies and include all amendments and modifications thereof.

4.31 Chief Executive Office.

          Seller maintains its chief executive office and its books and records at 798 Hausman Road,
Suite 300, Allentown, Pennsylvania 18104 (“Chief Executive Office”). Seller

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does not conduct any
of its business or operations related to the Facilities other than at the Facilities, its Chief Executive Office and its
office location at 960 Century Drive, Mechanicsburg, Pennsylvania 17055.

4.32 HIPAA Compliance.

          Seller hereby represents and warrants and covenants that it has been and is currently in
compliance, and is presently taking and will continue to take all actions necessary to assure that
it shall, on or before each applicable compliance date and continuously thereafter, comply with
Public Law 104-191 of August 21, 1996, known as the Health Insurance Portability and Accountability
Act of 1996 (“HIPAA) and its implementing regulations, including without limitation, the Standards
for Electronic Transaction and Code Set (45 CFR Parts 160 and 162), the Standards for Privacy of
Individually Identifiable Health Information (45 CFR Parts 160 and 164), the Security Standards for
the Protection of Electronic Protected Health Information (45 CFR Parts 160 and 164) and such other
regulations that may, from time to time, be promulgated thereunder. Seller has not received any
notice from any Governmental Authority that such Governmental Authority has imposed or intends to
impose any enforcement actions, fines or penalties for any failure or alleged failure to comply
with HIPAA or its implementing regulations.

4.33
DISCLOSURE.

          No
representation or warranty by Seller contained in this Agreement and
no statement contained in any of the Schedules and Exhibits to which
Seller is a party or any other certificate or instrument furnished or
to be furnished pursuant to this Agreement or in connection with the
Transactions contemplated in this Agreement contains or will contain
any untrue statement of a material fact, or omits or will omit to
state a material fact, necessary in order to make any of the
statements not misleading, or necessary in order to provide Buyer
with all pertinent information regarding the Business, Assets or
Facilities.

5. REPRESENTATIONS AND WARRANTIES OF BUYER

          As of the date hereof and as of the Closing Date, Buyer represents and warrants to Seller that
the following facts and circumstances are and, except as contemplated hereby, at the Closing Date
will be true and correct:

5.1 Corporate Capacity.

          Each Buyer is a limited liability corporation duly organized and validly existing, of active
status under the laws of the Commonwealth of Pennsylvania or the State of Maryland, as applicable.
Buyer has the requisite power and authority to enter into this Agreement, perform its obligations
hereunder and to conduct its businesses as now being conducted. Buyer has taken all requisite
action to authorize the execution, delivery, and performance of Buyer’s obligations hereunder.
Buyer has all requisite power and authority to conduct its business as now being conducted and as
to be conducted after the Closing.

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5.2 No Conflicts.

          As of the Closing Date and the date hereof, there are no actions, proceedings or
investigations pending or threatened, that question any of the transactions contemplated by this
Agreement or the validity of any of the Buyer Transaction
Documents (as defined in Section 5.3, below) or which, if adversely determined, could have a
material adverse effect on Buyer’s ability to enter into or perform its obligations under the Buyer
Transaction Documents.

5.3 Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc.

          The execution, delivery and performance of this Agreement by Buyer and all other agreements
referenced herein to which Buyer is to become a party at the Closing and the consummation of the
transactions set forth herein by Buyer, (collectively, the “Buyer Transaction Documents”):

          5.3.1 are within Buyer’s powers, are not in contravention of the law, and have been duly
authorized by all necessary action of Buyer;

          5.3.2 do not, and the execution and delivery by Buyer of the other Buyer Transaction Documents
and the performance by Buyer of all of the Buyer Transaction Documents will not (in each case, with
or without the passage of time or the giving of notice), directly or indirectly violate or conflict
with, result in a breach of, or constitute a default under, any governmental or third party
authorization or contract to which Buyer is a party that could affect Buyer’s ability to perform
its obligations hereunder;

          5.3.3 do not and will not conflict with any provision of Buyer’s articles of incorporation or
bylaws;

          5.3.4
do not require any approval or consent of, or filing with, any
governmental agency or authority bearing on the validity of this
Agreement which is required by law or the regulations of any such
agency or authority, except as disclosed on Schedule 5.3.4;

          5.3.5 will neither conflict with nor result in any breach of, or constitute a default under
(or an event which, with or without notice of lapse of time, or both would constitute a default) or
contravention of, nor cause the creation of any lien under, any indenture, agreement, lease,
instrument or understanding to which Buyer is a party or by which Buyer is bound;

          5.3.6 will not violate any statute, law, rule, regulation, order or judgment of any
governmental authority to which Buyer may be subject; or

          5.3.7 will not violate any order, writ, injunction, decree or judgment of any court or
governmental authority to which Buyer may be subject.

5.4 Financial Statements.

          5.4.1 Buyer has delivered to Seller copies of the consolidated audited financial statements of
Buyer as of December 31, 2003 (“Buyer’s Audited Financial Statements”) and will

23

 

provide Seller with
the most recent internal financial statements as
they become available during the normal course of business, up to within 30 days of the
Closing Date (“Buyer’s Interim Financial Statements”)

          5.4.2 Buyer’s Audited Financial Statements are true, complete and accurate and fairly present
the financial condition and results of operations of Buyer as at the respective dates thereof and
for the periods therein referenced, have been prepared in accordance with GAAP; Buyer’s Interim
Financial Statements are true, complete and accurate and fairly present the financial condition and
results of operations of Buyer as at the respective dates thereof and for the periods therein
referenced, have been prepared in accordance with GAAP; and the Financial Statements reflect the
consistent application of such accounting principles throughout the periods involved.

          5.4.3 Since the furnishing of the Financial Statements, no material adverse change has
occurred. The Financial Statements do not contain any untrue statement or omission of a material
fact and are not misleading in any regard. Buyer is solvent and no bankruptcy, insolvency or
similarly proceeding is pending against Buyer.

5.5 Binding Effect.

          This Agreement and all other agreements to which Buyer is or will become a party hereunder or
pursuant hereto are and will constitute the valid and legally binding obligation of Buyer and are
and will be enforceable against Buyer in accordance with the respective terms hereof and thereof,
subject to the Enforceability Exceptions.

5.6 Brokers and Finders.

          Buyer has engaged, and will be solely responsible for all fees, charges, costs and expenses
of, any broker or finder which has been used or engaged by Buyer, including, but not limited to,
those listed on Schedule 5.4 hereof.

5.7
Disclosure.

          
No representation or warranty by Buyer contained in this Agreement
and no statement contained in any of the schedules and Exhibits to
which seller is a party or any other certificate or instrument
furnished or to be furnished pursuant to this Agreement or in
connection with the Transactions contemplated in this Agreement
contains or will contain any untrue statement of material fact, or
omits or will omit to state a material fact, necessary in order to
make any of the statements not misleading, or necessary in order to
provide Buyer with all pertinent information regarding the Business,
Assets and Facilities.

6. COVENANTS OF SELLER

6.1 Access and Information.

          6.1.1 Between the date of this Agreement and the Closing Date, Seller shall (during business hours
or at such times to which Seller consents, which consent shall not be

24

 

unreasonably withheld) afford to the officers and authorized representatives and agents of
Buyer reasonable access to Seller’s directors and officers, and the right to inspect the plants,
properties, books, records, and documents of Seller (and to make copies thereof), and will furnish
for inspection and copying by Buyer such additional financial and operating data and other
information in Seller’s possession regarding the Business and the Assets as Buyer may from time to
time request.

          6.1.2 Between the date of the Seller/Buyer Announcement, as described in Paragraph 7.6, and
the Closing Date, Seller shall (during business hours or at such times to which Seller consents,
which consent shall not be unreasonably withheld) afford to the officers and authorized
representatives and agents of Buyer reasonable access to Seller’s employees (in the case of
employees, with the approval of Seller, which will not be unreasonably withheld), residents,
contractors, agents, payors and intermediaries. Seller shall permit Buyer access to Seller’s
accountants, auditors, and suppliers for consultation or verification of any information obtained
by Buyer and shall use its best efforts to cause such persons or entities to cooperate with Buyer
in such consultation and verification. In case of contact between Buyer and Seller’s accountants
or auditors, Buyer shall be responsible for all professional fees incurred in connection
therewith. In the exercise of its rights under this section, Buyer shall not unreasonably
interfere with the operations of Seller, the conduct of the Business, or the relationships with
Seller’s residents or suppliers.

6.2 Operations.

          From the date hereof until the Closing Date, Seller will:

          6.2.1 carry on the Business in substantially the same manner as Seller has heretofore and not
make any material change in operations, finance, accounting policies, or real or personal property
of the Business;

          6.2.2 maintain the Assets, and keep all Real Property and equipment in as good working order
and condition as at present, ordinary wear and tear excepted;

          6.2.3 perform all of Seller’s obligations under the Contracts and all agreements relating to
or affecting the Assets or the Business;

          6.2.4 take all actions necessary and appropriate to render title to the Assets free and clear
of all liens, security agreements, claims, charges and encumbrances (except for the Assumed
Liabilities and Permitted Encumbrances);

          6.2.5 keep in full force and effect present insurance policies or other
comparable
insurance;

          6.2.6 maintain and preserve Seller’s business organization intact and maintain Seller’s
relationships with physicians, employees, residents, payors, suppliers, customers and others
having business relations with Seller and take such actions as are necessary to cause the smooth,
efficient and successful transition of the Business and the Assets to Buyer as of Closing;

25

 

          6.2.7 permit, and allow reasonable access by Buyer, after the Seller/Buyer Announcement as
described in Paragraph 11.7 has been made, to make offers of post-Closing employment to all of
Seller’s personnel employed at the Facilities, which personnel shall be allowed to accept such
offers without penalty, competing offer or interference;

          6.2.8 keep in full force and effect all certificates of need, licenses, provider numbers,
permits, certificates, qualifications, authorizations, and registrations that are required for
Seller to carry on its business in accordance with this section; and

          6.2.9 consistent with past practices, Seller will make all normal and customary repairs to the
Assets or the facilities comprising the Business.

6.3 Negative Covenants.

          From the date hereof to the Closing Date, with respect to the Business and the Assets Seller
will not, without the prior written consent of Buyer:

          6.3.1 amend or terminate any of the Contracts, enter into any contract or commitment, or incur
or agree to incur any liability, except in the ordinary course of the Business and in no event
greater than $2,500 per item per Facility or which is not terminable without cause or penalty
within sixty (60) days following Closing;

          6.3.2 except as disclosed on Schedule 4.23 increase compensation payable or to become payable
or make a bonus payment to or otherwise enter into one or more bonus agreements with any employee,
except in the ordinary course of the Business in accordance with existing personnel policies and
employment contracts;

          6.3.3 create or assume any new mortgage, security interest or other lien or encumbrance upon
any of the Assets, whether now owned or hereafter acquired;

          6.3.4 sell, assign or otherwise transfer or dispose of any property, plant or equipment (other
than supplies), except in the normal course of business, and if valued in excess of $2,500, without
comparable replacement thereof; or

          6.3.5 take any action outside the ordinary course of business.

6.4 Governmental Approvals.

Between the date of this Agreement and the Closing Date, Seller (a) will use its best efforts to
obtain, as promptly as reasonably practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Seller to consummate the transactions set forth
herein including, without limitation, obtaining a Consent Order from the Pennsylvania Court of
Common Pleas of Lehigh County, Orphans’ Court Division (the “Orphans’ Court Order”) and including
preparing and filing a Pre-Merger Notification Report in compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the “HSR Act”) and, (b) will provide information and communications in Seller’s
possession to governmental and regulatory authorities as Buyer or

26

 

such authorities may reasonably request, and (c) will cooperate with Buyer in obtaining, as
Soon as practicable, all approvals, authorizations and clearances of governmental and regulatory
authorities required of Seller or Buyer to consummate the
transactions set forth herein.

6.5 Exclusive Agreement.

          Seller is not party to any agreement to sell any or all of the Assets, Business or Facilities
to any party other than Buyer. In the event any such agreement is entered into after the date
hereof, Seller shall ensure that such agreement is expressly subject to Buyer’s rights under this
Agreement.

6.6 Closing Conditions.

          Between the date of this Agreement and the Closing Date, Seller will use its best efforts to
cause the conditions specified in Articles 8 and 9 hereof over which Seller has control to be
satisfied as soon as reasonably practicable, but in all events before the Closing Date.

6.7 Employees.

          Seller shall use its reasonable best efforts to cause its employees and agents employed
at Facilities to make available their employment services to Buyer, and Buyer shall hire and
continue to employ such employees of Seller as shall be necessary to relieve Buyer of any liability
or responsibility (including, but not limited to the responsibility to provide notice of the
contemplated transactions) under the WARN Act or any similar federal, state or local law. However,
nothing contained in this Agreement shall constitute a guaranty of continued employment of any kind
for any current or former employee of Seller, whether or not such employee is ultimately hired by
Buyer.

6.8 Cooperation.

          Prior to the Closing Date, Seller will not take any action that would cause the
conditions upon the obligation of the parties to effect the transactions contemplated hereby not
to be fulfilled, including taking or causing to be taken any action that would cause the
representations and warranties made by Seller herein not to be true, correct, and complete as of
the Closing Date. Further, Seller covenants to cooperate with Buyer in the provision of documents,
affidavits, and other data, in order for Buyer to obtain any consents and approvals necessary to
consummate this Transaction, including actions required by Seller in Section 7.8 herein.

7. COVENANTS OF BUYER

7.1 Governmental Approval.

          Between the date of this Agreement and the Closing Date, Buyer will (a) use its commercially
reasonable best efforts to obtain, as promptly as practicable, all approvals, authorizations and
clearances of governmental and regulatory authorities required of Buyer to consummate the
transactions contemplated hereby and including preparing and filing a

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Pre-Merger Notification Report in compliance with the HSR Act, (b) use its commercially reasonable
efforts to cooperate with Seller for Seller to obtain full and complete releases of Seller from all
the Contracts, and Assumed Liabilities and to provide such other information and communications to
governmental and regulatory authorities as Seller or such authorities may reasonably request, and
(c) cooperate with Seller in obtaining, as soon as practicable, all approvals, authorizations and
clearances of governmental and regulatory authorities required of Seller to consummate the
transactions contemplated hereby, including but not limited to the Orphans’ Court Order.

7.2 Survey.

          Buyer, at the sole cost and expense of Buyer, shall obtain an as-built survey (the
“Survey”) of the Real Property acceptable to the Title Company for purposes of deleting standard
survey exceptions as provided above and reflecting all improvements visible on the grounds and all
easements, rights of way, means of ingress or egress, encroachments and drainage ditches, whether
abutting or interior, of record or on the grounds. The Survey shall reflect whether and to the
extent any portion of the Real Property lies within the 100-year flood hazardous area as defined
by applicable state or federal guidelines and shall be approved by Buyer, which approval shall not
be unreasonably withheld. The Survey shall be certified to the Title Company, Buyer’s lender,
Buyer and Seller in a form reasonably satisfactory to each.

7.3 Closing Conditions.

          Between the date of this Agreement and the Closing Date, Buyer will use its reasonable
best efforts to cause the conditions specified in Articles 8 and 9 hereof over which Buyer has
control to be satisfied as soon as reasonably practicable, but in all events before the Closing
Date.

7.4 Cooperation.

          Prior to the Closing Date, Buyer will not take any action that would Cause the
conditions upon the obligation of the parties to effect the transactions contemplated hereby not
to be fulfilled, including taking or causing to be taken any action that would cause the
representations and warranties made by Buyer herein not to be true, correct, and complete as of
the Closing Date.

7.5 Employees.

          Buyer will offer employment to substantially all employees of Seller who satisfy
Buyer’s reasonable requirements for employment positions, permitting them to continue in their
current or substantially similar positions, at wages and benefits substantially equivalent to
their current wages and benefits. In addition, Buyer will give due consideration to offering
employment to the employees of the food service, housekeeping and laundry contractors if and when
Buyer elects to provide such services internally.

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7.6 Meetings at Facilities.

          Buyer agrees that an executive of Buyer shall meet, together with the President of
Seller, at each of the Facilities on a mutually agreed upon date or dates following the
Seller/Buyer Announcement (as defined in Section 11.7 herein), for purposes of introducing Seller’s
staff, employees, and residents to Buyer.

7.7 Financing Commitment.

          Buyer has provided to Seller a copy of its financing term sheet or commitment from its
Lender(s) on or before the execution of this Agreement. Buyer shall use its commercially best
efforts to obtain binding commitments for its debt and equity financing on or before March
14, 2005.

7.8 Title and Survey Matters.

          7.8.1 Title Commitment. Buyer, at its cost and expense, shall obtain and cause a
copy to be furnished to Seller of a current title commitment (the “Title Commitment”) issued by a
title insurance company selected by Buyer and reasonably acceptable to Seller (the “Title
Company”), together with legible copies of all exceptions to title referenced therein. The Title
Commitment shall set forth the state of title to the Real Property, together with all exceptions or
conditions to such title, including all easements, restrictions, rights-of-way, covenants,
reservations, and all other encumbrances affecting the Real Property which would appear in an
owner’s or leasehold title policy, if issued. The Title Commitment shall contain the express
commitment of the Title Company to issue one or more owners’ or leasehold title policies
(collectively, the “Title Policy”) to Buyer in an amount equal to the amount of purchase price as
allocated per Section 2.2 of the Real Property insuring such title to the Real Property as is
specified in the Title Commitment. Buyer will have twenty (20) days from the date Buyer receives
the Title Commitment and Survey (as defined below) within which to cause the Title Commitment and
the Survey to be examined and to notify Seller in writing of any material objections to Seller’s
title reflected by the Title Commitment and the Survey (“Buyer’s Objection”). Seller shall have
twenty (20) days from receipt of Buyer’s written objections to cure the material defects set forth
therein, and to provide Buyer with written notice of Seller’s action to remedy such objection.
(“Seller’s Response”). If Seller does not timely cure and provide such notice, Buyer may, within
five days thereafter either (a) accept title to the Real Property as provided, or (b) terminate the
Agreement in written notice to Seller. If Buyer does not deliver to Seller written notice of
termination within such day five day period, Buyer will be deemed to have accepted title to the
Real Property as shown in the Title Commitment without reduction of Purchase Price. At Closing, an
authorized agent of the Title Company shall down-date and initial the Title Commitment to reflect
the condition of title of the Real Property must be consistent with the Title Commitment as
modified to delete Buyer’s objections therefrom.

          7.8.2 Title Policy. Within thirty (30) days after Closing, Buyer, at its cost and
expense, shall cause the Title Policy to be furnished to Buyer. The Title Policy shall be issued in
the amount of amount of purchase price as allocated per Section 2.2 of the Real Property and shall
insure good and marketable fee simple title to the fee simple Real Property. The Title

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Policy may contain the Permitted Encumbrances, but shall contain no additional exceptions to title
to the Real Property other than the standard exceptions contained in ALTA owners policy prescribed
for use in the State of Maryland and the Commonwealth of Pennsylvania, with: (a) the Standard
Exception as to taxes limited to taxes for the current and subsequent years “not yet due and
payable,” (b) the Standard Exception as to unrecorded easements, visible and apparent easements,
or other matters which would be disclosed by an inspection of the Real Property deleted; (c) the
Standard Exception as to mechanics’, materialmen’s, or similar liens or other matters relating to
the completion of construction and payment of bills with respect thereto deleted; (d) the Standard
Exception as to areas, boundaries, discrepancies, encroachments, and other matters which would be
disclosed by a survey of the Real Property deleted (subject to Buyer timely obtaining a survey);
(e) zoning endorsement; (f) comprehensive endorsement (ALTA); (g) contiguity endorsements; (h)
access endorsement; and (i) Environmental Protection Agency endorsements.

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

          The obligations of Buyer hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions unless waived in writing by Buyer. The failure of any of the
following conditions to be met (through no fault of the Buyer) shall cause this Agreement to be
terminated with no further obligation of the parties one to the other except for Sections 2.1(a),
13.5 and 13.16 herein:

8.1 Representations/Warranties.

          The representations and warranties of Seller contained in this Agreement shall be true when
made and on and as of the Closing Date as though such representations and warranties had been made
on and as of such Closing Date; each and all of the terms, covenants and conditions of this
Agreement to be complied with or performed by Seller on or before the Closing Date pursuant to the
terms hereof shall have been duly complied with and performed; and Buyer shall have received a
certificate to the foregoing effect from both the President of Seller, in his or her official
capacity.

8.2 Opinion of Seller’s Counsel.

          Buyer shall have received an opinion from counsel to Seller dated as of the Closing Date
and addressed to Buyer, in form and substance reasonably satisfactory to Buyer to the effect that:
(i) Each Seller is a nonprofit corporation, duly organized, validly existing and of active status
under the laws of the Commonwealth of Pennsylvania; (ii) Each Seller has full power and authority
to make, execute, deliver and perform this Agreement and each of the agreements contemplated
hereby, and all corporate or other proceedings required to be taken by Seller to authorize the
execution, delivery and performance of this Agreement and each of the agreements contemplated
hereby by Seller and to sell, convey, assign, transfer and deliver the Assets to Buyer as herein
contemplated have all been duly and properly taken; (iii) this Agreement and all other agreements,
deeds, assignments, other instruments and other agreements of conveyance and transfer to be
executed and delivered hereunder by Seller constitute the valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective

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terms, except for the Enforceability Exceptions; and (iv) no ungiven notice to, or
unobtained consent, authorization, approval or order of any court or governmental agency or body
required to be obtained by Seller is required for the consummation of the transactions set forth
herein. Such opinion shall include any other matters incident to the matters herein contemplated as
Buyer or Buyer’s counsel may reasonably request. In rendering such opinion, such counsel may rely
upon certificates of governmental officials, may place reasonable reliance upon certificates
of officers of Seller, and may rely on the opinions or advice of other professionals and advisors
employed by Seller.

8.3 Pre-Closing Confirmations.

          Buyer shall have obtained documentation or other evidence reasonably
satisfactory to Buyer confirming the following:

          8.3.1 Seller hereby covenants to provide the Pennsylvania Departments of Health and Public
Welfare, the Maryland Health Care Commission, the Maryland Department of Health and Mental Hygiene
(“DHMH”), the Maryland Department of Aging and the Centers for Medicaid and Medicare Services with
written notice of the Seller’s intent to transfer ownership and operation of the Facilities to
Buyer within the notification periods as prescribed by applicable law. Buyer also shall have
received no indication that any licenses, permits, accreditation, certifications, consents and
other authorizations necessary for the continued operation of the Facilities as now operated,
including the continuation of presently existing reimbursement arrangements with Medicaid and
Medicare, will not be issued.

          8.3.2 Expiration of all waiting periods under the HSR Act if applicable.

          8.3.3 Ability of Seller to transfer title to the Assets free and clear of all encumbrances as
required hereby.

          8.3.4 A Certificate of Need or approval for Certificates of Need, therefor, if applicable.

8.4 Action/Proceeding.

          No action or proceeding before a court or any other governmental agency or body shall
have been instituted or threatened to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions set forth herein, and no
governmental agency or body shall have taken any other action or made any request of Seller or
Buyer as a result of which Buyer reasonably and in good faith deems it inadvisable to proceed with
the transactions hereunder, and there shall not be in effect any order restraining, enjoining, or
otherwise preventing consummation of the transactions set forth herein.

8.5 No Adverse Change.

          No material adverse change in the results of operations, financial condition or businesses of
the Business (or prospects for the continuation thereof) shall have occurred subsequent to the
date hereof, and Seller shall not have suffered any material change, loss or

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damage to the Assets, whether or not covered by insurance. For purposes of this Agreement,
Material Adverse Change shall be defined as a material adverse change in the physical condition,
business prospects or affairs of the Facilities or any material physical damage or loss to the
Assets (whether or not such damage or loss is covered by insurance); provided, that “Material
Adverse Change” shall not include adverse changes to the results of operations of the Facilities
resulting primarily from general market conditions relating to the delivery of retirement and
health care services or the economy generally, or from the public announcements and the general
publicity relating to the transactions contemplated by this Agreement (including, without
limitation: (x) actions by residents or competitors or (y) loss of personnel or residents), other
than a breach of this Agreement or the Related Documents.

8.6 Vesting/Recordation.

          Seller shall have furnished to Buyer, in form and substance reasonably acceptable to Buyer
and approved by Buyer’s counsel, deeds, bills of sale, assignments or other instruments of
transfer and consents and waivers by others, necessary or appropriate to transfer to and
effectively vest in Buyer all of Seller’s right, title and interest in and to the Assets, in
proper statutory form for recording if such recording is necessary or appropriate.

8.7 Title to Real Estate.

          Buyer shall have received the Title Commitment and any objections by Buyer to exceptions
contained therein (other than Permitted Encumbrances) shall have been cured or waived as provided
herein.

8.8 Recent Agreements and Commitments.

          Seller shall have delivered to Buyer an accurate list and substantially complete
description (Schedule 8.8) of all agreements relating to the Business or the Assets
entered into by Seller between the date hereof and the Closing Date, which agreements shall be
included in the term “Contracts” for the purposes of this Agreement and shall be assumed by Buyer
at Closing, except for such agreements that Buyer believes to be illegal or commercially
unreasonable or outside the ordinary course of the Business. Furthermore, Seller shall have
updated all Schedules and delivered the same to Buyer at least ten (10) days before the Closing
Date.

8.9 Closing Documents.

          Seller shall have executed and delivered to Buyer all of the Closing Documents required to be
executed by Seller pursuant to any term or provision of this Agreement, each of which shall be in
form and substance reasonably acceptable to Buyer.

8.10 Casualty.

          If before the Closing any material part of the Assets is damaged, lost, or destroyed
(whether by fire, theft, vandalism, or other cause or casualty other than the act or omission of
Buyer, its agents, or representatives) and the same can be replaced, repaired or restored within
90 days, Seller must promptly replace, repair, and/or restore the same to substantially the same

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condition as before the damage. If in Seller’s determination, the same cannot be replaced,
repaired, or restored within 90 days, Seller must so notify Buyer within 30 days of the occurrence
of the damage or destruction. Buyer will thereupon have 10 days to notify Seller in writing of its
election either to (a) terminate this Agreement in its entirety in which event it will receive back
the Deposits; or (b) proceed to Closing and either (i) receive an assignment of insurance proceeds
payable to Seller as a result of the damage or destruction, but the Purchase Price will not be
reduced, or (ii) reduce the Purchase Price by the amount of insurance proceeds payable to Seller as
a result of the damage or destruction, but Seller will retain all such proceeds.

8.11 Consents to Assignments.

          All consents, waivers and estoppels of third parties, including governmental agencies,
required to be obtained by Seller in connection with the transactions contemplated hereby are set
forth on Schedule 8.11 hereof. All such consents shall have been obtained by Seller in
form and substance reasonably acceptable to Buyer. Seller shall use its best efforts to obtain all
other consents of third parties which are necessary or desirable to consummate the transactions
contemplated herein.

8.12 Appraisal.

          Buyer shall have received an appraisal of the Assets and Business reasonably
satisfactory by Buyer indicating that the allocation of the Purchase Price contemplated by Section
2.2 is appropriate.

8.13 Environmental Survey and Physical Plant Inspections.

          Buyer, at its sole cost and expense, shall have received a Phase I Environmental Site
Assessment from an environmental engineering firm (and, if recommended by such firm, additional
surveys and reports) and such structural engineering inspections and reports, mechanical systems
inspections and reports, and life safety code inspections and report, all as Buyer may deem
advisable or desirable with respect to the Real Property, the scope, findings and conclusions of
which shall be in accordance with the representations and warranties set forth in Sections 4.14
and 4.15 hereof.

8.14 Financial Statements.

          Seller has delivered to Buyer Audited Financial Statements for the years ending December
31, 2003 and 2002, and will provide Buyer with the most recent internal consolidated financial
statements (the “Interim Financial Statements”) as they become available during the normal course
of business, up to within 30 days of the Closing Date.

8.15 Due Diligence.

          Seller shall have granted Buyer complete access to conduct its due diligence related to the
Facilities, which due diligence shall include appraisals, property surveys, title work,
environmental and engineering studies, and other due diligence specifically required by Buyer’s
Lenders (“Facilities Due Diligence”) and Buyer shall have completed the Facilities Due

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Diligence on or before March 14, 2005, the results of which shall be reasonably satisfactory to
Buyer and Buyer’s Lenders. All other due diligence shall have been completed by Buyer prior to the
execution of this Agreement.

8.16 Allocation of Purchase Price.

          Seller and Buyer shall have agreed to an allocation of the Purchase Price, as contemplated by
Section 2.2 hereof.

8.17 Financing.

          Buyer shall have obtained one or more debt and/or equity financing commitments from a
lender(s) and/or equity investor of its choice (collectively, “Lender”) on terms and conditions
reasonably acceptable to Buyer, and Buyer shall have received the proceeds of said financing in an
amount sufficient to enable Buyer to pay the Purchase Price as of the Closing Date.

9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

     The obligations of Seller hereunder are subject to the satisfaction, on or prior to
the Closing Date, of the following conditions unless waived in writing by Seller. The failure of
any of the following conditions to be met (through no fault of the Seller) shall cause this
Agreement to be terminated with no further obligation of the parties one to the other except for
Sections 2.1(a), 13.5 and 13.16 herein:

9.1 Representations/Warranties.

          The representations and warranties of Buyer contained in this Agreement shall be true when
made and as of the Closing Date as though such representations and warranties had been made on and
as of such Closing Date; each and all of the terms, covenants and conditions of this Agreement to
be complied with or performed by Buyer on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with and performed; and Seller have received a certificate to the
foregoing effect from both the Chairman and CEO of the sole member of the Buyers.

9.2 Opinion of Buyer’s Counsel.

          Seller shall have received from counsel to Buyer an opinion dated as of the Closing
Date and addressed to Seller, in form and substance reasonably satisfactory to Seller, to the
effect that: (i) Each Buyer is a limited liability corporation, duly organized, validly existing
and of active status under the laws of the Commonwealth of Pennsylvania or the State of Maryland,
as applicable; (ii) Each Buyer has full power and authority to make, execute, deliver and perform
this Agreement and each of the agreements contemplated hereby, and all corporate or other
proceedings required to be taken by Buyer to authorize the execution, delivery, and performance of
this Agreement and each of the agreements contemplated hereby by Buyer, and to purchase and
receive the Assets as herein contemplated, have all been duly and properly taken; (iii) this
Agreement and the other agreements and instruments delivered hereunder by Buyer

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constitute the valid and binding obligation of Buyer enforceable against Buyer in
accordance with their respective terms, except for the Enforceability Exceptions; and (iv) no
ungiven notice to or obtained consent, authorization, approval or order of any court or
governmental agency or body required to be obtained by Buyer is required for the consummation of
the transactions set forth herein. Such opinion shall include any other matters incident to the
matters herein contemplated as Seller or Seller’s counsel may
reasonably request. In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates of officers of Buyer.

9.3 Action/Proceeding.

          No action or proceeding before a court or any other governmental agency or body shall
have been instituted or threatened to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions set forth herein, and no
governmental agency or body shall have taken any other action or made any request of Seller or
Buyer as a result of which Seller reasonably and in good faith deems it inadvisable to proceed with
the transactions hereunder; and there shall not be in effect any order restraining, enjoining, or
otherwise preventing consummation of the transactions set forth herein.

9.4 Pre-Closing Confirmations.

          Seller shall have obtained documentation or other evidence reasonably satisfactory to
Seller confirming the following:

          9.4.1 The Orphans’ Court Order;

          9.4.2 Expiration of all waiting periods under the HSR Act if applicable.

          9.4.3 Such other consents and approvals from third parties as may be legally or contractually
required for Seller’s consummation of the transactions described herein without breach or default
of any material agreement to which Seller is a party.

9.5 Extraordinary Liabilities/Obligation.

          Buyer shall not (a) be in receivership or dissolution, (b) have made any assignment for the
benefit of creditors, (c) admitted in writing its inability to pay its debts as they mature, (d)
have been adjudicated a bankrupt, or (e) have filed a petition in voluntary bankruptcy, a petition
or answer seeking reorganization, or an arrangement with creditors under the federal bankruptcy
law or any other similar law or statute of the United States or any state, nor shall any such
petition have been filed against Buyer.

9.6 Allocation of Purchase Price.

          Buyer and Seller shall have agreed to an allocation of the Purchase Price, as contemplated
in Section 2.2.

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10. NONCOMPETITION

10.1 Restrictions.

          Seller and Buyer recognize that Seller’s covenant not to compete is necessary to ensure
the continuation of the Business as owned and operated by Buyer subsequent to Closing, and
irreparable harm and damage will be done to Buyer in the event that Seller competes with Buyer
within the area specified in this Article. Therefore, in consideration of the premises and as a
necessary inducement for Buyer to enter into this Agreement and consummate the transactions set
forth herein, Seller and each of its members and subsidiaries, as set forth on Schedule 10.1
hereto, agree that for a period of three (3) years (the “Restricted Period”) from and after the
Closing Date, neither Seller nor any member, and/or subsidiary shall directly or indirectly, on its
own behalf or on behalf of any competitor of Buyer in any capacity: (a) construct, own, manage,
operate, control, participate in the management or control of, or maintain or continue any interest
whatsoever in any skilled nursing care facility within a fifteen (15) mile radius of Perry Village
in New Bloomfield, Pennsylvania, or within a twenty (20) mile radius of the other Facilities
(collectively, the “Market”); (b) influence or attempt to influence any client or potential client
of Buyer in the Market to acquire or contract for Facilities services other than from Buyer or its
affiliates; or (c) interfere with Buyer’s relationships with any payers, vendors, clients, or any
other person who does business with Buyer. Notwithstanding the foregoing, neither Seller nor any of
its members and subsidiaries shall be considered to be in violation of this Section 10.1 (a) if it:
(a) continues to engage in skilled nursing, assisted living, independent living or continuing care
retirement services (the “Services”), to the extent it engages in such Services at locations it
presently provides such Services (“Locations”), as listed on Schedule 10.1 on the date of execution
of this Agreement; (b) expands Services at the Locations; (c) acquires one or more continuing care
retirement communities outside of the Market; (d) relocates any Facility as set forth on Schedule
10. l(d); or (e) provides other health related or community services as listed on Schedule 10.1(e)
in any location, including the Market.

10.2 Enforcement.

          Buyer, Seller and Seller’s members and subsidiaries acknowledge and agree that any remedy
at law for any breach of the provisions of this Article 10 would be inadequate. Buyer, Seller, and
Seller’s members and subsidiaries further agree that if Buyer files suit for injunctive relief
hereunder, Buyer shall not be required to prove actual monetary loss or to establish the
inadequacy of any remedy at law, and further agree that the breach or threatened breach of such
provisions may be effectively restrained. To the extent that a court of competent jurisdiction
determines that this Article is illegal, invalid or unenforceable, the illegal, invalid or
unenforceable provision shall be reformed in accordance with Section 13.12 hereof.

11. ADDITIONAL AGREEMENTS

11.1 Termination Prior to Closing.

          Notwithstanding anything herein to the contrary, this Agreement may be terminated at any
time: (i) on or prior to the Closing Date by mutual consent of Buyer and Seller;

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(ii) on or prior to the Closing Date by Buyer if there has been a material adverse change in the
financial condition or results of operations of the Assets since the date hereof; (iii) on or prior
to closing by Buyer if any of the conditions specified in Article 8 of this Agreement have not been
substantially satisfied and satisfaction of such condition shall not have been waived; (iv) on or
prior to Closing by Seller if any of the conditions specified in Article 9 of this Agreement have
not been satisfied and satisfaction of such condition shall not have been waived; (v) by Buyer in
accordance with the provisions of Section 8.10; or by Buyer or Seller if the Federal Trade
Commission or the United States Justice Department request additional documentation under the HSR
Act regarding the transactions contemplated herein; and (vii) by either party if the Closing shall
not have occurred by May 15, 2005.

          Notwithstanding the foregoing, a party shall not be allowed to exercise any right of
termination if the event giving rise to the termination right shall be due to the willful breach of
this Agreement by such party seeking to terminate this Agreement to perform or observe in any
material respect any of the covenants or agreements set forth herein to be performed or observed by
such party.

11.2  Post-Closing Access to Information.

          Seller and Buyer acknowledge that subsequent to Closing each party may need access to
information or documents in the control or possession of the other party (or their affiliates) for
the purposes of concluding the transactions set forth herein, audits, compliance with governmental
requirements and regulations, and the prosecution or defense of third-party claims. Accordingly,
Seller and Buyer agree that for a period of seven (7) years after Closing each will, at the
expense of the requesting party and upon written request, make available to the other’s agents,
independent auditors and/or governmental agencies such documents and information as may be
available relating to the Assets for periods prior and subsequent to Closing to the extent
necessary to facilitate concluding the transactions set forth herein, audits, compliance with
governmental requirements and regulations and the prosecution or defense of claims.

11.3  Preservation and Access to Resident Records After the Closing.

          After the Closing, Buyer shall, in the ordinary course of business and as required by
law, keep and preserve all medical records and other records of the Facilities existing as of the
Closing and which constitute a part of the Assets delivered to Buyer at Closing. Buyer
acknowledges that as a result of entering into this Agreement and its ownership of the Facilities,
it will gain access to resident and other information which is subject to rules and regulations
concerning confidentiality. Buyer agrees to abide by any such rules and regulations relating to
the confidential information it acquires. Buyer agrees to maintain the resident records delivered
to Buyer at Closing at the Facilities after Closing in accordance with applicable law (including,
if applicable, Section 1861 (v)(i)(l) of the Social Security Act (42 U.S.C. § 1395(v)(l)(l)), and
requirements of relevant insurance carriers, all in a manner consistent with the maintenance of
resident records generated at the Facilities after Closing. Upon reasonable notice during normal
business hours at the sole cost and expense of Seller and upon Buyer’s receipt of appropriate
consents and authorizations, Buyer shall afford to the representatives of Seller, including its

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counsel and accountants, reasonable access to, and copies of, the records transferred to Buyer at
the Closing for the purposes of audits, required governmental filings and defense of third party
claims. In addition, Seller shall be entitled, at Seller’s sole risk, to remove from the Facilities
any such resident records, but only for purposes of pending litigation involving a resident to whom
such records refer, as certified in writing prior to removal by counsel retained by Seller in
connection with such litigation and only upon Buyer’s receipt of appropriate consents and
authorizations. Any resident records so removed from the Facilities shall be promptly returned to
Buyer following its use by Seller. Any access to the Facilities, its records or Buyer’s personnel
granted to Seller in this Agreement shall be upon the condition that any such access not interfere
with the business and operations of the Facilities.

11.4  Tax, Medicare, and Medicaid Effect.

          None of the parties (nor such parties’ counsel or accountants) has made or is making any
representations to any other party (nor such party’s counsel or accountant) concerning any of the
tax, Medicare or Medicaid effects of the transactions provided for in this Agreement as each party
hereto represents that each has obtained, or may obtain, independent tax, Medieaid, or Medicare
advice with respect thereto and upon which it, if so obtained, has solely relied.

11.5  Seller’s Cost Reports.

          Seller will prepare and timely file all required reports relating to Seller for periods
ending on or prior to the Closing Date or required as a result of the consummation of the
transactions set forth herein, including terminating cost reports for the Medicare program (the
“Seller Cost Reports”) and financial reports to the DPW or DHMH (the “State Reports”). Seller
shall indemnify and hold Buyer harmless from and against any liability from Seller’s failure to
timely file the Seller Cost Reports and/or the State Reports. Buyer shall use its reasonable
efforts to forward to Seller any and all correspondence relating to the Seller’s business
activities within fifteen (15) business days after receipt by Buyer. Buyer will remit any receipts
relating to Seller business activities after receipt by Buyer and will use its reasonable efforts
to forward any demand for payments within five (5) business days after receipt by Buyer. Seller
shall retain all rights and liabilities relating to Seller Cost Reports and the State Reports.
Such rights shall include the right to appeal any Medicare or Medicaid determinations relating to
the Seller Cost Reports or other matters. Seller shall retain the originals of Seller Cost
Reports, State Reports, correspondence, work papers and other documents relating to Seller Cost
Reports and State Reports.

11.6  Employee Matters.

          11.6.1  Workers’ Compensation.

          Seller shall maintain worker’s compensation coverage for its employees in accordance
with Pennsylvania and Maryland law, as applicable and shall be liable for any and all covered
claims for workers’ compensation benefits by employees to the extent such claims are for injuries
or diseases occurring prior to the Closing Date. Buyer shall obtain workers’ compensation coverage
for its employees in accordance with Pennsylvania and Maryland law, as

38

 

applicable and shall be liable for any and all covered claims for workers’ compensation
benefits by employees to the extent such claims are for injuries or diseases occurring on or after
the Effective Date.

          11.6.2  WARN Act.

          Seller acknowledges that the transfer of Assets to Buyer constitutes the sale of one or
more businesses within the meaning of the Workers Adjustment and Retraining and Notification Act
(the “WARN Act”) and the rules and regulations promulgated thereunder. Notwithstanding the
foregoing, Buyer intends to offer employment at the Closing to substantially all of the employees
of Seller, to perform comparable services, in such position as is comparable to the position such
employee held with Seller as of the Closing. Subject to the provisions of this Section 11.6.2 and
Section 6.7 herein, Seller shall indemnify and hold Buyer harmless for any violations of the WARN
Act which occur prior to the Closing Date.

11.7  Press Releases.

          At all times at or before the Closing, Seller, on the one hand, and Buyer, on the other
hand, will consult with the other before issuing or making any reports, statements or releases to
the public with respect to this Agreement or the transactions contemplated hereby (the
“Seller/Buyer Announcement”) and will use good faith efforts to obtain the other party’s approval
of the text of any public report, statement or release to be made on behalf of such party. Both
parties agree that no Seller/Buyer Announcement will be made until Buyer has provided Seller with
evidence that Buyer has obtained binding commitments in the form of debt and equity financing
sufficient to close the Transaction. If either party is unable to obtain the approval of its
public report, statement, or release from the other party and such report, statement, or release
is, in the opinion of legal counsel to such party, required by law in order to discharge such
party’s disclosure obligations, then the party may make or issue the legally required report,
statement, or release and promptly furnish the other party with a copy thereof.

11.8  Non-Transfer of Assets.

          Buyer covenants that Buyer shall not, within the period prescribed in Section 12.7,
sell or transfer substantially all of the assets of any Buyer or cause any Buyer to be dissolved,
liquidated or merged with or into another entity unless Buyer’s indemnification under Section 12.3
is assigned to the purchaser of substantially all of the assets or the surviving entity.

11.9  Retroactive Increase in Medical Assistance Payments.

          11.9.1 The parties agree that any retroactive increase in Medical Assistance payments
from the Pennsylvania Department of Public Welfare (“DPW”) (“Payment”) to the Facilities in
Pennsylvania that are paid separately from cost report settlements for services rendered up to and
including the Closing are assets of Seller regardless of when paid. The parties agree that any
retroactive increase in Medical Assistance payments from the Pennsylvania Department of Public
Welfare (“DPW”) (“Payment”) to the Facilities in Pennsylvania for

39

 

services rendered during the period subsequent to the Closing are assets of Buyer regardless
of when paid.

          11.9.2 If the Payment for any period prior to the Closing is received by the Buyer, the
Buyer shall remit such Payment to the Seller within ten (10) days after receipt of such Payment. If
the Payment for any period subsequent to the Closing is received by the Seller, the Seller shall
remit such Payment to the Buyer within ten (10) days after receipt of such Payment.

11.10  Pennsylvania Nursing Facility Assessment.

          11.10.1 The parties agree that the Nursing Facility Assessment Program by DPW (“Assessment”)
on the Facilities in Pennsylvania for the period from July 1, 2003 to the Closing shall be the
liability of Seller and the Assessment for the period beginning with the Closing Date shall be the
liability of the Buyer. Seller shall be responsible to submit data for each quarter on the
non-Medicare residents at each of the skilled nursing facilities at the Facilities for all calendar
quarters ending on or before the Closing and to remit payment for each applicable quarter by the
due dates. Buyer shall be responsible to submit data for each quarter on the non-Medicare residents
at each of the skilled nursing facilities at the each of the Facilities for all calendar quarters
ending after the Closing and to remit payment for each applicable quarter by the due dates.

          11.10.2 If an Assessment is paid for a calendar quarter in which both Seller and Buyer owned
the facilities for part of the quarter, the Buyer shall pay the full amount of the Assessment to
DPW and the Seller shall remit the portion of the Assessment that is related to the non-Medicare
resident days during the portion of the calendar in which Seller owned the Facilities to the Buyer
within ten (10) days after notification by Buyer of the amount due from Seller.

12. INDEMNIFICATION

12.1  Indemnification by Seller.

          Subject to and to the extent provided in this Article 12, Seller shall defend, indemnify
and hold harmless Buyer, its successors and permitted assigns (Buyer, its successors and permitted
assigns are collectively referred to as “Buyer’s Indemnified Persons”) from and after the Closing
from and against any claims, actions, losses, payments (whether made in settlement or otherwise),
damages, costs, or expenses (including interest, penalties, costs of preparation and investigation,
reasonable attorneys’, accountants’, and other professional advisors’ fees directly accruing from
such damages) (“Losses”), which arise from or relate to Sellers operation of the Business or
ownership of the Assets prior to the Closing, or which are incurred or suffered by Buyer’s
Indemnified Persons, from:

          12.1.1 any material inaccuracy in any representation or warranty of Seller or the
nonfulfillment of any covenant, agreement or other obligation of Seller set forth in this
Agreement;

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          12.1.2 any income or other tax assessed against Buyer from the operations of Seller prior to
the Closing Date, or any transaction or activity of Seller prior to the Closing Date, or any income
derived by Seller prior to the Closing Date;

          12.1.3 the Excluded Liabilities;

          12.1.4 any lawsuit, claim, or proceeding against Buyer or the Assets based upon any act or
omission by Seller which occurred prior to the Closing Date;

          12.1.5 any wages, salaries, bonuses, commissions, rebates, expenses, benefits, and other
compensation or fees of any nature payable prior to the Closing Date to any director, officer,
employee, contractor, agent or representative of Seller; or

          12.1.6 Any cause, event, fact or circumstance whatsoever arising or in connection with the
Business prior to the Closing unless specifically assumed by Buyer under this Agreement.

12.2  Limitations/Seller.

          Seller shall have no liability under this Article 12 and no claim under Section 12.1 of this
Agreement shall be made if no notice thereof shall have been given by or on behalf of any of
Buyer’s Indemnified Persons to Seller in the manner provided in Section 12.5.

12.3  Indemnification by Buyer.

          Subject to and to the extent provided in this Article 12, Buyer shall indemnify, defend, and
hold harmless Seller, its successors and permitted assigns (Seller, its successors and permitted
assigns are hereinafter collectively referred to as “Seller’s Indemnified Persons”) from and after
the Closing from and against any Losses that in any way arise from or relate to Buyer’s operation
of the Business or ownership of the Assets after the Closing, or which are incurred or suffered by
Seller’s Indemnified Persons from:

          12.3.1 any material inaccuracy in any representation or warranty of Buyer or the
nonfulfillment of any covenant, agreement or other obligation of Buyer set forth in this Agreement;

          12.3.2 any Assumed Liabilities and Contracts from and after the Closing Date; or

          12.3.3 Any cause, event, fact, or circumstance whatsoever arising on or in connection with the
Business after the Closing.

12.4  Limitations/Buyer.

          Buyer shall have no liability under this Article 12 and no claim under Section 12.3 of this
Agreement shall be made if no notice thereof shall have been given by or on behalf of any of
Seller’s Indemnified Persons to Buyer in the manner provided in Section 12.5.

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12.5  Indemnification Threshold.

                    Except for the matters set forth in Section 12.1.2, 12.1.3, 12.1.4, 12.1.5, and 12.1.6, where
the threshold shall be zero, no party shall have any liability under this Article 12, and no claim
under this Article 12 shall accrue to any indemnified person against an indemnifying party under
this Article 12 unless and until the total liability of such indemnifying party in respect of
claims arising under Article 12 exceeds Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate; at which point the Indemnifying Party shall be entitled to indemnification with respect
to all Losses.

12.6  Indemnification Procedure.

          (a) A claim for indemnification for any matter may be asserted by notice to the party from
whom indemnification is sought, “Indemnified Party.” Such claimant shall notify the other party,
“Indemnifying Party,” in writing as soon as practicable after it has knowledge of an
indemnification claim. Subject to the rights of or duties to any insurer or other third person
having liability therefor, the Indemnifying Party shall have the right promptly after receipt of
such notice to assume the control of the defense, compromise or settlement of any such action,
suit, proceeding, claim, liability, demand or assessment, including, at their own expense,
employment of counsel satisfactory to an Indemnified Party. The Indemnifying Party shall have
thirty (30) days in which to pay the indemnification claim in full. In the event that the
Indemnifying Party disputes such claim for indemnification, the Indemnified Party must object to
the indemnification claim within fifteen (15) days of its receipt of the written claim. If the
parties are unable to resolve the dispute in an amicable manner within thirty (30) days of the
purported dispute, the parties agree to submit the issue to mediation under the Commercial
Mediation Rules of the American Arbitration Association. The mediator shall not have authority to
impose a settlement upon the parties, but will attempt to help them reach a satisfactory resolution
of the disagreement. The mediator shall end the mediation whenever, in his judgment, further
efforts at mediation would not contribute to a resolution of the submitted disagreement.

          (b) If the issue is not resolved pursuant to the mediation process set forth above, the
parties agree to submit the issue to binding arbitration administered in Harrisburg, Pennsylvania
by the American Arbitration Association under its Commercial Arbitration Rules (or by such other
commercial arbitration service and its rules as may be agreed to by the parties at that time) in
effect at the time the controversial claim is submitted to binding arbitration, and judgment on the
award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

          (c) The arbitration shall be conducted by a panel of three arbitrators. Each party shall
select one arbitrator and agree upon a third within fifteen (15) days of the date of the demand for
arbitration. In the event that the parties are unable to timely agree on the third arbitrator, the
two selected arbitrators shall select a third arbitrator within fifteen (15) days of the parties’
impasse. The arbitrator shall be neutral and have no past or present governance or financial
relationship with any of the parties to this Agreement. Reasonable discovery shall be allowed in
arbitration. The arbitration shall commence within five (5) days after the selection of the
arbitration panel. Each party shall attend the arbitration through at least two individuals having
the authority to negotiate on behalf of that party. The arbitration shall be completed within
forty-five (45) days

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of commencement. Unless otherwise agreed to by the parties, it shall be conducted pursuant to the
rules of the American Arbitration Association. The arbitration panel shall issue a binding written
decision within ten (10) working days of final adjournment of the arbitration.

12.7  Survival of Representations.

          Notwithstanding any right of Buyer (whether or not exercised) to investigate the affairs
of Seller or any right of any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement, Seller has, on the
one hand, and Buyer has, on the other hand, the right to rely fully upon the representations and
warranties of the other contained in this Agreement. The representations, warranties, covenants and
agreements respectively made by Seller, on the one hand, and Buyer, on the other hand, in this
Agreement or in any certificate respectively delivered by any of Seller or Buyer pursuant to this
Agreement will survive the Closing for a period of three years. As to claims arising out of
Sections 4.8, 4.18, 4.22, and 4.26, said representations and warranties shall survive the Closing
for the applicable statute of limitations periods. Provided, however, any claim, cause of action,
or other Loss, as defined herein, that would otherwise be time barred or otherwise precluded from
being asserted for any reason, shall not, by virtue of the provisions contained in this Agreement,
be deemed to be contractually extended in any fashion by virtue of the specific time limitations
set forth in this section.

12.8  Other Indemnities Included Herein.

          Buyer and Seller acknowledge and agree that Seller has throughout this Agreement agreed
to indemnify Buyer from certain losses as, for example, in Section 1.3, (the “Miscellaneous
Indemnities”) Buyer and Seller acknowledge and agree that the Miscellaneous Indemnities are
subject to all of the terms and conditions set forth in this Article 12 (as if such Miscellaneous
Indemnities were contained in Article 12).

13. GENERAL

13.1  Interpretation.

          In this Agreement, unless the context otherwise requires:

          13.1.1 references to this Agreement are references to this Agreement and to the Schedules and
Exhibits hereto;

          13.1.2 references to Articles and Sections are references to articles and sections of this
Agreement;

          13.1.3 references to any party to this Agreement shall include references to its respective
successors and permitted assigns;

          13.1.4 references to a judgment shall include references to any order, writ, injunction,
decree, determination or award of any court or tribunal;

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          13.1.5 references to a “Person” shall mean any individual, company, body corporate or politic,
association, partnership, limited liability company, firm, joint venture, trust and governmental
agency or authority;

          13.1.6 the terms “hereof,” “herein,” “hereby,” “hereunder” and derivative or similar words
will refer to this entire Agreement;

          13.1.7 references to the “Code” shall mean the Internal Revenue Code of 1986, as amended, and
regulations thereunder and any future corresponding laws and regulations;

          13.1.8 references to any document (including this Agreement) are references to that document
as amended, consolidated, supplemented, novated or replaced by the parties from time to time;

          13.1.9 references to any law are references to that law as amended, consolidated, supplemented
or replaced from time to time and shall also refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise;

          13.1.10 the word “including” shall mean including without limitation;

          13.1.11 the term “Knowledge of Seller” or “to Seller’s Knowledge” means the collective
Knowledge of each of Seller’s Chief Operating Officer, Chief Financial Officer, Executive,
Facilities Management, and Facilities management including Facility Executive Directors, and
Facility Managers. The term “Knowledge” means the actual or constructive knowledge of that
individual, after due inquiry.

          13.1.12 references to “reasonable best efforts” or “commercially reasonable best efforts”
exclude the payment of monies to third parties who are not employees or agents of such party
required to make reasonable best efforts, other than for incidental costs and expenses;

          13.1.13 references to time are references to Eastern Standard or Daylight time (as in effect
on the applicable day) unless otherwise specified herein.

13.2  Schedules.

          The Schedules and all Exhibits and documents referred to in or attached to this
Agreement are integral parts of this Agreement as if fully set forth herein. Seller shall, at
least ten (10) days prior to the Closing Date, supplement or amend the Schedules prepared pursuant
to this Agreement with respect to any matter hereafter arising which, if existing or occuring at
the date of this Agreement, would have been required to be set forth or described in the Schedules
or which is necessary to correct or complete (with respect to any Schedule that is incomplete as
of the date of this Agreement) any information in the Schedules and deliver the same to Buyer.
Notwithstanding the foregoing, Buyer’s obligations or liabilities shall not be increased by means
of a Schedule or Exhibit revision or update, as further set forth in Section 13.20 herein.

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13.3  Consented Assignment.

          Anything contained herein to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any claim, right, contract, license, lease, commitment, sales
order or purchase order if an attempted assignment thereof without the consent of another party
thereto would constitute a breach thereof or in any material way affect the rights of Seller
thereunder, an attempted assignment would be ineffective or would materially affect Seller’s
rights thereunder so that Buyer would not in fact receive all such rights. Seller shall cooperate
in any reasonable arrangement designed to provide for Buyer the benefits under any such claim,
right, contract, license, lease, commitment, sales order or purchase order, including enforcement
of any and all rights of Seller against the other party or parties thereto arising out of the
breach or cancellation by such other party or otherwise.

13.4  Consents, Approvals and Discretion.

          Except as herein expressly provided to the contrary, whenever this Agreement requires
any consent or approval to be given by either party or either party must or may exercise
discretion, the parties agree that such consent or approval shall not be unreasonably withheld or
delayed and such discretion shall be reasonably exercised.

13.5  Expenses; Legal Fees and Costs.

          13.5.1 Except as otherwise expressly set forth in this Agreement, all expenses of the
preparation of this Agreement and of the consummation of the transactions set forth herein,
including counsel fees, accounting fees, investment advisor’s fees and disbursements, shall be
borne by the respective parties incurring such expense, whether or not such transactions are
consummated.

          13.5.2 Except as otherwise expressly set forth herein, Buyer shall pay all of the costs for
the Title Policy and the recording of the warranty deed. All transfer taxes, real estate filing and
recording fees and related costs incurred, assessed or otherwise imposed as a result of the
transfer of the Assets shall be borne one-half by Buyer and one-half by Seller. All other costs and
expenses arising out of the transfer of Assets to Buyer and the obtaining by Buyer of all
appraisals needed to effect the transactions herein shall be paid by Buyer, including the Survey
and such other inspections and reports as Buyer may deem advisable or desirable. Buyer shall pay
HSR Pre-merger Notification and Report, filing fees and costs of the appraisal.

          13.5.3 In the event either party elects to incur legal expenses to enforce or interpret any
provision of this Agreement by judicial means, the prevailing party will be entitled to recover
such legal expenses, including, attorney’s fees, costs and necessary disbursements, through appeal
or in bankruptcy proceedings in addition to any other relief to which such party shall be entitled.

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13.6  Choice of Law; Arbitration.

          13.6.1 The parties agree that this Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania without regard to such
state’s conflicts of laws or choice of law rules.

          13.6.2 Except as set forth under Articles 10 and 12, in the event that any dispute arises
concerning this Agreement, the parties expressly agree to enter into binding arbitration. Any
dispute, controversy or claim arising out of this Agreement shall be settled by mandatory binding
arbitration in accordance with this Section. Any arbitration under this Section shall be conducted
by the National Arbitration Forum, under the Code of Procedure then in effect, and judgment upon
the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The
place of arbitration shall be Harrisburg, Pennsylvania. The arbitrators shall decide legal issues
pertaining to the dispute, controversy or claim pursuant to the laws of the Commonwealth of
Pennsylvania 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 not have the authority to award punitive damages,
but shall have the authority to enter equitable relief. THE PARTIES UNDERSTAND THAT THEY ARE
KNOWINGLY AND WILLINGLY EXPRESSLY WAIVING A RIGHT TO JURY TRIAL CONCERNING ANY MATTERS RELATING TO
THIS AGREEMENT.

13.7  Benefit Assignment.

          Subject to provisions herein to the contrary, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns; provided, however, that no party may assign this Agreement
without the prior written consent of the other party. No assignment shall relieve the assignor of
its liabilities and obligations hereunder, and the assignor will remain jointly and severally
liable with the assignee for all of its liabilities and obligations hereunder, except that Buyer
may, without the prior written consent of Seller, assign its rights and delegate its duties
hereunder to one or more entities which controls, is controlled by, or is under common control
with Buyer, which shall have the effect of thereby releasing Buyer hereunder.

13.8  Accounting Date.

          The transactions contemplated hereby shall be effective for accounting purposes as of 12:01
a.m. (Eastern time) on the date following the Closing, unless otherwise agreed in writing by
Seller and Buyer.

13.9  No Third-Party Beneficiaries.

          The terms and provisions of this Agreement are intended solely for the benefit of Buyer
and Seller and their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.

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13.10  Waiver of Breach.

          The waiver by either party of a breach or violation of any provision of this Agreement
shall not operate as, or be construed to constitute, a waiver of any subsequent breach of the same
or other provision hereof. All remedies, either under this Agreement, or by law or otherwise
afforded, will be cumulative and not alternative.

13.11  Notices.

          Any notice, demand or communication required, permitted, or desired to be given
hereunder shall be deemed effectively given when personally delivered, or when delivered by
overnight courier, or five (5) days after being deposited in the United States mail, with postage
prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:

	 	 	 
	Buyer:

	 	Tandem Health Care, Inc.
	 

	 	800 Concourse Parkway South
	 

	 	Suite 200
	 

	 	Maitland, Florida 32751
	 

	 	Attn: Chairman and CEO
	 

	 	Facsimile: (407) 571-0595
	 
	 	 
	copy to:

	 	Tandem Health Care, Inc.
	 

	 	One Oxford Centre, 20th Floor 
	 

	 	301 Grant Street
 Pittsburgh, PA 15219
	 

	 	Attn: General Counsel
	 

	 	 Facsimile:(412) 281-4435
	 
	 	 
	Seller:

	 	Diakon Lutheran Social Ministries
	 

	 	798 Hausman Road

Suite 300
	 

	 	Allentown, PA 18104-9108 
	 

	 	Attn: The Rev. Dr. Daun McKee
	 

	 	President & CEO
 Facsimile (610) 682-1593
	 
	 	 
	copy to:

	 	Stevens & Lee
	 

	 	111 North Sixth Street
	 

	 	 P.O. Box 679
 Reading, PA 19603
	 

	 	Attn: Joanne N. Judge
	 

	 	Facsimile: (610) 988-0821

or to such other address or number, and to the attention of such other person or officer, as any
party may designate, at any time, in writing in conformity with these notice provisions.

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13.12  Severability.

          If any provision of this Agreement is held to be illegal, invalid or unenforceable under
any present or future law, and if the rights or obligations of Buyer or Seller under this Agreement
will not be materially and adversely affected thereby, (a) such provision will be fully severable;
(b)this Agreement will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the legal, invalid or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal, invalid or unenforceable
provision, a court of competent jurisdiction may reform such provision to make it lawful and in the
spirit of the intent of the parties, as evidenced by this Agreement and as so reformed shall be a
part of this Agreement.

13.13  Gender and Number.

          Whenever the context of this Agreement requires, the gender of all words herein shall
include the masculine, feminine and neuter, and the number of all words herein shall include the
singular and plural.

13.14  Divisions and Headings.

          The table of contents, the divisions of this Agreement into articles, sections, and
subsections and the use of captions and headings in connection therewith are solely for
convenience and shall have no legal effect in construing the provisions of this Agreement.

13.15 Time of Essence.

          Time is of the essence in the performance of this Agreement.

13.16 Confidentiality.

          It is understood by the parties hereto that the information, documents and instruments
delivered to Buyer by Seller or Seller’s agents and the information, documents and instruments
delivered to Seller by Buyer or Buyer’s agents are of a confidential and proprietary nature. Each
of the parties hereto agrees that prior to Closing they will maintain the confidentiality of all
such confidential information, documents or instruments delivered to them by each of the other
parties hereto or their agents in connection with the negotiation of this Agreement or in
compliance with the terms, conditions and covenants hereof and only disclose such information,
documents and instruments to their duly authorized officers, directors, representatives and
agents. Upon the Closing, Buyer’s confidentiality covenants shall be terminated except for Buyer’s
confidentiality covenants with respect to non-Facility information, which shall survive the
Closing, and Seller’s confidentiality covenants shall survive the Closing. Each of the parties
hereto further agrees that if the transactions contemplated hereby are not consummated, they will
return all such documents and instruments and all copies thereof in their possession to the other
party to this Agreement. Each of the parties hereto recognizes that any breach of this Section
would result in irreparable harm to the other party to this Agreement and their affiliates and that
therefore either Seller or Buyer shall be entitled to an injunction to

48

 

prohibit any such breach or anticipated breach, without the necessity of
proving actual damages or posting a bond, cash or otherwise, in addition to all of their
other legal and equitable remedies. Nothing in this Section, however, shall prohibit the
use or disclosure of such confidential information, documents or information as are
required by law or governmental regulations or to defend itself in a legal proceeding.

13.17  Entire Agreement/Amendment.

          This Agreement (and its exhibits, schedules and all other documents referenced and
incorporated herein) supersedes all previous contracts, and constitutes the entire
agreement of every kind or nature existing between or among the parties representing the
within subject matter and no party shall be entitled to benefits other than those
specified herein. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute but one and
the same instrument. No terms, conditions, warranties, or representations, other than
those contained herein and no amendments or modifications hereto shall be binding unless
made in writing and signed by the party to be charged.

13.18 Drafting.

          No provision of this Agreement shall be interpreted for or against either party
hereto on the basis that such party was the draftsman of such provision, each party having
participated equally in the drafting and negotiating hereof, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.

13.19
Post Closing Period.

          13.19.1
Negotiation of Information Systems and Support Agreements. Seller will use its reasonable best efforts to cooperate with Buyer in negotiating
agreements for all operation and maintenance services for management information systems,
data support and administrative support, from any person currently supplying the same to
Seller relating to the Business.

          13.19.2 Continued Operation of the Campuses. Buyer shall use its good faith efforts to
continue to operate the Facilities and provide the same services at the Facilities as they are
operated and provided as of the Closing Date for a period of not less than two years after the
Closing Date. Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, Buyer shall only be obligated to maintain the contracts of Seller that relate to
pharmacy, food service, housekeeping and laundry for a period of not less than one (1) years
after Closing.

          13.19.3      13.19.4 Benevolent Care. Seller will fulfill the commitment that
Seller has made as of the Closing to the assisted living and independent living residents for
benevolent care, as set forth on Schedule 13.19.4. Buyer agrees to maintain Seller’s
benevolent care policy for the residents of the Facilities as set forth on Schedule 13.19.4 on
the

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date of the Closing for the duration of such resident’s continued residence at such
Facilities, and Seller will retain financial responsibility for such residents.

          13.19.5 Accounts Receivable. Accounts receivable for the month in which the Closing Date
occurs shall be prorated between Seller and Buyer and, to the extent that either party receives
payment for such accounts after Closing, such parry shall remit to the other such other party’s
share of such receivable and any back-up documentation thereof within ten (10) days following
receipt thereof. Payment on accounts receivable shall be applied to the oldest account
outstanding as of the date of receipt. Further details of the Post Closing business relationship of
the Seller and Buyer shall be as set forth in the Operations Transfer Agreement attached as
Schedule 13.19.5, which shall be executed on or before the Closing.

          13.19.6 Wills and Trusts. Buyer acknowledges that gifts and bequests made after the Closing
naming any Seller by name as beneficiary shall be presumed the property of Seller. Buyer shall give
Seller written notice of any gifts and bequests made to the Facilities. Buyer will cooperate with
Seller in determining the appropriate preservation of certain donated artifacts that should
appropriately remain at the Facilities.

          13.19.7

13.19.7 Post-Closing Audit. Buyer reserves the right to audit up to the past three years
performance of the Facilities for purposes related to Buyer’s anticipated recapitalization, and
Seller agrees to use its commercially reasonable best efforts to cooperate with the independent
accounting firm engaged by Buyer in the audit of Seller’s records within a reasonable time period.
Buyer agrees to use its commercially reasonable best efforts to define with particularity for
Seller what information is required for such audits prior to the commencement of such audits. Buyer
has been advised by Seller that Seller has historically maintained statements of operations for the
Facilities as well as accounts receivable and fixed assets records, but Seller maintained no other
balance sheet records by Facility. Buyer shall be responsible for the direct costs of such audits,
and Buyer further agrees to provide staffing resources and compensate Seller for the costs of
Seller’s staff in the post-closing audits in an amount as will be mutually agreed to by Buyer and
Seller. Buyer further agrees that the results of such audits shall not result in any changes to the
terms of this Agreement and shall not provide a basis for any claims by Buyer under Section 12 of
this Agreement.

13.19.8  Intention of Executives. Buyer represents that Lawrence R. Deering, Chairman and
Chief Executive Officer, and Joseph D. Conte, President and Chief Operating Officer, have made a
good faith intention to continue to serve in their current positions with Buyer and to operate the
Facilities for a period of not less than two years after the Closing Date.

13.20  Incorporation by Reference.

          All exhibits and schedules referenced herein are hereby incorporated herein by
reference. In the event that a schedule or exhibit is not completed as of the date the parties
execute the Agreement, the parties will use their best efforts to complete such exhibits and

50

 

schedules and/or agree upon their form prior to February 28, 2005. Exhibits and schedules
may be revised thereafter by mutual agreement of the parties; provided, however, that the Sellers
shall have a right to modify any of the disclosure schedules prior to the Closing (in accordance
with the obligation to “bring down” the representations and warranties set forth in Section 13.2
herein) and provided further, that the parties hereto are signing this Agreement subject to the
mutual agreement of the Buyer and the Sellers upon the content of the Schedules and Exhibits no
later than February 28, 2005. Buyer may not terminate this Agreement on the basis of a Schedule or
Exhibit change unless the parties do not agree to the Schedules and Exhibits on or before February
28, 2005, or unless the Schedules and Exhibits presented pursuant to Section 13.2 are materially
different from those presented and agreed to on or before February, 28, 2005.

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51

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in
multiple originals by their duly authorized officers, all as of the date and year first above
written. This Agreement 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 Agreement.

	 	 	 	 	 	 	 
	BUYER:	 	RE SELINSGROVE, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	RE MIFFLIN, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	RE HAZLETON, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	RE POTTSVILLE, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	RE NEW BLOOMFIELD, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	RE MILLERSBURG, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer

52

 

	 	 	 	 	 	 	 
	 	 	 	 	RE EVERETT, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	RE FROSTBURG, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	RE SALISBURY, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	BUYER’S OPERATORS	 	OP SELINSGROVE, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP MIFFLIN, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer

53

 

	 	 	 	 	 	 	 
	 	 	 	 	OP HAZLETON, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP POTTSVILLE, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP NEW BLOOMFIELD, LLC
	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP MILLERSBURG, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP EVERETT, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer

54

 

	 	 	 	 	 	 	 
	 	 	 	 	OP FROSTBURG, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	OP SALISBURY, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lawrence R. Deering
	 

	 	 	 	Title:
	 	Chairman and Chief Executive Officer

55

 

	 	 	 	 	 	 	 
	SELLER:	 	DIAKON LUTHERAN SOCIAL
	 	 	 	 	MINISTRIES
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Daun E. Mckee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	The Rev. Dr. Daun E. Mckee
	 

	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	TRESSLER LUTHERAN SERVICES
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Daun E. Mckee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	The Rev. Dr. Daun E. Mckee
	 

	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	THE LUTHERAN WELFARE
	 	 	 	 	SERVICE OF NORTHEASTERN
	 	 	 	 	PENNSYLVANIA, INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Daun E. Mckee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	The Rev. Dr. Daun E. Mckee
	 

	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	THE LUTHERAN HOME AT TOPTON,
	 	 	 	 	PENNSYLVANIA
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Daun E. Mckee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	The Rev. Dr. Daun E. Mckee
	 

	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	SUSQUEHANNA HOUSING, INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Daun E. Mckee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	The Rev. Dr. Daun E. Mckee
	 

	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	Consented to and agreed to by,	 	 	 	 

56

 

	 	 	 	 	 	 	 
	for the limited pruposes of joining	 	 	 	 
	in Article 10 herein:	 	 	 	 
	 
	 	 	 	 	 	 
	LUTHERAN SERVICES NORTH EAST	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Daun E. Mckee	 	 	 	 
	 

	 	 	 	 	 	 
	Its:

	 	President and Chief
Executive Officer	 	 	 	 

57

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