ASSET PURCHASE AGREEMENT

Exhibit 10.26

ASSET PURCHASE AGREEMENT

DIAKON LUTHERAN SOCIAL MINISTRIES
TRESSLER LUTHERAN SERVICES,
THE LUTHERAN WELFARE SERVICE OF NORTHEASTERN PENNSYLVANIA,
INC.,
THE LUTHERAN HOME AT TOPTON, PENNSYLVANIA
AND
SUSQUEHANNA HOUSING, INC.
(“SELLER”)

AND

AND

Dated as of February 15, 2005

TABLE OF CONTENTS

1.		SALE OF ASSETS AND ASSUMPTION OF LIABILITIES							2
			1.1			Assets			2
			1.2			Excluded Assets			3
			1.3			Assumed Liabilities			3
			1.4			Excluded Liabilities			4
2.		FINANCIAL ARRANGEMENTS							4
			2.1			Purchase Price			4
			2.2			Allocation of Purchase Price			5
			2.3			Purchase Price Adjustments			5
			2.4			Prorations			5
3.		CLOSING							6
			3.1			Closing			6
			3.2			Actions of Seller at Closing			6
			3.3			Actions of Buyer at Closing			7
4.		REPRESENTATIONS AND WARRANTIES OF SELLER							8
			4.1			Capacity			9
			4.2			Corporate Powers; Consents; Absence of Conflicts With Other Agreements			9
			4.3			No Affiliates			9
			4.4			Binding Agreement			10
			4.5			Financial Statements			10
			4.6			Licenses			10
			4.7			Patents; Trademarks, Etc			11
			4.8			Medicare Participation/Accreditation			11
			4.9			Legal and Regulatory Compliance			11
			4.10			The Contracts			12
			4.11			Excluded Contracts			12
			4.12			Inventory and Supplies			13
			4.13			Equipment			13
			4.14			Real Property			13
			4.15			Condition of Assets			15
			4.16			Brokers and Finders			15
			4.17			Insurance			15
			4.18			Employee Benefit Plans			16
			4.19			Employees and Employee Relations			16
			4.20			Litigation or Proceeding			17
			4.21			Condemnation and Assessments			17
			4.22			Taxes			17
			4.23			Post-Balance Sheet Results			18
			4.24			Payments			18

			4.25			Certain Affiliate Transactions			19
			4.26			Environmental Matters			19
			4.27			Construction in Progress			20
			4.28			Computer Software, Etc			21
			4.29			Immigration Act			21
			4.30			Reports, Statements and Copies			21
			4.31			Chief Executive Office			21
			4.32			HIPAA Compliance			22
			4.33			Disclosure			22
5.		REPRESENTATIONS AND WARRANTIES OF BUYER							22
			5.1			Corporate Capacity			22
			5.2			No Conflicts			23
			5.3			Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc			23
			5.4			Financial Statements			23
			5.5			Binding Effect			24
			5.6			Brokers and Finders			24
			5.7			Disclosure			24
6.		COVENANTS OF SELLER							24
			6.1			Access and Information			24
			6.2			Operations			25
			6.3			Negative Covenants			26
			6.4			Governmental Approvals			26
			6.5			Exclusive Agreement			27
			6.6			Closing Conditions			27
			6.7			Employees			27
			6.8			Cooperation			27
7.		COVENANTS OF BUYER							27
			7.1			Governmental Approval			27
			7.2			Survey			28
			7.3			Closing Conditions			28
			7.4			Cooperation			28
			7.5			Employees			28
			7.6			Meetings at Facilities			29
			7.7			Financing Commitment			29
			7.8			Title and Survey Matters			29
8.		CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER							30
			8.1			Representations/Warranties			30
			8.2			Opinion of Seller’s Counsel			30
			8.3			Pre-Closing Confirmations			31
			8.4			Action/Proceeding			31
			8.5			No Adverse Change			31

			8.6			Vesting/Recordation			32
			8.7			Title to Real Estate			32
			8.8			Recent Agreements and Commitments			32
			8.9			Closing Documents			32
			8.10			Casualty			32
			8.11			Consents to Assignments			33
			8.12			Appraisal			33
			8.13			Environmental Survey and Physical Plant Inspections			33
			8.14			Financial Statements			33
			8.15			Due Diligence			33
			8.16			Allocation of Purchase Price			34
			8.17			Financing			34
9.		CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER							34
			9.1			Representations/Warranties			34
			9.2			Opinion of Buyer’s Counsel			34
			9.3			Action/Proceeding			35
			9.4			Pre-Closing Confirmations			35
			9.5			Extraordinary Liabilities/Obligation			35
			9.6			Allocation of Purchase Price			35
10.		NONCOMPETITION							36
			10.1			Restrictions			36
			10.2			Enforcement			36
11.		ADDITIONAL AGREEMENTS							36
			11.1			Termination Prior to Closing			36
			11.2			Post-Closing Access to Information			37
			11.3			Preservation and Access to Patient Records After the Closing			37
			11.4			Tax, Medicare, and Medicaid Effect			38
			11.5			Seller’s Cost Reports			38
			11.6			Employee Matters			38
			11.7			Press Releases			39
			11.8			Non-Transfer of Assets			39
12.		INDEMNIFICATION							40
			12.1			Indemnification by Seller			40
			12.2			Limitations/Seller			41
			12.3			Indemnification by Buyer			41
			12.4			Limitations/Buyer			41
			12.5			Indemnification Threshold			42
			12.6			Indemnification Procedure			42
			12.7			Survival of Representations			43
			12.8			Other Indemnities Included Herein			43

13.		GENERAL							43
			13.1			Interpretation			43
			13.2			Schedules			44
			13.3			Consented Assignment			45
			13.4			Consents, Approvals and Discretion			45
			13.5			Expenses; Legal Fees and Costs			45
			13.6			Choice of Law; Arbitration			46
			13.7			Benefit Assignment			46
			13.8			Accounting Date			46
			13.9			No Third-Party Beneficiaries			46
			13.10			Waiver of Breach			47
			13.11			Notices			47
			13.12			Severability			48
			13.13			Gender and Number			48
			13.14			Divisions and Headings			48
			13.15			Time of Essence			48
			13.16			Confidentiality			48
			13.17			Entire Agreement/Amendment			49
			13.18			Drafting			49
			13.19			Post Closing Period			49
			13.20			Incorporation by Reference			50

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of February 15, 2005, by and among DIAKON LUTHERAN SOCIAL MINISTRIES, TRESSLER LUTHERAN SERVICES, THE LUTHERAN WELFARE SERVICE OF NORTHEASTERN PENNSYLVANIA, INC., THE LUTHERAN HOME AT TOPTON, PENNSYLVANIA AND SUSQUEHANNA HOUSING, INC. (“Seller”) and RE SELINSGROVE, LLC, RE MIFFLIN, LLC, RE HAZLETON, LLC, RE POTTSVILLE, LLC, RE NEW BLOOMFIELD, LLC, RE MILLERSBURG, LLC and RE EVERETT, LLC , RE FROSTBURG, LLC, RE SALISBURY, LLC, (“Buyer”) AND OP SELINSGROVE, LLC, OP MIFFLIN, LLC, OP HAZELTON, LLC, OP NEW BLOOMFIELD, LLC,, OP MILLERSBURG, LLC, OP EVERETT, LLC, OP FROSTBURG, LLC AND OP SALISBURY, LLC (“BUYER’S OPERATORS) .

WITNESSETH:

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

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

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

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

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

1.1 Assets .

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

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

1.2 Excluded Assets .

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

1.3 Assumed Liabilities .

          As of the Closing Date, Buyer shall assume and agree to pay, perform and discharge the obligations of Seller under the Contracts arising subsequent to the Closing Date, plus those other liabilities disclosed on Schedule 1.3 (collectively, the “Assumed Liabilities”), plus: (i) Seller’s contractual obligations under current resident agreements, assuming no future service obligations (as defined in the AICPA Audit Guide for Health Care Organizations, Chapter 14, formerly known as Statement of Position 90-8, Financial Accounting and Reporting by Continuing Care Retirement Communities); (ii) all unearned resident entrance fees; (iii) all deferred revenue for future services and residents’ advance deposits; and (iv) the contractual obligations under certain service contracts of Seller related to pharmacy, food service, housekeeping and laundry for a period of not less than one (1) year after Closing; and (v) all liability and payment obligations related to Seller’s commitment or obligation to pay any person

or entity serving as guardian of the person of any Facility residents. Seller and Buyer agree that Buyer shall assume and perform the obligations of Seller arising subsequent to the Closing Date under each of the Contracts, regardless of whether consent to the assignment of each such Contract is required but not obtained; provided, however, that Seller shall indemnify and hold Buyer harmless from and against any claim related to failure to obtain consent made against Buyer by any party to a Contract that consent to the assignment of such Contract by Seller to Buyer is required but has not been obtained.

1.4 Excluded Liabilities .

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

2.1 Purchase Price .

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

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

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

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

2.2 Allocation of Purchase Price .

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

2.3 Purchase Price Adjustments .

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

2.4 Prorations .

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

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

3.1 Closing .

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

3.2 Actions of Seller at Closing .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           3.2.14 Seller will, on the Closing Date, transfer to Buyer all patient and/or resident funds presently held by Seller. Buyer agrees to assume custody of, and total responsibility for such accounts and deal with them in the fiduciary capacity required by law. Seller will indemnify and hold Buyer harmless from all liabilities, claims and demands in the event that the amount of funds, if any, transferred or assigned to Buyer does not represent the full amount of the funds then or thereafter shown to have been delivered to Seller as custodian;

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

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

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

3.3 Actions of Buyer at Closing .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.3 No Affiliates .

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

4.4 Binding Agreement .

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

4.5 Financial Statements .

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

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

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

4.6 Licenses .

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

4.7 Patents; Trademarks, Etc.

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

4.8 Medicare Participation/Accreditation .

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

4.9 Legal and Regulatory Compliance .

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

4.10 The Contracts .

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

          Except as disclosed in Schedule 4.10 :

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

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

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

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

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

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

4.11 Excluded Contracts .

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

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

4.12 Inventory and Supplies .

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

4.13 Equipment .

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

4.14 Real Property .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.15 Condition of Assets .

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

4.16 Brokers and Finders .

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

4.17 Insurance .

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

4.18 Employee Benefit Plans .

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

4.19 Employees and Employee Relations .

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

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

4.20 Litigation or Proceeding .

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

4.21 Condemnation and Assessments .

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

4.22 Taxes .

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

4.23 Post-Balance Sheet Results .

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

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

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

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

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

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

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

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

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

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

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

4.24 Payments .

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

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

4.25 Certain Affiliate Transactions .

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

4.26 Environmental Matters .

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

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

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

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

connection with the Business; or (d) any release or th