Document:

Exhibit 10.31

 

Exhibit 10.31

FIRST AMENDMENT

TO

ASSET PURCHASE AGREEMENT

     THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is entered into as of
October 1, 2003, by and among LaurelPharm, LLC, a Florida limited liability company (“Buyer”),
CoastalMed, Inc., a Florida corporation (“CMI”), CoastalMed of Panama City, Inc., a Florida
corporation (“CPC”) and Randall A. McElheney (collectively, the “Parties”). Tandem Health Care,
Inc., a Pennsylvania corporation (“THC”) hereby joins in the execution of this Amendment for the
limited purposes set forth herein.

W I T N E S S E T H

     WHEREAS, the Parties entered into that certain Asset Purchase Agreement (the “Agreement”)
dated August 22, 2003; and

     WHEREAS, due to certain restrictions placed on LaurelPharm by its financing arrangements,
LaurelPharm is unable to directly make principal payments under the Note; and

     WHEREAS, THC, as the parent of LaurelPharm, has agreed to execute the Note as the borrower so
the transaction under the Agreement will not be delayed, subject to certain terms and conditions;
and

     WHEREAS, CMI and CPC have agreed to the foregoing; and

     WHEREAS, the Parties desire to amend the Agreement, subject to certain terms and conditions
contained herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration, the Parties and THC hereby approve and adopt this Amendment
and mutually covenant and agree with each other as follows:

1. Capitalized Terms. Unless otherwise indicated herein, all capitalized terms used
in this Amendment shall have the same meaning ascribed to those terms in the Agreement.

2. Amendment to Whereas Clauses. The first and second Whereas clauses of the
Agreement are hereby amended to read as follows:

     “WHEREAS, CPC is licensed by the State of Florida Department of Health (“DOH”) as a
special closed system pharmacy and is the owner of certain assets used in its business,
which has a single location at 440 North Cove Boulevard, Panama City, Florida 32401 (the
“Panama City Leased Premises”); and”

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

 

 

3. Amendment to Section l(c). Section l(c) of the Agreement is hereby amended to
include Richard H. Ackerman, Trustee as landlord of the Palmetto Leased Premises.

4. Amendment to Section 2(a)(ii). Section 2(a)(ii) of the Agreement is hereby
deleted in its entirety and the following is substituted in its stead: “FOUR MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00) (the “Deferred Purchase Price”) shall be
paid in accordance with the term of that certain promissory note from THC to Sellers,
substantially in the form attached hereto as Exhibit 1 (the “Note”). The Note shall
be for a five-year term, bear interest at the rate of six percent (6%) per annum with a
10-year amortization, and provide for a one percent (1%) penalty for any payment postmarked
more than ten (10) days after its due date and provide for an event of default if any
payment is postmarked more than thirty one (31) days after its due date. Documentary stamp
taxes due on the Note, if any, shall be paid by Buyer or THC. Notwithstanding anything
contained herein or in the Note, THC shall have the option to require Buyer to repay all
interest payments made by THC under the Note. In the event that the Purchase Price is
adjusted pursuant to Section 2(d) hereof, the Note shall be modified to reflect the adjusted
Purchase Price and a new amortization and payment schedule shall be appended to the Note.

5. Amendment to Section 5(d). The second sentence of Section 5(d) of the Agreement
is deleted in its entirety and the following is substituted in its stead: “The existence of
any claim or cause of action of either Seller or the CMI Shareholders against Buyer, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement
by Buyer of such restrictive covenants except in the event Sellers have pursued legal action
against THC on the payment obligations of the Note and obtained a judgment against THC in
such action.

6. Amendment to Section 10(c). Subsections 10(c)(iii) and (iv) of the Agreement are
hereby deleted in their entirety.

7. Amendment to Section 10(d)(ii). Section 10(d)(ii) of the Agreement is deleted in
its entirety and the following is substituted in its stead: “Reserved.”

8. Amendment to Section 10(d)(iv). Section 10(d)(iv) of the Agreement is hereby
deleted in its entirety and the following is substituted in its stead: “A certificate of the
Secretary of State of Florida certifying that Buyer is a limited liability company with an
active status under the laws of the State of Florida, together with a certified copy of
Buyer’s articles of organization, all dated within ten (10) days prior to the Closing Date.”

9. Amendment to Section 13(n). Section 13(n) of the Agreement is amended by adding
the words, “or THC” after the words “other than by the Parties hereto.”

10. Counterparts. This Amendment may be executed in counterparts, each of which
shall be deemed to be an original and all of which when taken together, shall constitute a
single instrument.

11. Terms. All other terms and conditions set forth in the Agreement shall remain
in full force and effect.

2

 

     IN WITNESS WHEREOF, each Party hereto has executed or caused this Agreement to be executed on
its behalf, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	COASTALMED, INC.	 	COASTALMED OF PANAMA CITY, INC.
	 
	 	 	 	 	 	 	 	 
	By:	 	/s/ Randall McElheney	 	By:	 	/s/ Randall McElheney
	 	 	 	 	 	 	 
	 	 	Randall McElheney, President	 	 	 	Randall McElheney, President
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	LAURELPHARM, LLC
	 
	 	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	By:
	 	/s/ Joseph D. Conte
	/s/ Randall A. McElheney	 	 	 	 	 	Its:
President and COO 
	RANDALL A. MCELHENEY	 	 	 	 	 	 

JOINDER BY THC FOR THE EXPRESS PURPOSES STATED HEREIN:

TANDEM HEALTH CARE, INC.

	 	 	 	 	 
	By:

	 	/s/ Joseph D. Conte
	 	 
	 

	 	 	 	 
	 

	 	Its: President and COO	 	 

3Exhibit 10.32

 

Exhibit 10.32

ASSET PURCHASE AGREEMENT

BY AND AMONG

EDGEWOOD MANOR OF LUCASVILLE, INC.

EDGEWOOD MANOR OF LUCASVILLE II, INC.

EDGEWOOD MANOR OF WELLSTON, INC.

EDGEWOOD MANOR OF WESTERVILLE, INC.; and

EDGEWOOD MANOR OF GREENFIELD, INC.

(AS “SELLER”)

AND

RE LUCASVILLE I, INC.

RE LUCASVILLE II, INC.

RE WELLSTON, INC.

RE WESTERVILLE, INC.

AND

RE GREENFIELD, INC.

(AS “BUYER”)

Dated as of December 30, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
	 	 	1	 
	1.1 Assets
	 	 	1	 
	1.2 Excluded Liabilities
	 	 	2	 
	 
	 	 	 	 
	2. FINANCIAL ARRANGEMENTS
	 	 	2	 
	2.1 Deposit/Purchase Price
	 	 	2	 
	2.2 Allocation of Purchase Price
	 	 	3	 
	2.3 Purchase Price Adjustments
	 	 	4	 
	 
	 	 	 	 
	3. CLOSING
	 	 	4	 
	3.1 Closing
	 	 	4	 
	3.2 Prorations
	 	 	5	 
	3.3 Actions of Seller at Closing
	 	 	5	 
	3.4 Actions of Buyer at Closing
	 	 	7	 
	 
	 	 	 	 
	4. REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	8	 
	4.1 Capacity
	 	 	8	 
	4.2 Powers; Consents; Absence of Conflicts With Other Agreements
	 	 	8	 
	4.3 No Affiliates and FIRPTA
	 	 	8	 
	4.4 Binding Agreement
	 	 	9	 
	4.5 Licenses and Permits
	 	 	9	 
	4.6 Legal and Regulatory Compliance
	 	 	9	 
	4.7 The Contracts
	 	 	9	 
	4.8 Equipment
	 	 	9	 
	4.9 Real Property
	 	 	10	 
	4.10 Brokers and Finders
	 	 	12	 
	4.11 Insurance
	 	 	12	 
	4.12 No Employee Benefit Plans
	 	 	12	 
	4.13 No Employees and Employee Relations
	 	 	12	 
	4.14 Litigation or Proceeding
	 	 	12	 
	4.15 Taxes
	 	 	13	 
	4.16 Subsequent Events
	 	 	13	 
	4.17 Certain Affiliate Transactions
	 	 	13	 
	4.18 Environmental Matters
	 	 	13	 
	4.19 Reports, Statements and Copies
	 	 	15	 
	 
	 	 	 	 
	5. REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	15	 
	5.1 Corporate Capacity
	 	 	15	 
	5.2 Corporate Powers; Consents; Absence of Conflicts With Other
Agreements, Etc
	 	 	16	 
	5.3 Binding Effect
	 	 	16	 
	5.4 Brokers and Finders
	 	 	16	 
	5.5 Operation of the Assets
	 	 	16	 

i

 

	 	 	 	 	 
	5.6 Real Property Transferred “AS IS”
	 	 	17	 
	5.7 Lease Compliance
	 	 	17	 
	 
	 	 	 	 
	6. COVENANTS OF SELLER
	 	 	17	 
	6.1 Access and Information
	 	 	17	 
	6.2 Operations
	 	 	18	 
	6.3 Negative Covenants
	 	 	18	 
	6.4 Governmental Approvals
	 	 	18	 
	6.5 Exclusive Agreement
	 	 	19	 
	6.6 Closing Conditions
	 	 	19	 
	6.7 Title and Survey Matters
	 	 	19	 
	6.8 Title Commitment
	 	 	19	 
	6.9 Cooperation
	 	 	20	 
	 
	 	 	 	 
	7. COVENANTS OF BUYER
	 	 	20	 
	7.1 Governmental Approval
	 	 	20	 
	7.2 Survey
	 	 	20	 
	7.3 Closing Conditions
	 	 	20	 
	7.4 Cooperation
	 	 	20	 
	7.5 Real Property
	 	 	21	 
	 
	 	 	 	 
	8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
	 	 	21	 
	8.1 Representations/Warranties
	 	 	21	 
	8.2 Opinion of Seller’s Counsel
	 	 	21	 
	8.3 Pre-Closing Confirmations
	 	 	22	 
	8.4 Action/Proceeding
	 	 	22	 
	8.5 No Adverse Change
	 	 	22	 
	8.6 Vesting/Recordation
	 	 	22	 
	8.7 Title to Real Estate
	 	 	22	 
	8.8 No Agreements and Commitments
	 	 	22	 
	8.9 Closing Documents
	 	 	23	 
	8.10 Casualty
	 	 	23	 
	8.11 Consents to Assignments
	 	 	23	 
	8.12 Appraisal
	 	 	23	 
	8.13 Environmental Survey and Physical Plant Inspections
	 	 	24	 
	8.14 Due Diligence
	 	 	24	 
	8.15 Allocation of Purchase Price
	 	 	24	 
	8.16 Financing
	 	 	24	 
	8.17 Condemnation
	 	 	24	 
	8.18 Approvals and Consents
	 	 	25	 
	 
	 	 	 	 
	9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
	 	 	25	 
	9.1 Representations/Warranties
	 	 	25	 
	9.2 Opinion of Buyer’s Counsel
	 	 	25	 
	9.3 Action/Proceeding
	 	 	26	 
	9.4 Pre-Closing Confirmations
	 	 	26	 

ii

 

 

	 	 	 	 	 
	9.5 Extraordinary Liabilities/Obligation
	 	 	26	 
	9.6 Approvals and Consents
	 	 	26	 
	 
	 	 	 	 
	10. ADDITIONAL AGREEMENTS
	 	 	26	 
	10.1 Termination Prior to Closing
	 	 	26	 
	10.2 Post-Closing Access to Information
	 	 	27	 
	10.3 Press Releases
	 	 	27	 
	 
	 	 	 	 
	11. INDEMNIFICATION
	 	 	27	 
	11.1 Indemnification by Seller
	 	 	27	 
	11.2 Limitations/Seller
	 	 	28	 
	11.3 Indemnification by Buyer
	 	 	29	 
	11.4 Limitations/Buyer
	 	 	29	 
	11.5 Indemnification Procedure
	 	 	29	 
	11.6 Survival of Representations
	 	 	30	 
	11.7 Indemnity Notice; Fault
	 	 	30	 
	11.8 Exclusive Remedy
	 	 	31	 
	 
	 	 	 	 
	12. GENERAL
	 	 	31	 
	12.1 Interpretation
	 	 	31	 
	12.2 Schedules
	 	 	32	 
	12.3 Consented Assignment
	 	 	32	 
	12.4 Consents, Approvals and Discretion
	 	 	33	 
	12.5 Expenses; Legal Fees and Costs
	 	 	33	 
	12.6 Choice of Law; Arbitration
	 	 	33	 
	12.7 Benefit Assignment
	 	 	34	 
	12.8 Accounting Date
	 	 	34	 
	12.9 No Third-Party Beneficiaries
	 	 	34	 
	12.10 Waiver of Breach
	 	 	34	 
	12.11 Notices
	 	 	34	 
	12.12 Severability
	 	 	35	 
	12.13 Gender and Number
	 	 	35	 
	12.14 Divisions and Headings
	 	 	35	 
	12.15 Time of Essence
	 	 	36	 
	12.16 Confidentiality
	 	 	36	 
	12.17 Entire Agreement/Amendment
	 	 	36	 
	12.18 Drafting
	 	 	36	 
	12.19 Incorporated Reference
	 	 	37	 

iii

 

 

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of December 30, 2004, by
and among EDGEWOOD MANOR OF LUCASVILLE, INC., EDGEWOOD MANOR OF LUCASVILLE II, INC., EDGEWOOD MANOR
OF WELLSTON, INC., EDGEWOOD MANOR OF WESTERVILLE, INC., and EDGEWOOD MANOR OF GREENFIELD, INC.,
each of which is an Ohio corporation, (collectively, as “Seller”) and RE LUCASVILLE I, INC., RE
LUCASVILLE II, INC., RE WELLSTON, INC., RE WESTERVILLE, INC., and RE GREENFIELD, INC.,
(collectively as “Buyer”).

WITNESSETH:

     WHEREAS, Seller owns buildings that are nursing homes (the “Nursing Home”) and the related
real estate as described on Exhibit A, (the “Premises”);

     WHEREAS, Seller currently leases the Premises to Tandem Health Care of Ohio, Inc., an Ohio
corporation (“Tandem Ohio”), pursuant to that certain Assignment of Leases, dated March 1, 2000
(the “Assignment of Leases”), by and among Tandem Ohio, Sellers and the following “Renacci”
parties: James Renacci (“Renacci”), LTC Management of Lucasville, Inc., LTC Management of
Lucasville II, Inc., LTC Management of Westerville, Inc., LTC Management of Greenfield, Inc. and
LTC Management of Wellston, Inc.;

     WHEREAS, the respective boards of directors, and shareholders of Seller have determined that
it is in the best interest of Seller to sell the Assets (as defined in Section 1.1) 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)
(collectively, the “Assets”): (i) fee simple absolute title to the real property described in
Schedule 4.9 hereto, together with all improvements, buildings and fixtures located thereon
or therein (collectively, the “Real Property”); (ii) all major, minor or other machinery,
equipment, furniture, furnishings, appliances, signs and personal property located in, attached to
or used in connection with Real Property owned by Seller including those listed on Schedule
4.9 hereto (the

 

 

“Personal Property”), if any; (iii) any books and records pertaining to the Warranties (as
hereinafter defined), Licenses and Permits (as hereinafter defined), any Real Property or the
operation of the Real Property (collectively, the “Books and Records”)); (iv) all written
warranties and guaranties given to Seller made by or received from any person with respect to any
building, building component, structure, fixture, machinery, equipment or material constituting
part of the Real Property (collectively the “Warranties”); (v) (a) any preliminary, final or
proposed building plans or specifications (including “as-built” plans and drawings) and plans and
specifications for improvements, structures and fixtures, (b) existing surveys, architectural and
structural drawings, and engineering, soils, seismic, environmental, geologic and architectural
reports, studies and tests relating to the Real Property and (c) lock combinations, keys, operating
manuals and technical data relating to the Real Property or any Personal Property ((a), (b) and (c)
collectively, the “Reports and Plans”); and (vi) the Assignment of Leases, the Original Leases and
all other agreements; (vii) all certificates of use or occupancy, zoning permits, building permits
and other governmental permits, licenses, authorizations and approvals set forth on Schedule
4.5 (collectively, the “Licenses and Permits”) to the extent assignable, held by Seller
relating to and/or necessary or useful for the lawful construction, the ownership, operation,
management, use, occupancy, development and operations of the Nursing Home and the Assets (the
“Assignable Licenses and Permits”). Seller shall convey good title to the Assets and all parts
thereof to 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 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, except as otherwise
permitted under this Agreement (all such liabilities, “Excluded Liabilities”).

2. FINANCIAL ARRANGEMENTS

2.1 Deposit/Purchase Price.

          2.1.1 Five thousand dollars ($5,000) has been paid to Seller by Buyer in cash in accordance
with that certain Letter of Intent dated October 20, 2004 between Buyer and Seller as a good faith
deposit in connection with the negotiation of this Agreement (the “Deposit”). Such Deposit shall
be applied against the Purchase Price at Closing and shall not be refundable to Buyer; even in the
event that this Agreement is terminated in accordance with Section 10.1.

          2.1.2 Subject to the terms and conditions hereof and subject to adjustment as set forth in
Section 2.3, Buyer agrees to tender to Seller at Closing approximately ($15,161,627), (the
“Purchase Price”), comprised of the following:

          (a) Estimated debt pay off (the “Bank Liabilities”) of $8,909,205,
comprised as follows:

2

 

	 	(i)	 	Pay off of $8.6 Million National City loan in
the amount of $6,966,200
	 
	 	(ii)	 	Pay off of $4.0 Million National City loan in
the amount of $3,384,800, reduced by $1,771,795 which constitutes the
portion of such obligation being paid directly by Tandem Ohio to
National City and excluded from the Purchase Price (the “Tandem Loan
Portion”);
	 
	 	(iii)	 	Early termination of swap contract liability
in the amount of $330,000

	 	(b)	 	Estimated tax liability (the “Tax Liability”) of $2,902,422;
	 
	 	(c)	 	Option fee (the “Option Fee”) of $2,000,000; and
	 
	 	(d)	 	Subject to Section 2.3.3 herein, the lease termination premium
(the “Lease Termination Premium”) of $1,250,000, based upon a Closing date of
March 1, 2005.;

          2.1.3 The Purchase Price will be paid at Closing in cash or certified check for the Bank
Liabilities, Tax Liability, the Option Fee, the Lease Termination Premium and the Rent Arrearages;
provided, however that Tandem shall be given credit toward the payment of the Purchase Price in the
amount of (1) $5,000 for the Deposit; and (2) lease deposits (the “Lease Deposits”) in the amount
of $308,883.

          2.1.4 Buyer shall also tender to Seller at Closing the amount of accrued interest on the Bank
Liabilities on and as of Closing (the “Accrued Interest”).

          2.1.5 Buyer shall also tender to Seller at Closing the Rent Arrearages and December Rent as
set forth on Schedule 2.1.5.

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 as provided by Section 1060 of the Internal
Revenue Code of 1986, as amended and rules and regulations promulgated thereunder (collectively,
the “Code”) and to be set forth in Schedule 2.2 hereto. In this regard, the parties agree
that, if required, they will each properly prepare and timely file Form 8594 in accordance with
Section 1060 of the Code consistent with the Allocation. The parties agree that any tax

3

 

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.

          2.3.1 The Bank Liabilities shall be adjusted to reflect the actual liability on and as of the
Closing Date.

          2.3.2 The Tax Liability is based upon (and shall include) Seller’s accountant’s estimate of
taxable gain on the $15,161,627 Purchase Price as of a December 31, 2004 Closing (i.e., the actual
Purchase Price “grossed-up” to include all taxes on the transaction), and such amount shall be
adjusted to reflect the “estimate” as of the actual Closing, subject to verification by Buyer’s
accountants and, to the extent necessary, there will be a final computation of the precise amount
of such liability within thirty (30) days after the Closing, based upon the “grossed-up” Purchase
Price. The parties acknowledge and agree that it is their intent that the Purchase Price include
all federal, state and local tax liabilities of any kind or nature incurred by Seller and/or its
shareholders in connection with (and only in connection with) the consummation of the transactions
contemplated hereby. The computation of the Tax Liability to be reimbursed by Buyer hereunder
shall not include any net operating or capital loss carry forward, inter-company transfers or
payments which Seller or its shareholders may possess with respect to any matter that is not
directly related to the transaction contemplated herein. Any dispute regarding computation of the
tax liabilities will be conclusively resolved by an independent certified public accountant
reasonably acceptable to Seller and Buyer and the fees charged by the certified public accountant
will be borne by the parties in the proportion that the computation by such party’s accountant
shall be proven to be incorrect. For example, if Seller states that the tax reimbursement amount
is $3,400,000 and Buyer states it is $3,000,000 but the certified public accountant states that the
amount is $3,300,000, Seller shall pay 25% of the certified public accountant fees and Buyer shall
pay 75%; if the certified public accountant determined that the amount is $3,500,000, the entire
fee shall be borne by Buyer.

          2.3.3 Should the Closing occur prior to March 1, 2005, the Lease Termination Premium shall be
increased as follows: by $50,000 to $1,300,000 if the Closing occurs on or after February 1, 2005
but before March 1, 2005, and by $100,000 to $1,350,000 if the Closing occurs on or after December
15, 2004 but before February 1, 2005, and the Purchase Price shall be increased accordingly.

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.

4

 

on or before March 1, 2005, such date to be determined based upon the timing of financing for
the transaction, 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”);
provided, however, that the Closing shall not occur on December 24-26, 2004 and provided that if
Closing is to occur on January 1, 2005, the parties shall use their best efforts to have all
documents executed and Closing deliverables exchanged before December 30, 2004. The Closing shall
be effective as of 12:01 a.m. then prevailing Eastern time on the date following the Closing (the
“Effective Time”).

3.2 Prorations.

     Except as set forth in Section 2.3, there shall be no other offsets, deductions, prorations or
purchase price adjustments of any kind or nature. The parties acknowledge and agree that it is
their intent that, after the payment by Seller of the final Bank Liabilities and the final Tax
Liability, and after the payment to Seller of the Reimbursable Selling Expenses, Seller shall
receive the Option Fee plus the Lease Termination Premium, in full, subject to no further or
additional offsets, deductions, prorations or purchase price adjustments, provided that such total
amount shall include the Deposit, and provided further that Seller shall be obligated to pay the
Non-Reimbursable Selling Expenses (as defined in Section 11.5).

3.3 Actions of Seller at Closing.

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

          3.3.1 Deeds, duly executed, containing limited warranty of title substantially in the form
attached hereto as Exhibit B, sufficient to vest in Buyer (or its nominee or assignee) full legal
and equitable fee simple title to the Real Property, subject only to the liens and encumbrances
permitted herein;

          3.3.2 General Bill of Sale and Assignment of Contracts, in substantially the form attached as
Exhibit C (the “Bill of Sale”), duly executed by Seller, conveying to Buyer good and valid title to
the tangible assets which are part of the Assets including the Warranties, Reports and Plans, Books
and Records, Licenses and Permits and the Personal Property owned by Seller and any unpaid casualty
claims or losses (if any) and unpaid condemnation awards or damages, if any, which title shall be
free and clear of all liens, security interests, pledges, options, restrictions, encumbrances, and
defects in title, except for current taxes not yet due and payable and except as provided or
permitted herein;

          3.3.3 A FIRPTA Affidavit, substantially in the form attached hereto as Exhibit D;

          3.3.4 All documents required by this Agreement or the Title Company (as defined herein), which
are reasonably necessary in order for the Title Company to issue the Title Policy to Buyer in
accordance with this Agreement, including without limitation the Seller’s

5

 

affidavit prepared by the Title Company, provided such affidavit or other documents are in
form acceptable to Seller in Seller’s reasonable discretion;

          3.3.5 A payoff letter with wire instructions setting forth the amount required to be paid in
order to satisfy in full as of Closing any and all mortgages, including the Bank Liabilities, that
encumber the Real Property;

          3.3.6 All Books and Records;

          3.3.7 All Licenses and Permits;

          3.3.8 All Reports and Plans

          3.3.9 All keys to the Real Property and Personal Property in possession of Seller;

          3.3.10 A duly executed counterpart of any certificates, affidavits, disclosures and reports
required by applicable state and local law in connection with the conveyance of the Assets to
Buyer;

          3.3.11 Copy of resolutions duly adopted by the respective boards of directors, and
shareholders 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;

          3.3.12 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;

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

          3.3.14 Certificates of Good Standing of Seller from the Ohio Secretary of State, dated no
earlier than ten (10) business days prior to Closing;

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

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

          3.3.17 The cancellation and termination of any existing lease of the Real Property; and

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          3.3.18 Such other instruments and documents, including consents to assignments of the
Assignable Licenses and Permits, as Buyer reasonably deems necessary to effect the transactions
contemplated hereby.

3.4 Actions of Buyer at Closing.

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

          3.4.1 The Purchase Price in same-day funds, less the Deposit;

          3.4.2 The payment of all accrued but unpaid rents and any and all other payments due Seller
pursuant to the Original Leases (collectively, “Rent”). Rent will be prorated if the Closing takes
place after January 1, 2005, but will not be prorated if the Closing takes place on or before
January 1, 2005.

          3.4.3 The Accrued Interest in same-day funds;

          3.4.4 Copies of resolutions duly adopted by the respective boards of directors of 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;

          3.4.5 Certificate of the Chairman of 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;

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

          3.4.7 Certificates of Good Standing of Buyer from the Ohio Secretary of State, dated no
earlier than ten (10) days prior to Closing;

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

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

          3.4.10 Payoff receipt evidencing payment by Tandem Ohio of the Tandem Loan Portion.

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

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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:

4.1 Capacity.

          Seller consists of several corporations duly organized, validly existing and in good standing
under the laws of the State of Ohio. 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 to own its properties and conduct its business in the place and manner now
conducted.

4.2 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 organizational documents;

          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;

          4.2.4 will not create 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 or the Assets may be subject if such violation would have a material adverse affect on
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 or the Assets may be subject.

4.3 No Affiliates and FIRPTA.

          Except as set forth on Schedule 4.3, 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

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not have any investments in any other entity. Seller is not a foreign person within the
meaning of Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”).

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”). All persons who have any legal interest in
the Assets, or whose joinder would be necessary to convey title to the Assets as required by this
Agreement, are named herein as “Seller.”

4.5 Licenses and Permits.

          All Licenses and Permits held by Seller, as set forth on Schedule 4.5, are in full
force and effect, unconditional, not currently under appeal, and not subject to appeal. Seller has
previously delivered to Buyer true, correct and complete copies of all the Licenses and Permits.
Except as otherwise provided herein, Seller holds all the Licenses and Permits in its own name, has
not assigned them and has not received any notice that any of the Licenses and Permits may be
suspended or not renewed or may not be assigned to Buyer.

4.6 Legal and Regulatory Compliance.

          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 Seller has timely filed all
reports, data and other information required to be filed with such commissions, boards, bureaus and
agencies except where a failure to file timely would not have a material adverse effect on the
Assets.

4.7 The Contracts.

          Other than the Original Leases (as defined in Section 5.5.2), the Assignment of Leases, and
the National City loans described in Section 2.1(a)(i) and (ii) (the “National City Loans”), Seller
is not a party to any contracts, commitments or agreements that affect the Assets.

4.8 Equipment.

          Attached hereto is a depreciation schedule as of fiscal year and December 31, 2004
(Schedule 4.8) by Nursing Home which lists all the Personal Property. Since the
above-referenced date, Seller has not sold or otherwise disposed of any item of Personal Property
constituting any part of the Assets. To Seller’s knowledge, all of the Assets consisting of the
Personal Property are adequately maintained and in functional condition, except for reasonable wear
and tear. Seller has good and valid title to such Personal Property Personal Property.

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Seller will convey to Buyer at Closing all of Seller’s interest in all Personal Property free
and clear of any lien or security interest or other encumbrance.

4.9 Real Property.

          Seller is vested with full legal and equitable fee simple absolute title to the Real Property.
The legal description of the Premises is described in Schedule 4.9 hereto. The Real
Property will be conveyed to Buyer at Closing by special 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) easements, conditions, or restrictions of record provided
that none of the foregoing are violated by any existing improvements or the present use thereof;
(iii) dedicated streets, roads, and rights-of-way; (iv) all applicable zoning and other laws which
do not interfere with existing use; (v) matters disclosed on the Survey (as defined in Section 7.2)
and (vi) other matters on the Title Commitment (as hereinafter defined) to which Buyer does not
object. The Real Property comprises all of the real property necessary to operate the nursing home
on the Premises.

          4.9.1 Seller has good, indefeasible and insurable fee simple absolute title to each parcel of
Real Property, free and clear of any and all mortgages, liabilities, liens, charges, claims,
collateral assignments, tenancies, leases, attachments, levies, judgments, easements, reservations,
encroachments, pledges, rights-of-way, equities, restrictions, encumbrances, rights of first
refusal, options to acquire, assessments, security interests, defects in title and all other title
matters whatsoever, except those to be paid at the Closing and the Permitted Encumbrances, and will
defend the same against the claims of all persons wrongfully claiming by, through or under Seller;

          4.9.2 Seller has not received notice of a 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;

          4.9.3 There is not existing, and to the best knowledge of Seller, 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 or any utilities, sewers, roadways or
other public improvements;

          4.9.4 Seller has no knowledge nor has received a notice of 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;

          4.9.5 The Real Property are in compliance with all applicable zoning ordinances, local
building codes and ordinances or are operating under a valid zoning variance; the use and operation
of the Nursing Home as a nursing home is a permitted use under the applicable zoning code(s);
Seller has received no notice that the Nursing Home is in violation, which violation has not been
cured, of local building codes, ordinances or zoning laws; and the

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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;

          4.9.6 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;

          4.9.7 No part of the Real Property contains or is located within any tideland, wetland, or
marshland or any similar areas;

          4.9.8 There are no parties other than Tandem Ohio or its sublessee thereto in possession of
the Real Property or any portion thereof as managers, lessees, tenants, or trespassers and the Real
Property is not subject to any lease, license, form of use or occupancy agreement other than the
Assignment of Leases to Tandem Ohio and any sublease by Tandem Ohio;

          4.9.9 There is access to the Real Property from a dedicated public right-of-way. 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;

          4.9.10 There is available to the Real Property propane gas, water, sanitary sewer lines, storm
sewers, electrical, and telephone services in operating condition which are adequate for use of the
Real Property for the operation of the nursing home located on the Premises. 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 threatened governmental or third party proceeding which
would impair or result in the termination of such utility availability;

          4.9.11 Seller has not received and has no actual knowledge of any notice or request, formal or
informal, from any insurance company or board of fire underwriters (i) identifying any defects in
the buildings or improvements on the Premises that would adversely affect the insurability of the
nursing home located on the Premises, or (ii) requesting the performance of any demolition,
repairs, alteration or other work with respect to the nursing home located on the Premises;

          4.9.12 Seller has no knowledge and Seller has not received a notice of any public improvements
which have been ordered to be made and/or which have not heretofore been assessed, and there are no
special, general or other assessments pending, threatened against, affecting or to affect the
buildings or improvements on the Premises; and

          4.9.13 No public or private nuisance condition concurrently exists or has existed prior to the
date hereof on, or with respect to, the Real Property.

          4.9.14 Notwithstanding anything contained in this Agreement to the contrary, Seller shall have
no obligation or liability (whether arising through representation, warranty or otherwise)
regarding any lien, encumbrance, condition or other matter that either (a) was created

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by or on behalf of Buyer or a related entity of Buyer, or (b) arose in connection with Buyer’s
or a related entity of Buyer’s obligations under its lease of the Premises or any assignment of
same.

4.10 Brokers and Finders.

          Seller has not and will not engage any broker or finder in connection with this Agreement and
the transactions contemplated hereunder unless Seller notifies Buyer of such engagement, in which
event Seller agrees to be solely responsible for all fees, charges, costs and expenses of any such
broker or finder.

4.11 Insurance.

          Schedule 4.11 sets forth a true and complete list of all insurance policies or
self-insurance funds of any nature whatsoever maintained by Seller, if any, as of the date hereof
covering the ownership and operation of the Assets, which Schedule reflects the policies’ numbers,
terms, identity of insurers, amounts and coverages. 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.

4.12 No Employee Benefit Plans.

          None of the Assets is an asset, and the funds used by Seller to acquire the Assets were not
assets, of any “employee benefit plan” within the meaning of the Employee Retirement Income
Security Act of 1974, as amended, or of any entity the underlying assets of which constitute “plan
assets” of one or more of such plans under applicable U.S. Department of Labor regulations.

4.13 No Employees and Employee Relations.

          Seller does not currently have, and since 1997 has not had any employees.

4.14 Litigation or Proceeding.

          There are no claims, judgments, orders, suits, actions, garnishments, attachments or
proceedings of any nature by or before any court, commission, board or other governmental body
pending, or to the knowledge of Seller threatened, which involve or affect, or could involve or
affect: (a) the Assets, (b) the legal use of the Assets, (c) Seller’s title to the Assets, (d) the
validity or enforceability of this Agreement, (e) any risk of any judgment or liability being
imposed upon Seller which could materially adversely affect the financial condition of Seller or
Seller’s ability, power or right to observe or perform fully its agreements and obligations
hereunder, including without limitation the conveyance of the Assets to Buyer. Seller has filed a
claim under a valid and adequate insurance policy for each and every matter contained in the
Litigation (which insurance policy shall not require any deductible or other payment in connection
with the filing, performance or payment of each such claim), if any, and each such

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claim has been accepted by the applicable insurance company and the proper defense of such
claim has been tendered at the sole cost and expense of such insurance company (including the cost
of all attorneys’ fees).

4.15 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, but excluding any taxes or assessments related to the Real Property 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, 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 Seller’s knowledge,
threatened.

4.16 Subsequent Events.

          Except as disclosed herein (including the Schedules hereto) or as disclosed on Schedule
4.16 hereto, since September 30, 2004 to the date of this Agreement (i) to Seller’s knowledge
there has not been any material damage, destruction or loss (whether or not covered by insurance)
affecting the Assets and (ii) Seller has not incurred any material liability or obligation of any
nature (whether absolute, accrued, contingent or otherwise).

4.17 Certain Affiliate Transactions.

          Except as set forth on Schedule 4.17, no officer, or member of the respective boards
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 or the
Assets; or (iii) holds a beneficial interest in any contract or agreement relating to the Assets to
which Seller is a party or by which Seller may be bound.

4.18 Environmental Matters.

          4.18.1 (1) For purposes of this Agreement, the term “Environmental Laws” shall mean any and
all bylaws, statutes, ordinances, rules, regulations, orders or determinations of any Government
Authority pertaining to health or the environment, whether now in existence or

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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.

               (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 on the Real Property; (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; or (e) any underground storage
tank, waste treatment, disposal or storage areas, asbestos or polychlorinated biphenyls (“PCBs”).

          4.18.2 During Seller’s ownership of the Real Property:

               (1) The Real Property is in compliance with all applicable Environmental Laws except as to any
violations that may have occurred arising from Buyer’s operation of the Premises or the Real
Property. 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.

               (2) The Real Property is not subject to any existing, pending or, to the best 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

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Seller is in compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations.

               (4) There is no pending claim 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 PCBs into the environment from 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 relating to the Real Property;
(b) received notice under the citizen suit provision of any Environmental Law in connection with
the Real Property; (c) received any request for information, notice, demand letter, administrative
inquiry, or formal complaint or claim or suit with respect to any Environmental Condition relating
to the Real Property; or (d) been subject to or threatened with any governmental or citizen action
with respect to any Environmental Conditions relating to the Real Property; and Seller has no
reason to believe that any of the above will be asserted.

               (6) Seller has provided Buyer with true and correct copies of any environmental study,
assessment, report, permit or other written material relating to the environmental condition of the
Real Property and the presence of Hazardous Substances that are in Seller’s possession, if any.

4.19 Reports, Statements and Copies.

          All representations and warranties made herein or in any certificate or other document
delivered in connection herewith, 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.

5. REPRESENTATIONS AND WARRANTIES OF BUYER

     As of the date hereof and as of the Closing Date, Buyer, jointly and severally, 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.

          Buyer is a corporation duly organized and validly existing, of active status under the laws of
the State of Ohio. 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

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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.

5.2 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:

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

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

          5.2.3 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;

          5.2.4 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;

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

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

5.3 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.

5.4 Brokers and Finders.

          Buyer has not engaged any broker or finder with respect to the transaction proposed in this
Agreement.

5.5 Operation of the Assets.

          5.5.1 The Tandem affiliates set forth on Schedule 5.5.1 (the “Tandem Affiliates”) are
and have since March 1, 2000 (the “Possession Date”) been in possession of and have operated the
Assets pursuant to the Assignment of Leases.

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          5.5.2 Pursuant to the Assignment of Leases, Tandem Ohio and/or the Tandem Affiliates have
assumed all of the obligations of Renacci under the original leases (the “Original Leases”) that
were subject to the Assignment of Leases, from and after the Possession Date.

          5.5.3 The State of Ohio through its agencies has licensed the Tandem Affiliates to operate the
Nursing Homes and use the Assets in connection therewith since the Possession Date.

          5.5.4 Tandem Ohio has full knowledge of the condition and the use of the Assets since the
Possession Date and has performed its own due diligence regarding the Assets including the use of
the Assets in connection with the operation of the Nursing Homes prior to taking possession on the
Possession Date.

          5.5.5 Tandem Ohio has timely obtained or will have timely obtained prior to Closing the
consent of any and all governmental authorities (the consent of which may be required to consummate
the transactions contemplated herein) to the proposed transaction, if required.

          5.5.6 Tandem Ohio and/or the Tandem Affiliates is in possession of certain books, records,
cost reports, health inspection reports, contracts, records or other documents related to the
ownership or operation of the Assets. To the limited extent that Seller may have any material
information or records which Tandem does not possess or have access to from other sources, Tandem
shall have access to such information and records of Seller during customary business hours on
reasonable notice, as set forth in Sections 6.1 and 8.14.

5.6 Real Property Transferred “AS IS”

     Buyer acknowledges that the Real Property is being purchased and will be conveyed “as-is” with
all faults and defects, whether patent or latent, as of the Closing Date. There have been no
representations, warranties, guarantees, statements or information, express or implied, pertaining
to the Real Property, its condition, or any other matters whatsoever, made to or furnished to Buyer
by Seller or any employee or agent of Seller, except as specifically set forth in this Agreement.

5.7 Lease Compliance.

          Tandem Ohio (or its affiliated entities) is and shall be in material compliance with the
Original Leases and the Assignment of Leases on and as of the Closing.

6. COVENANTS OF SELLER

6.1 Access and Information.

          Between the date of this Agreement and the Closing Date, Seller shall afford to the officers
and authorized representatives and agents of Buyer reasonable access to Seller’s partners,
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

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Buyer such additional financial and operating data and other information in Seller’s
possession regarding the Assets as Buyer may from time to time request.

          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 with any work done by Seller’s accountant at the
request of Buyer outside the ordinary due diligence process and except with respect to such fees
related to computation of the Tax Liability which fees are to be handled in accordance with Section
2.3.2. In the exercise of its rights under this section, Buyer shall not unreasonably interfere
with the operations of Seller.

6.2 Operations.

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

          6.2.1 maintain the Assets, and keep all Real Property in as good a condition as at present,
ordinary wear and tear excepted;

          6.2.2 perform all of Seller’s obligations under the National City Loans;

          6.2.3 take all actions necessary and appropriate to: (i) render title to the Assets free and
clear of all liens, security agreements, claims, charges and encumbrances (except for the Permitted
Encumbrances); and (ii) with respect to the Real Property, discharge mortgage or monetary liens on
the Real Property credited by Seller; and

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

6.3 Negative Covenants.

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

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

          6.3.2 sell, assign or otherwise transfer or dispose of any of the Assets.

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, (b) will provide information and communications in Seller’s possession to governmental and
regulatory authorities as Buyer or such authorities may

18

 

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 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 Title and Survey Matters.

6.8 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 2.3 of the Real Property insuring such
title to the Real Property as is specified in the Title Commitment. Buyer will have five (5) 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 five (5) 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 three days thereafter either (a) accept title to the Real Estate 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 three day period, Buyer will be deemed to have
accepted title to the Real Estate 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.

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6.9 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 in all material respects
as of the Closing Date.

7. COVENANTS OF BUYER

7.1 Governmental Approval.

          Between the date of this Agreement and the Closing Date, Buyer will (a) use its 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, (b) use its commercially reasonable efforts 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.

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 and
Buyer 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.

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7.5 Real Property.

     In the event that this Agreement is terminated prior to the Closing by any party hereto,
Buyer, at its sole cost and expense, shall restore the Real Property (a) to substantially the same
condition it was in immediately prior to the commencement of Buyer’s due diligence inspection
activities hereunder, and (b) to a condition in full compliance with the provisions of the Original
Leases and the Assignment of Leases. Buyer shall indemnify, defend and hold Seller harmless from
and against all liabilities, claims, damages, penalties, costs and expenses (including, but not
limited to, reasonable attorneys’ fees and expenses) incurred or asserted against Seller in
connection with or arising out of Buyer’s due diligence inspection activities. The obligations set
forth in this Section 7.5 shall survive the expiration or termination of this Agreement.

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 12.5, and
12.17 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 the President of each 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)
Seller is a corporation, duly organized, validly existing and of active status under the laws of
the State of Ohio; (ii) 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 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

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

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.

          Seller shall not have suffered any material adverse change, loss or damage to the Assets,
whether or not covered by insurance.

8.6 Vesting/Recordation.

          Seller shall have furnished to Buyer, in form and substance reasonably acceptable to Buyer and
approved by Buyer’s counsel, as required hereunder, 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 No Agreements and Commitments.

          Seller shall not have entered into any new agreements or commitments relating to the Assets
prior to Closing without the written consent of Buyer.

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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 (other than the Real Property) 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 condition as before the damage; provided, however, that for the purposes
of this Section, the Premises may not be replaced with other real property. 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; 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.

          With respect to the Real Property, if a material part of the Real Property is damaged prior to
the Closing by fire or other casualty, Buyer may cancel this Agreement by written notice to Seller
within ten (10) days of the date of such casualty, in which event this Agreement shall terminate
and neither party shall have any further rights or obligations under this Agreement other than
those rights and obligations which are expressly stated to survive expiration or termination of
this Agreement. In the event that Buyer fails to provide Seller with written termination notice
within such ten (10) day period, then notwithstanding anything to the contrary, this Agreement
shall remain in full force and effect and Buyer shall proceed to close and take the Real Property
as damaged, in which event Buyer shall be entitled to receive the insurance proceeds, if any,
actually received by Seller as the result of such loss.

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 indicating that the allocation of the
Purchase Price contemplated by Section 2.2 is appropriate.

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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 or Buyer’s
Lender (as defined below) 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 4.9 and 4.18 hereof.

8.14 Due Diligence.

          Seller shall have granted Buyer reasonable access to conduct its due diligence related to the
Assets, and Buyer shall have completed its due diligence reviews, the results of which shall be
reasonably satisfactory to Buyer and Buyer’s Lenders.

8.15 Allocation of Purchase Price.

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

8.16 Financing.

          Buyer shall have obtained one or more debt and/or equity financing commitments by December 15,
2004 from a lender(s) of its choice (“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.

8.17 Condemnation.

          If, prior to the Effective Time, all or any portion of the Real Property is taken by eminent
domain or a notice of any eminent domain proceedings with respect to the Real Property or any part
thereof is received by the Seller then Seller shall within ten (10) days thereafter deliver written
notice thereof to Buyer. If a material portion of the Real Property is taken by eminent domain,
Buyer shall have the option to (a) complete the purchase hereunder or (b) if such taking, in
Buyer’s reasonable discretion, materially adversely affects the Real Property’s viability for
Buyer’s intended purposes, terminate this Agreement, in which event the parties shall have no
further obligations to the other pursuant to this Agreement, and this Agreement shall be null and
void. Buyer shall deliver written notice of its election to terminate this Agreement pursuant to
this Section to the Seller within ten (10) days after the date upon which the Buyer received
written notice of such eminent domain proceedings. If this Agreement is not so terminated, Buyer
shall be entitled to all awards or damages actually received by reason of any exercise of the power
of eminent domain or condemnation with respect to, or for the taking of, the Real Property or any
portion thereof, and all proceeds of such awards or damages shall be a credit for Buyer’s benefit
toward the Purchase Price, and any unpaid awards or damages shall be assigned to Buyer at Closing.
Any negotiation for, or agreement to, and all contests of any offers

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and awards relating to eminent domain proceedings shall be conducted with the joint approval
and consent of the Seller and the Buyer.

8.18 Approvals and Consents.

     Seller (or its affiliated entities) shall have secured any and all approvals and consents
necessary for the consummation of the transactions contemplated hereby, including, but not limited
to, the approvals of all relevant governmental authorities.

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
12.5, and 12.17 herein:

9.1 Representations/Warranties.

          The representations and warranties of Buyer contained in this Agreement shall be true in all
material respects 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 the Chairman of Buyer.

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) Buyer is a corporation, duly organized, validly existing and of active status under the laws of
the State of Ohio; (ii) 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 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

25

 

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 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 Approvals and Consents.

     Buyer (or its affiliated entities) shall have secured any and all approvals and consents
necessary for the consummation of the transactions contemplated hereby, including, but not limited
to, the approvals of all relevant governmental authorities.

10. ADDITIONAL AGREEMENTS

10.1 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; (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

26

 

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 6.7, 8.10 or 8.16; (vi) by Buyer or Seller if Closing
shall not have taken place on or before 11:59 p.m. (Eastern time) on March 1, 2005 (which date may
be extended by mutual agreement of Buyer and Seller).

          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.

10.2 Post-Closing Access to Information.

          Seller and Buyer 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 in Seller’s or Buyer’s possession 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.

10.3 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 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. 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. INDEMNIFICATION

11.1 Indemnification by Seller.

          Subject to and to the extent provided in this Article 11, 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

27

 

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 ownership of the Assets prior to the Closing, or which are incurred or suffered by Buyer’s
Indemnified Persons, from:

          11.1.1 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;

          11.1.2 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;

          11.1.3 the Excluded Liabilities;

          11.1.4 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; or

          11.1.5 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;

provided, however, that Seller shall not indemnify Buyer’s Indemnified Persons for losses arising
from Tandem Ohio’s operation or use of the Assets under the Assignment of Leases.

11.2 Limitations/Seller.

          Seller shall have no liability under this Article 11 and no claim under Section 11.1 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 11.7.

          Notwithstanding anything to the contrary contained in this Agreement, no amounts of indemnity
shall be payable by Seller as a result of any claim in respect of any Losses unless and until the
Buyer’s Indemnified Persons have suffered, incurred, sustained or become subject to Losses in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate, it being agreed that if such
Losses are in excess of One Hundred Thousand Dollars ($100,000), the Seller shall be liable for any
such Losses in excess of $100,000.

          The maximum aggregate liability of the Seller under this Article 11 shall be limited to Three
Million Three Hundred Fifty Thousand Dollars ($3,350,000).

          The amount of any Losses for which indemnification is provided under this Article 11 shall be
reduced by the net amount of any related recoveries received any of Buyer’s Indemnified Persons
under insurance policies or other related payments received from third parties and all such Buyer’s
Indemnified Persons shall use all commercially reasonable efforts to effect any such recovery.

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11.3 Indemnification by Buyer.

          Subject to and to the extent provided in this Article 11, 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 ownership
of the Assets after the Closing, or which are incurred or suffered by Seller’s Indemnified Persons
from:

          11.3.1 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;

          11.3.2 Any cause, event, fact, or circumstance whatsoever arising on or in connection with the
Real Property after the Closing.

11.4 Limitations/Buyer.

          Buyer shall have no liability under this Article 11 and no claim under Section 11.3 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 11.5.

11.5 Indemnification Procedure.

          All claims for indemnity herein shall be made in accordance with the following 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.

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     (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 Wadsworth, Ohio 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 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.

11.6 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 one (1) year. As to claims arising out of
Sections 4.15 and 4.18, 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.

11.7 Indemnity Notice; Fault.

          Buyer and Seller each agree to give the other party prompt notice of any circumstance under
which such other party would have a claim for indemnity pursuant to this Article 11.

30

 

          Notwithstanding anything to the contrary contained in this Agreement, no amounts of indemnity
shall be payable as a result of any claim in respect of any Losses arising under this Article 11 to
the extent that such Losses are caused by (a) any misrepresentation or breach of warranty, covenant
or agreement by the party seeking indemnification hereunder, or (b) the gross negligence or
intentional misconduct of such party or any of its officers, directors, employees, agents or
affiliates.

11.8 Exclusive Remedy.

          The indemnification provided to any person pursuant to this Article 11 shall be such
Indemnified Party’s sole remedy for any claims arising hereunder, or otherwise in connection with
or arising out of the transactions described herein, including without limitation any breach by any
party hereto of any representation, warranty or covenant contained in this Agreement, or in any
document, agreement, certificate or instrument required to be delivered in connection herewith.

12. GENERAL

12.1 Interpretation.

          In this Agreement, unless the context otherwise requires:

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

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

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

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

          12.1.5 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;

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

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

31

 

          12.1.8 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;

          12.1.9 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;

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

          12.1.11 references to the “ knowledge” of a party means the actual or constructive knowledge
of any director, or officer, of such party after due inquiry;

          12.1.12 references to “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;

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

12.2 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 occurring 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.

12.3 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.

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12.4 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.

12.5 Expenses; Legal Fees and Costs.

          12.5.1 Seller’s legal, accounting and advisor fees shall be borne by Seller (collectively, the
“Non-Reimbursable Selling Expenses”). Except for the Non-Reimbursable Selling Expenses, all costs
and expenses of Seller and Buyer relating to the preparation of this Agreement and the consummation
of the transactions set forth herein, including but not limited to, transfer taxes and sales taxes,
recording costs, endorsements, title examinations, title insurance, closing agent fees, postage,
fees related to wiring of the receipt of the Purchase Price, delivery charges, documentary stamps
and disbursement fees shall be borne by the Buyer whether or not such transactions are consummated,
and all such costs and expenses which are incurred by Seller and reimbursable to Seller by Buyer
shall be collectively referred to as the “Reimbursable Selling Expenses.”

          12.5.2 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.

12.6 Choice of Law; Arbitration.

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

          12.6.2 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
letter shall be settled by arbitration in accordance with this section. Any arbitration under this
section shall be conducted in accordance with the Rules for Non-Administered Arbitration of the CPR
Institute for Dispute Resolution, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The place of arbitration shall be Columbus,
Ohio. The arbitrators shall decide legal issues pertaining to the dispute, controversy or claim
pursuant to the laws of the State of Ohio. 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.

33

 

12.7 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.

12.8 Accounting Date.

          The transactions contemplated hereby shall be effective for accounting purposes as of 12:01
a.m. (Eastern time) December 31, 2004, unless otherwise agreed in writing by Seller and Buyer.

12.9 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.

12.10 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.

12.11 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

34

 

	 	 	 	 	 
	 

	 	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:
	 	Daniel D. McCuen
	 

	 	 	 	5761 Sunbury Road
	 

	 	 	 	Westerville, Ohio 43082
	 
	 	 	 	 
	 

	 	Copy to:
	 	Laura Hauser, Esq.
	 

	 	 	 	Thompson Hine LLP
	 

	 	 	 	3900 Key Center
	 

	 	 	 	127 Public Square
	 

	 	 	 	Cleveland, Ohio 44114-1291

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.

12.12 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.

12.13 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.

12.14 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.

35

 

12.15 Time of Essence.

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

12.16 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 but 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 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.

12.17 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.

12.18 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.

36

 

12.19 Incorporated Reference.

          All exhibits and schedules referenced herein are hereby incorporated herein by reference.

[Signatures on following pages]

37

 

          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 LUCASVILLE I, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO
	 
	 	 	 	 
	 	 	RE LUCASVILLE II, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO
	 
	 	 	 	 
	 	 	RE WELLSTON, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO
	 
	 	 	 	 
	 	 	RE WESTERVILLE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO
	 
	 	 	 	 
	 	 	RE GREENFIELD, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO

38

 

	 	 	 	 	 
	SELLER:	 	EDGEWOOD MANOR OF LUCASVILLE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Daniel D. McCuen
	 

	 	 	 	 
	 	 	Name: Daniel D. McCuen
	 	 	Title: President
	 
	 	 	EDGEWOOD MANOR OF LUCASVILLE II, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Daniel D. McCuen
	 

	 	 	 	 
	 	 	Name: Daniel D. McCuen
	 	 	Title: President
	 
	 	 	EDGEWOOD MANOR OF WELLSTON, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Daniel D. McCuen
	 

	 	 	 	 
	 	 	Name: Daniel D. McCuen
	 	 	Title: President
	 
	 	 	EDGEWOOD MANOR OF WESTERVILLE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Daniel D. McCuen
	 

	 	 	 	 
	 	 	Name: Daniel D. McCuen
	 	 	Title: President
	 
	 	 	EDGEWOOD MANOR OF GREENEFIELD, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Daniel D. McCuen
	 

	 	 	 	 
	 	 	Name: Daniel D. McCuen
	 	 	Title: President

39

 

JOINDER AND CONSENT

Tandem Health Care of Ohio, Inc. hereby agrees to be bound by the provisions of Section 5.5 to this
Agreement and further agrees that the statements in Section 5.5 as it relates to Tandem Ohio are
true and correct as of the date hereof, and will be true and correct on the Closing Date.

	 	 	 	 	 
	 	 	TANDEM HEALTH CARE OF OHIO, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence R. Deering
	 

	 	 	 	 
	 	 	Name: Lawrence R. Deering
	 	 	Title: Chairman and CEO

40

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