_________________________________________________________________________________________________________________________ AGREEMENT AND PLAN OF MERGER BY AND BETWEEN FC-GEN ACQUISITION, INC. AND GENESIS HEALTHCARE CORPORATION* January 15, 2007

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“Equity Financing Commitment” and together with the Debt Financing Commitments, the “Financing Commitments”), pursuant to which JER Partners Acquisitions IV, LLC and FC Investors XI, LLC have committed, subject to the terms thereof, to provide the amount of equity financing set forth therein to Parent (the “Equity Financing” and, together with the Debt Financing, the “Financing”). Prior to the date of this Agreement, none of the Financing Commitments has been amended or modified, and the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect. The Equity Financing Commitment, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of Parent and the other party thereto. Subject to the immediately succeeding sentence, each of the Debt Financing Commitments, in the form so delivered, is in full force and effect as of the date of this Agreement and is a legal, valid and binding obligation of Parent and, to the knowledge of Parent, the other parties thereto. The obligations to make the Financing available to Parent and/or Merger Sub pursuant to the terms of the Financing Commitments are not subject to any conditions other than the conditions set forth in the Financing Commitments. As of the date of this Agreement, (A) none of the Financing C ommitments has been supplemented, modified or amended in any respect, (B) no event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent or Merger Sub under any term or condition of the Financing Commitments and (C) the commitments contained in the Financing Commitments have not been withdrawn, terminated or rescinded. Parent (1) is not aware of any fact or occurrence that makes any of the assumptions, or the representations or warranties of Parent or Merger Sub, in any of the Financing Commitments inaccurate in any material respect, (2) has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it or its Affiliates contained in the Financing Commitments and (3) has no reason to believe that any portion of the Financing required to consummate the transactions contemplated hereby will not be made available to Parent or Merger Sub on the Closing Date. Parent and Merger S ub have fully paid any and all commitment fees or other fees required by the Financing Commitments to be paid by them on or prior to the date of this Agreement and shall in the future pay any such fees as they become due. The Financing Commitments, if and when funded, will provide Parent and the Surviving Corporation with financing at or immediately after the Effective Time sufficient to satisfy all of Parent’s and Merger Sub’s obligations under this Agreement, including the consummation of the Merger upon the terms contemplated by this Agreement and the Financing Commitments and the payment of all amounts under Article III of this Agreement and the funding, refinancing or prepayment of any indebtedness or other obligations of the Company or its Subsidiaries set forth in the Company’s balance sheet included in the most recent Company SEC Report filed prior to the date of this Agreement that become due or payable by the Company or its Subsidiaries in connection with or as a result of the Merger, and the payment of all related fees and expenses associated with the foregoing. Notwithstanding anything in this Agreement to the contrary, the Debt Financing Commitments may be superseded at the option of Parent or Merger Sub after the date of this Agreement but prior to the Effective Time by the New Financing Commitments in accordance with Section 7.10, and in such event, the term “Financing Commitments” as used herein shall be deemed to include the New Financing Commitments to the extent then in effect. Parent acknowledges that its obligations under this Agreement are not conditioned upon or subject to its receipt of the proceeds made available under the Financing Commitments or any other Financing (such obligations being subject only to the satisfaction of the conditions set forth in Sect ions 8.1 and

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8.2 as set forth herein). Concurrently with the execution of this Agreement, Parent has delivered to the Company the limited guarantee of JER Partners Acquisitions IV, LLC (the “Guarantor”) with respect to the payment obligations of Parent pursuant to Section 9.2(c) on the terms specified therein (the “Guarantee”).

     Section 5.8      Certain Arrangements.  As of the date hereof, there are no contracts, undertakings, commitments, agreements or obligations, whether written or oral, between Parent, Merger Sub or any of Parent Affiliate, on the one hand, and any member of the Company’s management or Board of Directors, on the other hand, relating in any way to the Company, the Common Stock, the transactions contemplated by this Agreement, or to the operations of the Company after the Effective Time.

     Section 5.9      Capitalization of Merger Sub.  The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, no par value per share. All of the outstanding shares of capital stock of Merger Sub have been validly issued, are fully paid and nonassessable and are owned directly by, and at the Effective Time will be owned directly by, Parent, free and clear of all Liens. Merger Sub has outstanding no option, warrant, right or any other agreement pursuant to which any Person other than Parent may acquire any equity security of Merger Sub. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will have incurred no liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the transactions contemplated by this Agreement, including the Merger.

     Section 5.10      Absence of Litigation.  As of the date hereof, there is no Proceeding pending or, to the knowledge of Parent, threatened against Parent or any Parent Affiliate or any of its or their respective properties or assets, other than any such Proceeding that does not have, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. As of the date hereof, none of Parent or Parent Affiliate is subject to any order, judgment, writ, injunction or decree, that has, or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

     Section 5.11      Ownership of Company Stock.  Neither Parent nor Merger Sub beneficially owns (within the meaning of Section 13 of the Exchange Act and the rules and regulations promulgated thereunder), or will prior to the Effective Time beneficially own, any Shares, and neither Parent nor Merger Sub is a party, or will prior to the Closing Date become a party, to any Contract, arrangement or understanding (other than this Agreement and the Equity Financing Commitments) for the purpose of acquiring, holding, voting or disposing of any Shares.

     Section 5.12      No Source of Conflicting Interests; Health Regulatory Compliance.  Neither Parent, Merger Sub, nor any Parent Affiliate operates or conducts, or owns or controls any Person that operates or conducts, any business or activities that are regulated by or subject to licensure requirements of any Governmental Authority whose consent or approval is referred to on Schedule 8.2(d) and neither Parent no r Merger Sub has any reason to believe that the identity of or any activities or relationships of Parent, Merger Sub or any Parent Affiliate would reasonably be expected to materially interfere with, delay or reduce the

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likelihood of receipt of the consents and approvals referred to on Schedule 8.2(d). There are no Proceedings, notices of noncompliance, demand letters, audits or inquiries pending or threatened with respect to a violation of any Law by any of Parent, Merger Sub or any Parent Affiliate that would reasonably be expected to materially interfere with, delay or reduce the likelihood of receipt of the consents and approvals referred to on Schedule 8.2(d). None of Parent, Merger Sub or any Parent Affiliate has been debarred, disqualified, suspended or excluded from any Medicare, Medicaid or any other health care program, or from being a health care provider, owner, opera tor or licensee. To the Knowledge of the Parent, as of the date hereof, no current director or executive officer of Parent, Merger Sub or any Parent Affiliate: (a) has had a civil monetary penalty assessed against it under 42 U.S.C. § 1320a-7a; (b) has been excluded from participation under Medicare, Medicaid or any other Federal Health Care Program (as that term is defined in 42 C.F.R. Section 1001.2); or (c) has been convicted (as that term is defined in 42 C.F.R. § 1001.2) of any offense described in 42 U.S.C. § 1320a-7(a) or (b)(1),(2), or (3).

ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER

     Section 6.1      Conduct of the Company and Subsidiaries.  Except for matters set forth in Section 6.1 of the Company Disclosure Letter, as requested by Parent pursuant to Section 7.16 hereof, or as otherwise contemplated by or specifically provided in this Agreement or as subsequently consented to in writing by Parent (which consent shall not be unreasonably withheld), from the date of this Agreement until the Effective Time, the Company shall use its reasonable best efforts to, and shall use its reasonable best efforts to cause its Subsidiaries to, conduct their respective busine sses in the ordinary and usual course consistent with past practice, and, to the extent consistent therewith, shall use its reasonable best efforts to (i) preserve substantially intact its and its Subsidiaries’ present business organization and capital structure; (ii) maintain in effect all material Permits that are required for the Company or its Subsidiaries to carry on their respective businesses; (iii) keep available the services of present officers and key employees; and (iv) maintain the current relationships with tenants, customers, providers, suppliers and other Persons with which the Company or its Subsidiaries have significant business relationships. Without limiting the generality of the foregoing, and except for matters set forth in Section 6.1 of the Company Disclosure Letter or as expressly contemplated or permitted by this Agreement, without the prior written consent of Parent (which consent shall not be unreasonably withheld), the Company shall not, and shall not permit its Subsidiaries to:

     (a)      adopt any change in the organizational documents of the Company or any Material Subsidiary;

     (b)      merge or consolidate the Company or any of its Subsidiaries with any Person or otherwise alter through liquidation, reorganization, reclassification, recapitalization, restructuring or in any other fashion the corporate or capital structure or ownership of the Company or any of its Subsidiaries (other than the Merger and other than such transactions solely among the Company and/or its wholly owned domestic Subsidiaries that would not result in a material increase in the Tax liability of the Company or its Subsidiaries);

     (c)      sell, lease or otherwise dispose of an amount of assets or securities, including by merger, consolidation, asset sale or other business combination (including by

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formation of a material Company joint venture) that is material, individually or in the aggregate, to the Company and its Subsidiaries taken as a whole, other than (i) such transactions solely among the Company and/or its wholly owned domestic Subsidiaries that would not result in a material increase in the Tax liability of the Company or its Subsidiaries, (ii) sales or other dispositions of inventory and other assets in the ordinary course of business consistent with past practice and (iii) leases and subleases of real property and voluntary terminations or surrenders of real property leases, in each case, in the ordinary course of business consistent with past practice;

     (d)      (i) make any material acquisition, by purchase or other acquisition of stock or other equity interests, by merger, consolidation or other business combination (including by formation of a material Company joint venture) or (ii) make any material property transfers or material purchases of any property or assets from any Person (other than acquisitions of inventory and other assets in the ordinary course of business), in each case, other than such transactions solely among the Company and/or wholly owned Subsidiaries of the Company, if the aggregate amount of the consideration paid or transferred by the Company and its Subsidiaries in connection with all such transactions would exceed $20 million;

     (e)      other than in connection with drawdowns or repayments with respect to existing credit facilities and letters of credit in the ordinary course of business consistent with past practice, redeem, repurchase, prepay, defease, cancel, incur or otherwise acquire, or modify in any material respect the terms of, indebtedness for borrowed money or enter into or amend any existing capital lease, conditional sale, swap, derivative or hedging or similar agreement, or assume, guarantee or endorse or otherwise become responsible for, whether directly, contingently or otherwise, the obligations of any Person, other than the incurrence, assumption or guarantee of indebtedness (i) among the Company and/or any of its wholly owned Subsidiaries or (ii) not in excess of $5 million in the aggregate;

     (f)      make any material loans, advances or capital contributions to, or investments in, any other Person in excess of $2,500,000 in the aggregate for all such loans, advances, contributions and investments, except (i) for transactions solely among the Company and/or wholly owned Subsidiaries of the Company, (ii) as required by existing Contracts set forth in Section 6.1(f) of the Company Disclosure Letter or any Disclosed Contract, (iii) in the ordinary course of business (including advances to Company Joint Ventures) or (iv) pursuant to commitments of the type referred to in Section 4.5(d) hereof that are in effect on the date hereof;

     (g)      authorize any capital expenditures in excess of $20 million in the aggregate, other than (i) expenditures provided for in the Company’s budget for fiscal year 2007 (a copy of which 2007 budget has been provided to Parent) and (ii) expenditures in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance);

     (h)      pledge or otherwise encumber shares of capital stock or other voting securities of the Company or any of its Subsidiaries, other than in the ordinary course of business or in connection with any financing activities not prohibited by Section 6.1(e);

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     (i)      mortgage or pledge any of its material assets, tangible or intangible, or create, assume or suffer to exist any Lien thereupon (other than Permitted Liens), other than in the ordinary course of business or in connection with any financing activities not prohibited by Section 6.1(e));

     (j)      enter into or amend any Contract with any executive officer, director or other Affiliate (other than the Company’s Subsidiaries) of the Company or any of its Subsidiaries that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act as currently applicable to the Company, which have not been disclosed prior to the date hereof;

     (k)      enter into, renew, extend, amend, transfer, terminate or waive any provision or right with respect to any Contract that is or would be material to the Company and its Subsidiaries, taken as a whole, or waive, release or assign any rights or claims thereto or thereunder, other than in the ordinary course of business consistent with past practice;

     (l)      (i) split, combine or reclassify any Company Securities or amend the terms of any Company Securities; (ii) declare, establish a record date for, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of Company Securities other than a dividend or distribution by a wholly owned Subsidiary of the Company to its parent corporation; or (iii) authorize for issuance, offer to issue, issue or sell or agree to issue or sell any Company Securities, or redeem, repurchase, exchange or otherwise acquire or offer to redeem, repurchase, exchange or otherwise acquire, any Company Securities, other than in connection with (A) the exercise or forfeiture of Company Options outstanding on the date of this Agreement in accordance with their original terms, (B) the withholding of Company Securities to satisfy Tax obligation s with respect to Company Options or Restricted Shares, (C) the acquisition by the Company of Company Securities in connection with the net exercise of Company Options in accordance with the terms thereof and (D) acquisitions by or issuances to Company Benefit Plans identified in Section 6.1(l) of the Company Disclosure Letter in the ordinary course of business consistent with past practice;

     (m)      except in the ordinary course of business or as required pursuant to existing written agreements or Company Benefit Plans in effect on the date of this Agreement or as required by applicable Law, (i) adopt, amend in any material respect or terminate any Company Benefit Plan, (ii) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (iii) except in connection with promotions or new hires made in the ordinary course of business consistent with past practice, increase in any manner the cash compensation or welfare or pension benefits of Company Employees or (iv) change any actuarial or other assumption used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions to any Company Benefit Plan are made or determi ned;

     (n)      settle or compromise any litigation, or release, dismiss or otherwise dispose of any claim or arbitration, other than (i) settlements or compromises of litigation, claims or arbitration that do not exceed $2,500,000 in the aggregate (net of insurance recoveries and self-insured claims) and do not impose any material restrictions or obligations on the business or operations of the Company and its Subsidiaries, taken as a whole and (ii) settlements or

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compromises of litigation, claims or arbitration disclosed, reflected or reserved against in the most recent financial statements (or the notes thereto) of the Company included in the Company SEC Reports for an amount not materially in excess of the amount so disclosed, reflected or reserved;

     (o)      other than in the ordinary course of business consistent with past practice, or except to the extent required by Law, (A) file the federal income Tax Return of the consolidated group of which the Company is the common parent for the tax year ending September 30, 2006, without affording the Parent the opportunity to review and comment prior to filing such Tax Return; (B) make, revoke or change a material Tax election; (C) change any material method of tax accounting; (D) settle or compromise any material Tax liability for an amount materially in excess of the amount reserved with respect thereto in the most recent financial statements of the Company (or the notes thereto) included in the Company SEC Reports filed prior to the date hereof; (E) file or cause to be filed any amended Tax Return that is material; or (F) enter into any material closing agreement;

     (p)      make any change in financial accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company, except insofar as may be required by a change in GAAP or Law;

     (q)      adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Material Subsidiaries, or enter into a letter of intent or agreement in principle with respect thereto (other than the Merger and other than such transactions solely by the Company’s wholly owned domestic Subsidiaries that would not result in a material increase in the Tax liability of the Company or its Subsidiaries);

     (r)      except as otherwise permitted or contemplated by this Agreement, take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of the Company to consummate the Merger or the other transactions contemplated by this Agreement; or

     (s)      authorize or enter into any contract, agreement, material commitment or arrangement to do any of the foregoing.

     Section 6.2      Conduct of Parent and Merger Sub.  Each of Parent and Merger Sub agrees that, from the date of this Agreement to the Effective Time, it shall not take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Parent and Merger Sub to consummate the Merger or the other transactions contemplated by this Agreement.

     Section 6.3      No Control of Other Party’s Business.  Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or

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direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.

     Section 7.1      Shareholder Meeting; Proxy Material.

     (a)      The Company shall (i) take all action necessary to establish a record date for, duly call, give notice of, convene and hold a meeting of its shareholders (the “Company Shareholder Meeting”) for the purpose of having this Agreement adopted by the shareholders of the Company in accordance with applicable Law as promptly as reasonably practicable after the SEC clears the Company Proxy Statement and (ii) unless a Recommendation Withdrawal occurs in accordance with the proviso in the immediately succeeding sentence, (A) use reasonable best efforts to solicit the adoption of this Agreement by the shareholders of the Company, including the solicitation of proxies in favor of such adoption and approval, and (B) include in the Company Proxy Statement the recommendation of the Board of Directors of the Company that the shareholders of the Company adopt this Agreement (the “Recommendation”). Neither the Board of Directors of the Company nor any committee thereof shall directly or indirectly (x) withdraw (or modify or qualify in a manner adverse to Parent or Merger Sub), or publicly propose to withdraw (or modify or qualify in a manner adverse to Parent or Merger Sub), the Recommendation or (y) take any other action or make any other public statement in connection with the Company Shareholder Meeting inconsistent with such Recommendation (any action described in this clause (x) or (y) being referred to as a “Recommendation Withdrawal”); provided that, anything to the contrary contained in this Agreement notwithstanding, the Board of Directors of the Company may effect a Recommendation Withdrawal (subject to the Company having complied with its obligations under Section 7.4) if such Board of Directors determines in good faith (after consultation with outside counsel) that failure to take such action could reasonably be expected to be inconsistent with its fiduciary obligations. Notwithstanding any Recommendation Withdrawal, unless this Agreement is terminated pursuant to, and in accordance with, Section 9.1, this Agreement shall be submitted to the shareholders of the Company at the Company Shareholder Meeting for the purpose of adopting this Agreement. If, at any time prior to the Effective Time, any information relating to the Company, Parent or Merger Sub or any of their respective Affiliates should be discovered by the Company, Parent or Merger Sub which should be set forth in an amendment or supplement to the Company Proxy Statement so that the Company Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties and, to the extent required by applicable Law, the Company shall disseminate an appropriate amendment the reof or supplement thereto describing such information to the Company’s shareholders.

     (b)      In connection with the Company Shareholder Meeting, the Company will (i) as promptly as reasonably practicable prepare and file (after Parent and Merger Sub have had a reasonable opportunity to review and comment thereon) with the SEC the Company Proxy

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Statement, (ii) respond as promptly as reasonably practicable to any comments received from the SEC with respect to such filings and provide copies of such comments to Parent and Merger Sub promptly upon receipt, (iii) as promptly as reasonably practicable, prepare and file (after Parent and Merger Sub have had a reasonable opportunity to review and comment thereon) any amendments or supplements necessary to be filed in response to any SEC comments or as required by Law, (iv) use its reasonable best efforts to have cleared by the SEC and will thereafter mail to its shareholders as promptly as reasonably practicable, the Company Proxy Statement and all other customary proxy or other materials for meetings such as the Company Shareholder Meeting, (v) to the extent required by applicable Law, as promptly as reasonably practicable, prepare, file (after Parent and Merger Sub have had a reasonable opportunity to review and comment thereon) an d distribute to the shareholders of the Company any supplement or amendment to the Company Proxy Statement if any event shall occur which requires such action at any time prior to the Company Shareholder Meeting, and (vi) otherwise use commercially reasonable efforts to comply with all requirements of Law applicable to the Company Shareholder Meeting and the Company Proxy Statement. Parent and Merger Sub shall cooperate with the Company in connection with the preparation and filing of the Company Proxy Statement and the resolution of any comments from the SEC referred to above, including furnishing the Company upon request with any and all information as may be required to be set forth in the Company Proxy Statement or any supplement or amendment thereto under the Exchange Act. The Company will provide Parent and Merger Sub a reasonable opportunity to review and comment upon the Company Proxy Statement, or any amendments or supplements thereto, and will include in drafts thereof and related correspondence an d filings all comments reasonably proposed by Parent and reasonably acceptable to the Company, prior to filing the same with the SEC. To the extent practicable, the Company and its outside counsel shall permit Parent and its outside counsel to participate in all communications with the SEC and its staff (including all meetings and telephone conferences) relating to the Company Proxy Statement, this Agreement or any of the transactions contemplated by this Agreement.

     Section 7.2      Reasonable Best Efforts.

     (a)      Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to take, or cause to be taken, all actions, to file, or cause to be filed, all documents and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including preparing and filing as promptly as practicable all documentation to effect all necessary filings, consents, waivers, approvals, authorizations, Permits or orders from all Governmental Authorities or other Persons, provided, however, that in no event shall any party he reto be required to pay prior to the Effective Time any fee, penalty or other consideration to any landlord or other person to obtain any such consent, waiver or approval. In furtherance and not in limitation of the foregoing, each party hereto agrees to make or cause to be made an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement as promptly as practicable after the date hereof (and in any event within 15 Business Days) and to make, or cause to be made, the filings and authorizations, if any, required under the Other Antitrust Laws of jurisdictions other than the United States as promptly as reasonably practicable after the date hereof and to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act and to take or cause to be taken all other actions necessary, proper or advisable consistent with

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this Section 7.2 to cause the expiration or termination of the applicable waiting periods, or receipt of required authorizations, as applicable, under the HSR Act or the Other Antitrust Laws of jurisdictions other than the United States as soon as practicable. In furtherance and not in limitation of the foregoing, the parties shall request and shall use reasonable best efforts to obtain early termination of the waiting period under the HSR Act.

     (b)      Each of Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall, in connection with the efforts referenced in Section 7.2(a) to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement, use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) subject to applicable legal limitations and the instructions of any Governmental Authority, keep the other party reasonably informed of any communication received by such party from, or given by such party to, the Federal Trade Commission (the &# 147;FTC”), the Antitrust Division of the Department of Justice (the “DOJ”) or any other Governmental Authority and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby; and (iii) subject to applicable legal limitations and the instructions of any Governmental Authority, permit the other party to review in advance any communication to be given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any other Governmental Authority or, in connection with any proceeding by a private party, with any other person, and to the extent permitted by the FTC, the DOJ or such othe r applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences.

     (c)      In furtherance and not in limitation of the covenants of the parties contained in Sections 7.2(a) and (b), if any objections are asserted with respect to the transactions contemplated hereby under any Law or if any suit is instituted (or threatened to be instituted) by the FTC, the DOJ or any other applicable Governmental Authority or any private party challenging any of the transactions contemplated hereby as violative of any Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each of Parent and Merg er Sub, on the one hand, and the Company, on the other hand, shall take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated hereby, including taking all such further action as may be necessary to resolve such objections, if any, as the FTC, the DOJ, state antitrust enforcement authorities or competition authorities of any other nation or other jurisdiction may assert under any Law with respect to the transactions contemplated hereby, and to avoid or eliminate each and every impediment under any Law that may be asserted by any Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as reasonably practicable (and in any event no later than the End Date), including (x) proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, the sale, divestiture or disposition of any assets or businesses of Parent or its Subsidiaries or Affiliates or of the Company or its Subsidiaries and (y) otherwise taking or committing to take any actions that after the Closing Date would limit the freedom of Parent or its Subsidiaries’ or Affiliates’ (including the Surviving Corporation’s) freedom of action with respect to, or its ability to retain, one or more of its or its Subsidiaries’ or Affiliates’ (including the Surviving Corporation’s) businesses, product lines or

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assets, in each case as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding which would otherwise have the effect of preventing the Closing or delaying the Closing beyond the End Date; provided that neither the Company nor any of its Subsidiaries shall become subject to, or consent or agree to or otherwise take any action with respect to, any requirement, condition, understanding, agreement or order of a Governmental Authority to sell, to hold separate or otherwise dispose of, or to conduct, restrict, operate, invest or otherwise change the assets or business of the Company or any of its Affiliates, unless such requirement, condition, understanding, agreement or order is binding on the Company only in the event that the Closing occurs.

     (d)      Subject to the obligations under Section 7.2(c), in the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private party challenging the Merger or any other transaction contemplated by this Agreement, or any other agreement contemplated hereby, each of Merger Sub and the Company shall cooperate in all respects with each other and use its respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the tran sactions contemplated by this Agreement.

     Section 7.3      Access to Information.

     (a)      Subject to applicable Law, the Company will provide and will cause its Subsidiaries and its and their respective Representatives to provide Parent and Merger Sub and their respective authorized Representatives and financing sources, during normal business hours and upon reasonable advance notice (i) such access to the offices, facilities, properties, books and records (including information relating to Taxes) of the Company and such Subsidiaries (so long as such access does not unreasonably interfere with the operations of the Company or its Subsidiaries) as Parent or Merger Sub or their financing sources reasonably may request, including access to personnel and properties to enable the performance of environmental assessments with respect to the Company Properties, including access to personnel and properties to enable the preparation of engineering studies, environmental assessments, and such other reports and analyses as are customary in commercial real estate financings (ii) all information made available prior to the execution of this Agreement, including, without limitation, all information in data rooms, electronic data rooms or similar locations (subject to the execution of appropriate confidentiality agreements), provided, however, that the preparation and receipt of such studies, reports and investigations shall not be a condition to Closing, and (iii) all documents that Merger Sub reasonably may request. Notwithstanding the foregoing, Parent, Merger Sub and their respective Representatives and financing sources shall not have access to any books, records and other information the dis closure of which would, in the Company’s good faith opinion after consultation with legal counsel, result in the loss of attorney-client privilege with respect to such books, records and other information, or contravene any Law or Contract to which the Company or any of its Subsidiaries is a party. The parties will use their reasonable best efforts to make appropriate substitute arrangements under circumstances in which the restrictions of the preceding sentence apply.

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     (b)      No investigation by any of the parties or their respective Representatives shall affect the representations, warranties, covenants or agreements of the other parties set forth herein.

     (c)      Parent and Merger Sub shall keep, and shall cause their respective Representatives and financing sources to keep, all information obtained pursuant to this Section 7.3 confidential in accordance with the Confidentiality Agreement.

     (d)      In furtherance of the foregoing, but not in limitation thereof, the Company shall use its reasonable best efforts to cause its accountants, including tax accountants, during normal business hours and upon reasonable advance notice, to furnish to Parent and Parent’s accountants, including tax accountants, access to all work papers relating to the Company’s business for any of the periods covered by the financial statements of the Company included in the SEC Reports.

     (e)      In connection with the continued operation of the Company and its Subsidiaries, the Company will confer in good faith on a regular basis with one or more representatives of Parent, designated to the Company, regarding operational matters and the general status of ongoing operations and will notify Parent promptly of any event or occurrence that has had or may reasonably be expected to have a Material Adverse Effect on the Company, provided, however, that the foregoing consultation (i) shall take place during normal business hours, (ii) shall not interfere with the operations of the Company o r its Subsidiaries and (iii) shall be limited by Section 6.3 hereof and the parties’ obligations to comply with all applicable laws and regulations. The Company acknowledges that Parent does not and will not waive any rights it may have under this Agreement as a result of such consultation.

     Section 7.4      No Solicitation.

     (a)      The Company shall not, nor shall it authorize or permit any of its Subsidiaries or any of their respective officers, directors, employees, consultants, agents, advisors, affiliates and other representatives (“Representatives”) to, directly or indirectly, (A) initiate, solicit or knowingly encourage (including by way of providing information) the submission of any inquiries, proposals or offers or any other efforts or attempts that constitute or may reasonably be expected to lead to any Company Acquisition Proposal or engage in any discussions or negotiations with respect thereto or otherwise knowingly cooperate with or knowingly assist or participate in, or knowingly facilitate any such inquiries, proposals, discussions or nego tiations, or (B) approve or recommend, or publicly propose to approve or recommend, a Company Acquisition Proposal or enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement providing for or relating to a Company Acquisition Proposal or enter into any agreement or agreement in principle requiring the Company to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder or propose or agree to do any of the foregoing. The Company shall immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any Persons conducted theretofore by the Company, its Subsidiaries or any Representatives with respect to any Company Acquisition Proposal.

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     (b)      Notwithstanding anything to the contrary contained in Section 7.4(a), if at any time following the date of this Agreement and prior to obtaining the Requisite Shareholder Vote, (i) the Company has received a written Company Acquisition Proposal from a third party that the Board of Directors of the Company believes in good faith to be bona fide and (ii) the Board of Directors of the Company determines in good faith, after consultation with its independent financial advisors and outside counsel, that such Company Acquisition Proposal constitutes or would reasonably be expected to result in a Superior Proposal, then the Company may (A) furnish information with respect to the Company and its Subsidiaries to the Person making such Company Acq uisition Proposal and (B) participate in discussions or negotiations with the Person making such Company Acquisition Proposal regarding such Company Acquisition Proposal; provided that the Company (x) will not, and will not allow Company Representatives to, disclose any non-public information to such Person without entering into an Acceptable Confidentiality Agreement, and (y) will provide to Parent any material non-public information concerning the Company or its Subsidiaries provided to such other Person which was not previously provided to Parent. The Company shall promptly (within one Business Day) notify Parent in the event it receives a Company Acquisition Proposal from a Person or group of related Persons, including the material terms and conditions thereof, and shall keep Parent apprised as to material changes to such Company Acquisition Proposal on a re asonably current basis (and in any event no later than 48 hours after it becomes aware of such changes). Without limiting the foregoing, the Company shall promptly (within one Business Day) notify Parent orally and in writing if it determines to begin providing information or to engage in negotiations concerning a Company Acquisition Proposal from a Person or group of related Persons pursuant to this Section 7.4(b).

     (c)      Notwithstanding anything in this Agreement to the contrary, if, at any time prior to obtaining the Requisite Shareholder Vote, the Company receives a Company Acquisition Proposal which the Board of Directors of the Company concludes in good faith constitutes a Superior Proposal, the Board of Directors of the Company may (x) effect a Recommendation Withdrawal and/or (y) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal; provided, however, that the Company shall not terminate this Agreement pursuant to the foregoing clause (y), and any purported termina tion pursuant to the foregoing clause (y) shall be void and of no force or effect, unless concurrently with such termination the Company pays the Termination Fee payable pursuant to Section 9.2(a); and provided, further, that the Board of Directors may not effect a Recommendation Withdrawal relating to a Superior Proposal pursuant to the foregoing clause (x) or terminate this Agreement pursuant to the foregoing clause (y) unless (i) the Company shall have provided prior written notice to Parent and Merger Sub, at least four calendar days in advance of such Recommendation Withdraw al or such termination, of its intention to effect a Recommendation Withdrawal in response to such Superior Proposal or terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal, which notice shall specify the material terms and conditions of any such Superior Proposal (including the identity of the party making such Superior Proposal), and shall have contemporaneously provided a copy of the relevant proposed transaction agreements with the party making such Superior Proposal and other material documents and (ii) Parent shall not have made, within four calendar days of receipt of such notice, a proposal that the Board of Directors of the Company shall have determined to be at least as favorable to the Company as such Superior Proposal.

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     (d)      The Company agrees that any violations of the restrictions set forth in this Section 7.4 by any Representative of the Company or any of its Subsidiaries, shall be deemed to be a breach of this Section 7.4 by the Company.

     (e)      As used in this Agreement, the term:

   “Acceptable Confidentiality Agreement” means a confidentiality and standstill agreement that contains provisions with respect to confidential treatment of information that are no less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement;

   “Company Acquisition Proposal” means any inquiry, proposal or offer from any Person or group of Persons other than Parent, Merger Sub or their respective Affiliates relating to any direct or indirect acquisition or purchase of a business (whether in one transaction or a series of related transactions) that constitutes 25% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, or 25% or more of any class or series of Company Securities, any tender offer or exchange offer that if consummated would result in any Person or group of Persons beneficially owning 25% or more of any class or series of capital stock of the Company, or any merger, reorganization, consolidation, share exchange, busines s combination, recapitalization, liquidation, dissolution or similar transaction involving the Company (or any Subsidiary or Subsidiaries of the Company whose business constitutes 25% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole);

   “Superior Proposal” means a Company Acquisition Proposal that the Board of Directors of the Company in good faith determines would, if consummated, result in a transaction that is more favorable to the Company than the transactions contemplated hereby, after taking into account such factors (including likelihood of termination in light of all financial, regulatory, legal and other aspects of such proposal) as the Board of Directors of the Company considers to be appropriate; provided that, for purposes of the definition of “Superior Proposal,” the references to “25% or more” in the d efinition of Company Acquisition Proposal shall be deemed to be references to “a majority.”

     (f)      Nothing contained in this Section 7.4 or elsewhere in this Agreement shall prohibit the Company from taking and disclosing to its shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act; provided any such disclosure (other than a “stop, look and listen” letter or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) shall be deemed to be a Recommendation Withdrawal unless the Board of Directors of the Company expressly publicly reaffirms at least two Business Days prior to the Company Shareholder Meeting its recommendation in favor of the adoption of this Agreement.

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     Section 7.5      Director and Officer Liability.

     (a)      Parent and Merger Sub agree that all rights to exculpation, indemnification and advancement of expenses now existing in favor of the current or former directors, officers or employees, as the case may be, of the Company or its Subsidiaries as provided in their respective certificate of incorporation or bylaws or other organization documents or in any agreement shall survive the Merger and shall continue in full force and effect. For a period of six years following the Effective Time, Parent and the Surviving Corporation shall maintain in effect exculpation, indemnification and advancement of expenses provisions that are no less favorable in the aggregate than those provided in the organizational documents of the Company and its Subsidiaries in effect immediately prior to the Effective Time or in any indemnification agreements of the Company or its Subsidiaries with any of t heir respective directors, officers or employees in effect immediately prior to the Effective Time and shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any individuals who at the Effective Time were current or former directors, officers or employees of the Company or any of its Subsidiaries.

     (b)      In addition to and not in limitation of the terms of Section 7.5(a), from and after the Effective Time, Parent and the Surviving Corporation shall, to the greatest extent permitted by Law, indemnify and hold harmless (and comply with all of the Company’s and its Subsidiaries’ existing obligations to advance funds for expenses to) any person who is now, or has been at any time prior to the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of the Company or any Subsidiary of the Company (or any of their respective predecessors) and any person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee b enefit plan or any other enterprise at the request of the Company or any of its Subsidiaries (any such person, an “Indemnified Party”) against (i) any and all costs and expenses (including reasonable attorneys’ fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement (“Damages”) in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (a “Claim”), arising out of, relating to or in connection with any acts or omissi ons occurring or alleged to occur prior to or at the Effective Time, including the approval of this Agreement, the Merger or the other transactions contemplated by this Agreement or arising out of or pertaining to the transactions contemplated by this Agreement, and (ii) any and all Damages arising out of acts or omissions in connection with such persons serving as an officer, director, member, trustee or other fiduciary of any entity if such service was at the request or for the benefit of the Company or any of its Subsidiaries; provided, however, that Parent and the Surviving Corporation shall not be required to indemnify any Indemnified Party for Damages resulting from fraud or from conduct that results in criminal conviction of suc h Indemnified Person. Neither Parent nor the Surviving Corporation shall settle, compromise or consent to the entry of any judgment in any threatened or actual Claim for which indemnification could be sought by an Indemnified Party hereunder, unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such Claim or such Indemnified Party otherwise consents in writing to such settlement, compromise or consent.

     (c)      As of the Effective Time, the Company shall have purchased (provided that the Company shall not be required to pay any amounts in respect of such coverage prior to

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the Closing, other than any such amounts advanced by Parent to the Company prior to the due date for the payment of such amounts), and, following the Effective Time, the Surviving Corporation shall maintain, a tail policy to the current policy of directors’ and officers’ liability insurance maintained on the date hereof by the Company (the “Current Policy”) which tail policy shall be effective for a period from the Effective Time through and including the date six years after the Closing Date with respect to claims arising from facts or events that existed or occurred prior to or at the Effective Time, and which tail policy shall contain substantially the same coverage and amount as, and contain terms and conditions no less advantageous to the covered persons, in the agg regate, than the coverage currently provided by the Current Policy; provided, however, that in no event shall the Company expend an aggregate amount to purchase such tail policy that would be in excess of an amount equal to 500% of the annual premium currently paid by the Company under the Current Policy (the “Insurance Amount”); provided, however, that if the cost of such tail policy would exceed the Insurance Amount, the Company shall be obligated to purchase, and the Surviving Corporation shall be obligated to maintain, a tail policy with the greatest coverage available for a cost not exceeding the Insurance Amount.

     (d)      This Section 7.5 shall survive the consummation of the Merger and is intended to be for the benefit of, and shall be enforceable by, present or former directors or officers of the Company or its Subsidiaries, their respective heirs and personal representatives and shall be binding on the Surviving Corporation and its successors and assigns. In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person (including by dissolution), then, and in each such case, Parent shall cause prop er provision to be made so that the successors and assigns of the Surviving Corporation assume and honor the obligations set forth in this Section 7.5. The agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any such present or former director or officer is entitled, whether pursuant to Law, contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 7.5 is not prior to or in substitution for any such claims under any such policies.

     Section 7.6      Takeover Statutes; Rights Agreement.

     (a)      The parties shall use their respective reasonable best efforts (i) to take all action necessary so that no Takeover Statute is or becomes applicable to the Merger or any of the other transactions contemplated by this Agreement and (ii) if any such Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary so that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Statute on the Merger and the other transactions contemplated by this Agreement.

     (b)      The Board of Directors of the Company shall take all further actions necessary in order to render the Company Rights inapplicable to the Merger and the transactions contemplated hereby. Except as contemplated by this Agreement or approved in writing in

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advance by Parent, the Board of Directors of the Company shall not (i) amend the Company Rights Agreement, (ii) redeem the Company Rights or (iii) take any action with respect to, or make any determination under, the Company Rights Agreement.

     Section 7.7      Public Announcements.  Except with respect to any Recommendation Withdrawal or any action taken pursuant to, and in accordance with, Section 7.4 or Article IX, so long as this Agreement is in effect, the parties will consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press release or public statement as may be required by applicable Law or the rules and regulations of NASDAQ, will not issue any such press release or make any such public statement without the consent of the other parties (not to be unreasonably withheld or delayed).

     Section 7.8      Notice of Current Events.  From and after the date of this Agreement until the Effective Time, the Company and Parent shall promptly notify each other orally and in writing of (i) the occurrence, or non-occurrence, of any event that, individually or in the aggregate, would reasonably be expected to cause any condition to the obligations of any party to effect the Merger and the other transactions contemplated by this Agreement not to be satisfied or (ii) the failure of such party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant to this Agreement which, individually or in the aggregate, would reasonably be expected to result in any condition to the obligations of any party to effect the Merger and the other transactions contemplated by this Agreement not to be satisfied; provided, however, that the delivery of any notice pursuant to this Section 7.8 shall not cure any breach of any representation or warranty requiring disclosure of such matter prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder to the party receiving such notice.

     Section 7.9      Employee Matters.

     (a)      Without limiting any additional rights that any current employee or officer employed by the Company or any of its Subsidiaries at the Effective Time (any such employee other than any employee subject to collective bargaining, a “Current Employee”) may have under any Company Benefit Plan, for the period commencing at the Effective Time and ending on the one year anniversary thereof, the Surviving Corporation and each of its Subsidiaries shall cause to be provided to the Current Employees their salary or hourly wage rate, commission structure and opportunities, bonus structure and opportunities (but, except as otherwise agreed with Parent or the Surviving Corporation, excluding any equity or equity equivalent award opportunities, and any other equity-based compensation), severance, pension, welfare and other benefits that in the aggregate are no less favorable than such compensation and benefits, as applicable, maintained for and provided to such Current Employees immediately prior to the Effective Time; provided, however, that subject to the foregoing and Section 7.9(c), nothing herein shall prevent the amendment or termination of any Company Benefit Plans or interfere with the Surviving Corporation’s right or obligation to make such changes as are necessary to conform with applicable Law. Nothing in this Section 7.9 shall limit the right of the Surviving Corporation or any of its Subsidiaries to terminate the employment of any Current Employee at any time.

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     (b)      Notwithstanding any provision of this Agreement to the contrary, the Surviving Corporation and each of its Subsidiaries shall cause to be provided to each Current Employee whose employment is terminated by the Surviving Corporation or any of its Affiliates (other than those Current Employees covered by employment agreements that provide for severance benefits or represented Current Employees) during the period commencing at the Effective Time and ending on the first anniversary thereof, severance benefits in amounts no less than those required by the policy set forth on Section 4.13(h) of the Company Disclosure Schedule; provided, however, that a portion of any such severance benefits in excess of three weeks’ base salary may be conditioned on delivery of a valid and irrevocable general release of claims in form and substance reasonably satisfactory to the Surviving Corporation.

     (c)      As of and after the Effective Time, the Surviving Corporation shall cause to be given to Current Employees full credit for all purposes (but not benefit accruals under any defined benefit pension plans), under any employee compensation and incentive plans, benefit (including vacation) plans, programs, policies and arrangements maintained for the benefit of Current Employees as of and after the Effective Time by the Surviving Corporation or any of its Subsidiaries for the Current Employees’ service with the Company, its Subsidiaries and their predecessor entities (each, a “Surviving Corporation Plan”) to the same extent recognized by the Company under a similar Company Benefit Plan immediately prior to the Effecti ve Time, except in each case as results in a duplication of benefits with respect to the same period of service. With respect to each Surviving Corporation Plan that is a “welfare benefit plan” (as defined in Section 3(1) of ERISA), the Surviving Corporation or its Subsidiaries shall (i) cause there to be waived any pre-existing condition or eligibility limitations and (ii) cause to be given effect, for the applicable plan year in which the Closing occurs, in determining any deductible and maximum out-of-pocket limitations, claims incurred and amounts paid by, and amounts reimbursed to, Current Employees under similar Company Benefit Plans maintained by the Company and its Subsidiaries immediately prior to the Effective Time.

     (d)      The provisions of this Section 7.9 are for the sole benefit of the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person (including for the avoidance of doubt any Current Employees), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (with respect to the matters provided for in this Section 7.9) under or by reason of any provision of this Agreement. Nothing in this Section 7.9 shall amend, or be deemed to amend, any Company Benefit Plan or Surviving Corporation Plan.

     Section 7.10      Financing.  (a) Prior to the Effective Time, the Company shall provide, and shall cause its Subsidiaries to provide, and shall use its reasonable best efforts to cause their respective Representatives, including legal and accounting, to provide all cooperation reasonably requested by Parent in connection with the arrangement of the Debt Financing (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company and its Subsidiaries), including (i) participating in a reasonable number of meetings, presentations, ro ad shows, due diligence sessions and sessions with rating agencies, (ii) using reasonable best efforts to facilitate the pledging of collateral and (iii) furnishing Parent and its Financing sources as promptly as reasonably practicable with such financial and other pertinent information regarding the Company as may be reasonably requested by Parent. The foregoing notwithstanding, (x) no Pre-Closing Director shall be required to take

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any action with respect to the foregoing and neither the Company nor any of its Subsidiaries shall be obligated to take any action that requires action or approval by the Pre-Closing Directors, (y) no obligation of the Company or any of its Subsidiaries or Representatives undertaken pursuant to the foregoing shall be effective until the Effective Time, and (z) none of the Company or any of its Subsidiaries or Representatives shall be required to pay any commitment or other similar fee or incur any other cost or expense that is not simultaneously reimbursed by Parent in connection with the Debt Financing prior to the Effective Time. Parent shall, promptly upon request by the Company, reimburse the Company for all reasonable and documented out-of-pocket costs incurred by the Company or its Subsidiaries in connection with such cooperation and shall indemnify and hold harmless the Company, its Subsidiaries and their respective Representativ es for and against any and all losses suffered or incurred by them in connection with the arrangement of the Debt Financing and any information utilized in connection therewith (other than information provided by the Company or its Subsidiaries). Any other provision hereof notwithstanding, neither the Company nor any of its Subsidiaries, Affiliates or Representatives shall be required to incur any cost, fee, expense or liability in excess of $250,000 in the aggregate for all such Persons for all such costs, fees, expenses or liabilities incurred in connection with this Section 7.10. All non-public or otherwise confidential information regarding the Company obtained by Parent, Merger Sub or their Representatives pursuant to this Section 7.10(a) shall be kept confidential in accordance with the Confidentiality Agreement. The Company hereby consents to the use of its and its Subsidiaries logos in connection with the Debt Financing.

     (b)      Parent and Merger Sub shall use, and shall cause their Affiliates to use, their reasonable best efforts to arrange the Financing as promptly as practicable, on the terms and conditions described in the Financing Commitments, including using reasonable best efforts to (i) negotiate and finalize definitive agreements with respect thereto on the terms and conditions contained therein or on other terms no less favorable to Parent and Merger Sub, (ii) satisfy on a timely basis all conditions applicable to Parent or Merger Sub (or their Affiliates) in such definitive agreements, (iii) comply with their obligations under the Financing Commitments and consummate the Financing no later than the Closing and (iv) enforce their rights under the Financing Commitments. In the event that all conditions to the Financing Commitments (other than in connection with the Debt Financing, the ava ilability or funding of any of the Equity Financing) have been satisfied in Parent’s good faith judgment, Parent shall use its reasonable best efforts to cause the lenders and the other Persons providing such Financing to fund the Financing required to consummate the Merger on the Closing Date (including by taking enforcement action to cause such lenders and other Persons providing such Financing to fund such Financing). In the event any portion of the Financing becomes unavailable on the terms and conditions contemplated in the Financing Commitments, Parent shall promptly notify the Company and shall use its reasonable best efforts to arrange to obtain alternative financing from alternative sources on terms that will still enable Parent and Merger Sub to consummate the transactions contemplated by this Agreement as promptly as practicable following the occurrence of such event, but no later than the End Date. Parent shall deliver to the Company true and complete copies of all agreements pursuant to whi ch any such alternative source shall have committed to provide Parent and Merger Sub with any portion of the Financing. Each of Parent and Merger Sub shall refrain (and shall use their reasonable best efforts to cause their Affiliates to refrain) from taking, directly or indirectly, any action that would reasonably be expected to result in a failure of any of the conditions contained in the Financing Commitments

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or in any definitive agreement related to the Financing. In connection with its obligations under this Section 7.10, Parent and Merger Sub shall be permitted to amend, modify or replace the Debt Financing with new Financing Commitments, including through co-investment by or financing from one or more additional parties (the “New Financing Commitments”); provided that neither Parent nor Merger Sub shall agree to or permit any replacement of, or amendment, supplement or other modification to be made to, or any waiver of any material provision or remedy under, the Financing Commitments if such modification, waiver or remedy reduces the aggregate amount of t he Financing that is required to consummate the Merger and the other transactions contemplated hereby, adversely amends or expands the conditions to the drawdown of the Financing in any respect that would make such conditions less likely to be satisfied, that can reasonably be expected to delay the Closing, or is adverse to the interests of the Company and its Subsidiaries taken as a whole. Parent shall keep the Company reasonably apprised of material developments relating to the Financing. For the avoidance of doubt, failure to obtain all or any portion of the Financing (or any alternative financing) shall not in and of itself relieve or alter the obligations of Parent and Merger Sub to consummate the Merger on the terms contemplated by this Agreement (such obligation being subject only to the satisfaction of the conditions set forth in Sections 8.1 and 8.2 as set forth herein).

     Section 7.11      Actions with Respect to Existing Debt.

     (a)      Provided that this Agreement shall not have been terminated in accordance with Section 9.1, the parties agree that Merger Sub or an Affiliate thereof may, in Parent’s sole and absolute discretion, commence offers to purchase with respect to all of the outstanding aggregate principal amount of the Company’s 8% senior subordinated notes due 2013 (the “2013 Notes”) and the Company’s 2.5% convertible senior subordinated debentures due 2025 (the “2025 Notes,” and together with the 2013 Notes, the “Notes”), on pricing terms determined by Parent and subject to such other terms and conditions as are determined by Parent and reasonably acceptable the Company, to be consummated substantially simultaneously with the Closing using funds provided by Parent (each a “Debt Tender Offer” and collectively, the “Debt Tender Offers”). Notwithstanding the foregoing, the closing of the Debt Tender Offers shall be conditioned on the occurrence of the Closing, and, if the Debt Tender Offers are commenced, Parent shall cause Merger Sub (or such Affiliate thereof making the Debt Tender Offers) to use its commercially reasonable efforts to cause the Debt Tender Offers to close on the Closing Date or as soon as reasonably practicable thereafter. Parent hereby covenants and agrees to provide (or to cause to be provided) immediately available funds for the full payment at the Effective Time of all Notes properly tendered and not withdrawn. The Company shall provide, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause their respective Representatives to, provide all cooperation reasonably requested by Parent in connection with the Debt Tender Offers.

     (b)      If Parent advises the Company in writing that, in its reasonable judgment based on the advice of the dealer manager of the Debt Tender Offer, there is a significant possibility that the Requisite Consent for the 2013 Notes will not be obtained and preparations should be made to defease the 2013 Notes, the Company shall use commercially reasonable efforts to make such preparations, and if such Requisite Consent is not timely received, the Company shall defease, the 2013 Notes in connection with and at the time of the Merger; provided, the Company shall not be required to defease the 2013 Notes, provide any irrevocable

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notice or take any other irrevocable act regarding such defeasance unless (i) such action is taken simultaneously with the Merger being consummated and (ii) Parent shall have deposited, or caused to be deposited, the amount of funds necessary to effect such defeasance as provided and calculated in accordance with the terms of the indenture applicable to such Notes. If there is more than one dealer manager for the Debt Tender Offer, the term dealer manager as used in this Section 7.11(b) shall refer to the lead dealer manager of the Debt Tender Offer.

     (c)      As part of the Debt Tender Offers for the Notes, Merger Sub or an Affiliate thereof may solicit the consent (the “Consent Solicitation”) of the holders of the Notes to certain amendments to the indentures applicable to such Notes as mutually agreed by Parent and the Company in writing, which amendments shall be set forth in the Offer Documents (the “Indenture Amendments”), and to obtain, as soon as practicable after the date of the commencement of the Debt Tender Offers, the requisite consent of holders of the Notes (the “Requisite Consent”) to authorize the Indenture Amendments. Promptly upon receipt of the Requisite Consent, the Company shall, and shall use its commercially reasonable efforts to cause the applicable trustees to, execute supplemental indentures incorporating and giving effect to the Indenture Amendments, which shall become operative concurrently with the Effective Time, subject to the terms and conditions of this Agreement (including the conditions to the Debt Tender Offers). Concurrent with the Effective Time, Parent shall cause Merger Sub (or such Affiliate thereof making the Debt Tender Offers) to accept for payment and thereafter promptly pay for any Notes that have been properly tendered and not withdrawn pursuant to the applicable Debt Tender Offer and in accordance with such Debt Tender Offer, using funds provided by Parent.

     (d)      In connection with any Debt Tender Offer, Parent shall prepare all necessary and appropriate documentation in connection with such Debt Tender Offer, including the offer to purchase, related letter of transmittal and other related documents (collectively, the “Offer Documents”). Parent and the Company shall cooperate with each other in the preparation of the Offer Documents. All Offer Documents shall be subject to the prior review and comment of the Company and Parent and shall be reasonably acceptable to each of them. If at any time prior to the completion of any Debt Tender Offer any information in the Offer Documents should be discovered by the Company or Parent which should be set forth in an amendment or suppleme nt to the Offer Documents, so that the Offer Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be disseminated to the holders of the applicable Notes.

     (e)      Parent shall reimburse the Company for its reasonable out-of-pocket fees and expenses incurred in connection with this Section 7.11 promptly following request by the Company and delivery of reasonable documentation of such fees and expenses. Parent shall indemnify and hold harmless the Company, its Subsidiaries and their respective Representatives and each Person, if any, who controls the Company within the meaning of Section 20 of the Exchange Act, from and against any and all Damages suffered or incurred by any of them in connection with any actions taken pursuant to this Section 7.11; provided, however, that Parent shall not have any obligation to indemnify and hold harmless any such party or Person to the

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extent that any such Damages suffered or incurred arose from disclosure that was furnished by such Person to Parent specifically for use in connection with the Debt Tender Offer that contains a material misstatement or omission. Any other provision hereof notwithstanding, neither the Company nor any of its Subsidiaries, Affiliates or Representatives shall be required to incur any cost, fee, expense or liability in excess of $250,000 in the aggregate for all such Persons for all such costs, fees, expenses or liabilities incurred in connection with this Section 7.11.

     Section 7.12      Insurance Matters.  To the extent requested by Parent, the Company shall use its reasonable best efforts to purchase, by the Effective Time, tail policies to the current fiduciary liability and excess professional liability policies maintained on the date hereof by the Company and its Subsidiaries, which tail policies shall be effective for a period from the Effective Time through a reasonable period specified by Parent and shall contain the coverage and amount reasonably requested by Parent, provided that the Company shall not be required to pay any amounts in re spect of such coverage prior to the Closing, other than any such amounts advanced by Parent to the Company prior to the due date for the payment of such amounts.

     Section 7.13      Section 16(b).  The Company shall take all steps reasonably necessary to cause the transactions contemplated by this Agreement and any other dispositions of equity securities of the Company (including derivative securities) in connection with the transactions contemplated by this Agreement by each individual who is a director or executive officer of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.

     Section 7.14      Resignation of Directors.  At the Closing, except as otherwise may be agreed by Parent, the Company shall deliver to Parent evidence reasonably satisfactory to Parent of the resignation of all directors of the Company. Upon the request of Parent, as specified by Parent reasonably in advance of the Closing, the Company will seek to obtain the resignation of all directors of Subsidiaries of the Company, in each case, effective at the Effective Time.

     Section 7.15      Capital Expenditures.  Following the Effective Time, Parent and the Company agree that the Company and its Subsidiaries shall maintain their capital expenditure program in place on the date hereof, which program is set forth in Section 7.15 of the Company Disclosure Schedule, for the time periods set forth for such program in Section 7.15 of the Company Disclosure Schedule, in each case, subject to such changes to such program as the Company determines after the Effective Time to be necessary or prudent relating to compliance with the Company’s and its Subsidiaries’ agreements with their financing sources or to changes after the date hereof in the Company’s and its Subsidiaries’ b usiness performance or prospects (including actual or potential changes to Medicare reimbursement rates), financial performance or prospects, or access to financing.

     Section 7.16      Other Transactions.  Parent may request, by reasonable notice given to the Company, that the Company shall, and/or shall cause one or more of its Subsidiaries to, at Parent’s sole expense, use commercially reasonable efforts, immediately prior to the Closing, (a) to cooperate with Parent to effect a reorganization or transfer of assets (including stock of other Subsidiaries of Parent) among wholly owned Subsidiaries of Parent (any such transaction, a “Pre-Acquisition Reorganization”), (b) cooperate with Parent and its advisers to

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determine the nature of any Pre-Acquisition Reorganization and the manner in which it most effectively could be implemented, and (c) cooperate with Parent to prepare all documentation and do all such other acts and things immediately prior to the Closing as are necessary or desirable to give effect to such Pre-Acquisition Reorganization; provided that such Pre-Acquisition Reorganization shall (i) not impede, delay or prevent consummation of the Merger (including by giving rise to litigation by third parties), (ii) be structured so as not to prejudice, in the reasonable opinion of the Company, the interests of any holders of shares of Common Stock or Company Options, (iii) not require the Company to obtain the approval of holders of shares of Common Stock, (iv) not be considered in determining whether a representation, warranty or covenant of the Company hereunder has been breached, (v) not be structured to require the Company or any of its Subsidiaries to take any action in contravention of any Law or existing Contract, and (vi) be conditioned upon Parent confirming that Parent and Merger Sub are prepared to proceed immediately with the Closing and providing any other evidence reasonably requested by the Company that the Closing will occur (it being understood that in any event the Pre-Acquisition Reorganization will be deemed to have occurred immediately prior to the Closing), and (vii) not be effective prior to the Closing, and then only if it is reasonably certain, in the Company’s reasonable judgment, that the Merger will become effective that same day, and that such Pre-Acquisition Reorganization can be reversed or unwound without adversely affecting the Company, its Subsidiaries, or their respective operations, properties and assets, in the event the Merger does not become effective and this Agreement is terminated. Parent acknowledges and agrees that (x) any Pre-Acquisition Reorganization or related actions could require the consent of third parties or Governmental Authorities, and the Company shall be under no obligation to seek or pay any value to obtain such consents, and (y) the completion of any Pre-Acquisition Reorganization or related actions shall not be a condition to consummation of the Merger. Parent shall, promptly upon request by the Company, forthwith reimburse the Company for all reasonable fees and expenses (including any professional fees and expenses) incurred, directly or indirectly, by the Company and its Subsidiaries in considering and cooperating with Parent in connection with any request to effect a Pre-Acquisition Reorganization, shall be responsible for any costs of the Company and its Subsidiaries in reversing or unwinding (in the event this Agreement is terminated) any Pre-Acquisition Reorganization that was effected, and shall indemnify and hold harmless the Company, its Subsidiaries and their respective Representatives for and against any and all losses and liabilities (including Taxes) suffered or incurred by them, directly or indirectly, in connection with, or as a result of any action taken pursuant to, this Section 7.16. The obligation of Parent to reimburse the Company and its Subsidiaries for fees and expenses, to be responsible for costs as set out in this Section 7.16 and to indemnify and hold harmless the Company and its Subsidiaries for any losses and liabilities (including Taxes) suffered or incurred by them, directly or indirectly, in connection with, or as a result of any action taken pursuant to, this Section 7.16< /font> will be in addition to any other payment Parent may be obligated to make pursuant to this Agreement and will survive termination of this Agreement. Any other provision hereof notwithstanding, neither the Company nor any of its Subsidiaries, Affiliates or Representatives shall be required to incur any cost, fee, expense or liability in excess of $250,000 in the aggregate for all such costs, fees, expenses or liabilities incurred by all such Persons in connection with this Section 7.16.

     Section 7.17      Merger Sub.  As promptly as practicable following the execution of this Agreement, Parent shall cause Merger Sub to be duly organized under the laws of Pennsylvania with the Articles of Incorporation and By-laws in the forms set forth in Exhibits A

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and B. Parent and the Company agree to cause this Agreement to be amended to have Merger Sub become a constituent party to this Agreement as soon as practicable upon formation of Merger Sub.

     Section 8.1     Conditions to the Obligations of Each Party.  The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or valid waiver (where permissible) of the following conditions:

     (a)      Shareholder Approval.  This Agreement shall have been adopted by the Requisite Shareholder Vote.

     (b)      No Injunctions or Restraints; Illegality.  No temporary restraining order, preliminary or permanent injunction, stay, decree or other judgment or order (each, an “Order”) shall have been enacted, issued, promulgated, enforced or entered by a court of competent jurisdiction and remain in effect which prohibits or renders illegal the consummation of the Merger; provided, how ever, that this condition shall not be deemed satisfied with respect to any party that has failed to use the efforts required of such party pursuant to Section 7.2 to avoid entry of such Order to cause such Order to be challenged or overturned.

     (c)      Regulatory Approval.  Any applicable waiting period under the HSR Act (and any extension thereof) relating to the Merger shall have expired or been terminated.

     Section 8.2      Conditions to the Obligations of Parent and Merger Sub.

     The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or valid waiver (where permissible) of the following further conditions:

     (a)      Representations and Warranties.  The representations and warranties of the Company (i) set forth in Sections 4.5(a), (b) and (c) shall be true and correct in all material respects as of the Effective Time as if made at and as of such time, (ii) set forth in Section 4.10(a) shall be true and correct in all respects as of the Effective Time as if made at and as of such time, and (iii) set forth in Article IV, other than those described in clauses (i) and (ii) above, shall be true and correct as of the Effective Time as if made at and as of such time (without regard to any qualification as to “materiality” or “Material Adverse Effect on the Company” contained therein), except in the case of this clause (iii) where the failure to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect on the Company; provided that, with respect to each of clauses (i), (ii) and (iii), representations and warranties made as of a specific date shall be required to be so true and correct (subject to such qualifications) as of such date only.

     (b)      Performance of Obligations of the Company.  The Company shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it at or prior to the Effective Time hereunder.

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     (c)      Officer’s Certificate.  Parent and Merger Sub shall have received a certificate signed by a senior officer of the Company certifying as to the matters set forth in Sections 8.2(a) and 8.2(b).

     (d)      Certain Consents and Approvals.  All of the consents and approvals identified on Schedule 8.2(d) shall have been obtained; provided, however, that in the event Parent or Merger Sub assert for any purpose that this condition is not satisfied, it shall nevertheless be deemed satisfied if Parent and Merger Sub shall have failed to use the reasonable best efforts required of either of them pursuant to Section 7.2 to obtain any such consents or approvals or to cooperate with and assist the Company in doing so, as applicable.

     (e)      Absence of Material Adverse Effect.  Except as disclosed in the Company Disclosure Letter or as disclosed (excluding any “forward-looking” statement or risk factor disclosure) in the Company SEC Reports filed prior to the date of this Agreement, since September 30, 2006, there shall not have been an Effect that, individually or in the aggregate, has resulted or would be reasonably expected to result in a Material Adverse Effect on the Company.

     Section 8.3      Conditions to the Obligations of the Company.  The obligation of the Company to consummate the Merger is subject to the satisfaction or valid waiver (where permissible) of the following further conditions:

     (a)      Representations and Warranties.  The representations and warranties of Parent and Merger Sub contained in this Agreement that (i) are qualified as to “Parent Material Adverse Effect” qualification shall be true and correct as of the Effective Time as if made at and as of such time and (ii) that are not so qualified shall be true and correct in all respects as of the Effective Time as if made at and as of such time, except, in the case of this clause (ii), where the failure of such representations and warranties to be so true and correct has not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; provided that, with respect to each of clauses (i) and (ii), representations made as of a specific date shall be required to be true as of such date only.

     (b)      Performance of Obligations of Parent and Merger Sub.  Parent and Merger Sub shall have performed in all material respects all material obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it at or prior to the Effective Time hereunder.

     (c)      Officer’s Certificate.  The Company shall have received a certificate signed by a senior officer of Parent and Merger Sub certifying as to the matters set forth in Sections 8.3(a) and 8.3(b).

     Section 9.1      Termination.  This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any prior adoption of this Agreement by the shareholders of the Company):

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     (a)      by mutual written consent of the Company, on the one hand, and Parent, on the other hand;

     (b)      by written notice by either the Company, on the one hand, or Parent, on the other hand, if:

     (i)       the Effective Time shall not have occurred on or before September 30, 2007 (the “End Date”), unless the failure of the Effective Time to occur by such date is the result of, or caused by, the failure of the party seeking to exercise such termination right to perform or observe any of the covenants or agreements of such party set forth in this Agreement;

     (ii)      there shall be any final and nonappealable Order that makes illegal or prohibits the consummation of the Merger, provided that the party seeking to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall have used the efforts required by Section 7.2 to remove such Order; or

     (iii)      at the Company Shareholder Meeting or any adjournment thereof at which this Agreement has been voted upon, the shareholders of the Company fail to adopt this Agreement by the Requisite Shareholder Vote;

     (c)      by the Company by written notice:

     (i)      if a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Section 8.3(a) or 8.3(b) not to be satisfied, and such breach is incapable of being cured by the End Date; provided, however, that the Company is not then in material breach of this Agreement so as to cause any of the conditions set forth in Section 8.1, 8.2(a), 8.2(b) or 8.2(d) not to be satisfied;

     (ii)      prior to obtaining the Requisite Shareholder Vote, in accordance with, and subject to the terms and conditions of, Section 7.4(c); or

     (iii)      at any time following July 15, 2007, if the Merger shall not have been consummated within five Business Days of the first date upon which all of the conditions set forth in Sections 8.1 and 8.2 (other than 8.2(c)) are satisfied, provided that at the time of such termination such cond itions continue to be satisfied; and provided, further, that if at the end of such five Business Day period the Merger can not be consummated, after the use by Parent and Merger Sub of their reasonable best efforts, due to any circumstance that is outside the control of Parent or Merger Sub, then such five Business Day period shall be extended for a commercially reasonable amount of time (but in no event for more than an additional ten Business Days); and if Parent and Merger Sub do not consummate the Merger within such period of time, the Company shall at the end of such period have the right to terminate this Agreement; and

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     (d)      by Parent, by written notice, if:

     (i)      a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Section 8.2(a), 8.2(b) or 8.2(d) not to be satisfied, and such breach is incapable of being cured by the End Date; provided, however, that neither Parent nor Merger Sub is then in material breach of this Agreement so as to cause any of the conditions set forth in Section 8.1, 8.3(a) or 8.3(b) not to be satisfied; or

     (ii)      the Board of Directors of the Company or any committee thereof (A) shall have effected a Recommendation Withdrawal, or publicly proposed to effect a Recommendation Withdrawal, (B) shall have approved or recommended to the shareholders of the Company a Company Acquisition Proposal other than the Merger, or (C) the Company fails to include the Recommendation in the Company Proxy Statement.

     Section 9.2      Termination Fee.

     (a)      In the event that this Agreement is terminated by the Company pursuant to Section 9.1(c)(ii), then the Company shall pay to Parent the Termination Fee in accordance with Section 9.2(d), at or prior to the time of termination.

     (b)      (I) In the event that (1) this Agreement is terminated by Parent, on the one hand, or the Company, on the other hand, pursuant to Section 9.1(b)(iii) or by Parent pursuant to Section 9.1(d)(i); (2) at any time after the date of this Agreement and prior to the Company Shareholder Meeting (in the case of a termination pursuant to Section 9.1(b)(iii)), or prior to the breach giving rise to the right of termination (in the case of a termination pursuant to Section 9.1(d)(i)) a bona fide written Company Acquisition Proposal shall have been publicly announced or publicly made known and, in the case of termination pursuant to Section 9.1(b)(iii), not publicly withdrawn at least two Business Days prior to the Company Shareholder Meeting; and (3) within 12 months after such termination pursuant to Section 9.1(b)(iii) or 9.1(d)(i), the Company or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, any Company Acquisition Proposal (whether or not the same as that originally announced or consummated), then, on the date of such execution or consummation, the Company shall pay to Parent the Termination Fee in accordance with Section 9.2(d). For purposes of this Section 9.2(b)(I) only, references in the definition of the term “Company Acquisition Proposal” to the term “25%” will be deemed replaced by the term “a majority”. If this Agreement is terminated in the circumstances described in clauses (1) and (2) of the first sentence of this Section 9.2(b)(I), but the circumstances described in clause (3) of such sentence have not yet occurred, then the Company shall pay to Parent, within two days of Parent’s delivery to the Company of a written statement of its expenses, the Break-Up Expenses in accordance with Section 9.2(d); provided that if the circumstances in clause (3) ultimately do occur then any payment by the Company of the Break-Up Expenses shall be credited against the payment of the Termination Fee such that the payment of the Termination Fee and the Break-Up Expenses shall not exceed $50 million in the aggregate.

     (II) In the event that (1) this Agreement is terminated by Parent pursuant to Section 9.1(d)(ii); and (2) within 12 months after such termination pursuant to Section 9.1(d)(ii),

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the Company or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, any Company Acquisition Proposal, then, on the date of such execution or consummation, the Company shall pay to Parent the Termination Fee in accordance with Section 9.2(d). For purposes of this Section 9.2(b)(II) only, references in the definition of the term “Company Acquisition Proposal” to the term “25%” will be deemed replaced by the term “a majority”. If this Agreement is terminated in the circumstances described in clauses (1) of the first sentence of this Section 9.2(b)(II), but the circumstances described in clause (2) of such sentence have not yet occurred, then the Company shall pay to Parent within two days of Parent’s delivery to the Company of a written statement of its expenses, the Break-Up Expenses in accordance with Section 9.2(d); provided that if the circumstances in clause (2) ultimately do occur then any payment by the Company of the Break-Up Expenses shall be credited against the payment of the Termination Fee such that the payment of the Termination Fee and the Break-Up Expenses shall not exceed $50 million in the aggregate.

     (c)      In the event that this Agreement is terminated (i) by Parent or the Company pursuant to (A) Section 9.1(b)(i) and at the time of such termination the conditions set forth in Sections 8.1(a), 8.2(a) and 8.2(b) have been satisfied or (B) Section 9.1(b)( ii) as the result of a proceeding brought by a Governmental Authority, or (ii) by the Company pursuant to Section 9.1(c)(i) or 9.1(c)(iii), then, as promptly as practicable (but in any event within two Business Days) following such termination, Parent shall pay to the Company the Parent Fee in accordance with Section 9.2(d).

     (d)      Any amount that becomes payable pursuant to Section 9.2(a), 9.2(b) or 9.2(c) shall be paid by wire transfer of immediately available funds to an account designated by the party entitled to receive such payment.

     (e)      Each of the Company, Parent and Merger Sub acknowledges that the agreements contained in this Section 9.2 are an integral part of the transactions contemplated by this Agreement, that without these agreements the Company, Parent and Merger Sub would not have entered into this Agreement, and that any amounts payable pursuant to this Section 9.2 do not constitute a penalty. If the Company fails to pay as directed in writing by Parent any amounts due to Parent or Merger Sub pursuant to this Section 9.2 within the time periods specified in this Section 9.2 or Parent fails to pay the Company any amounts due to the Company pursuant to this Section 9.2 within the time periods specified in this Section 9.2, the Company or Parent, as applicable, shall pay the costs and expenses (including reasonable legal fees and expenses) incurred by Parent or the Company, as applicable, in connection with any action, including the filing of any lawsuit, taken to collect payment of such amounts, together with interest on such unpaid amounts at the prime lending rate prevai ling during such period as published in The Wall Street Journal, calculated on a daily basis from the date such amounts were required to be paid until the date of actual payment. Notwithstanding anything to the contrary in this Agreement, the Company's right to receive payment of the Parent Fee from Parent or the Guarantor (in accordance with the Guarantee) pursuant to Section 9.2(c) and to require Parent, Merger Sub and the Guarantor to perform their respective obligations under (i) the Guarantee in accordance with its terms and (ii) Section 7.3(c), the third, fourth and fifth sent ences of Section 7.10(a), Section 7.11(e), the last three sentences of Section 7.16, and the second sentence of this Section 9.2(e) of this Agreement, shall be the sole and exclusive remedy of the Company and its Subsidiaries against Parent, Merger Sub, the Guarantor, FC Investors XI,

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LLC, and any of their respective former, current, or future general or limited partners, stockholders, managers, members, directors, officers, Affiliates, Representatives or agents (collectively, the “Parent Parties”) (whether at law or in equity) with respect to the negotiation, execution and performance of this Agreement and the transactions and obligations contemplated hereby, including for any loss suffered as a result of the failure of the Merger to be consummated, under any theory and for any reason, and upon payment in full of such amounts and fulfillment of such obligations, none of the Parent Parties shall have any further liability or obligation relating to or arising out of the negotiation, execution and performance of this Agreement or the transactions contemplated by this Agree ment. This provision is an essential term of this Agreement and each of the Parent Parties are intended beneficiaries of this provision and shall have the right, in their name (alone or with others) to enforce this provision.

     (f)      As used in this Agreement, the “Break-Up Expenses” payable to Parent shall be an amount equal to the lesser of (i) $5 million and (ii) Parent’s actual out-of-pocket, documented expenses incurred in connection with this Agreement and the transactions contemplated hereby (including, without limitation, all reasonable attorneys’, accountants’ and investment bankers’ fees and expenses).

     Section 9.3      Effect of Termination.  If this Agreement is terminated pursuant to Section 9.1, this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of the Company, Parent, Merger Sub or their respective Subsidiaries or Affiliates, except that the provisions of Section 7.3(c), Section 7.11(e), the last three sentences of Section 7.16, Section 9.2, Section 9.3 and Article X will survive the termination hereof; provided, however, that nothing herein shall relieve any party from liability for willful breach or fraud.

     Section 10.1      Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given:

     if to Parent or Merger Sub, to:

FC-GEN Acquisition, Inc.
1035 Powers Place
Alpharetta GA 30004
Attn: Christopher M. Sertich Fax No.:

     with a copy (which shall not constitute notice) to:

Williams Mullen
222 Central Park Avenue, Suite 1700
Virginia Beach, VA 23462
Attn: Lawrence R. Siegel, Esq.
Fax No.: (757) 473-0395

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     and

O'Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Attn: Drake S. Tempest, Esq.
Fax: (212) 326-2061

     if to the Company, to:

Genesis Healthcare Corporation
101 East State Street
Kennett Square, PA 19348
Attention: Eileen M. Coggins
Fax: (610) 444-6350

     with a copy (which shall not constitute notice) to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd St.
New York, NY 10019
Attention: Mark Gordon, Esq.
Fax: (212) 403-2000

or such other address or facsimile number as such party may hereafter specify by notice to the other parties hereto. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the facsimile number specified above and electronic confirmation of transmission is received or (ii) if given by any other means, when delivered at the address specified in this Section 10.1.

     Section 10.2      Representations and Warranties.  None of the representations, warranties, covenants and agreements in this Agreement or in any instrument, document or certificate delivered pursuant to this Agreement shall survive the Effective Time, except for those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time and then only to such extent. Each of Parent, Merger Sub and the Company acknowledges and agrees that, except for the representations and warranties expressly set forth in this Agreement (a) no party makes, and has not made, any representations or warranties relating to itself or its businesses or otherwise in connection with the Merger, (b) no person has been authorized by any party to make any representation or warranty relating to itself or its businesses or otherwise in connection with the Merger and, if made, such representation or warranty must not be relied upon as having been authorized by such party, and (c) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or information provided or addressed to any party or any of its Representatives are not and shall not be deemed to be or to include representations or warranties unless any such materials or information are expressly the subject of any representation or warranty set forth in this Agreement.

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     Section 10.3      Expenses.  Except as otherwise expressly provided in Sections 7.5, 7.11, 7.12, 7.16 and 9.2, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

     Section 10.4      Amendment.  This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors or Board of Managers, as applicable, at any time prior to the Effective Time, whether before or after adoption of this Agreement by the shareholders of the Company; provided, however, that, after adoption of this Agreement by the shareholders of the Company, no amendment may be m ade which under applicable Law requires the further approval of the shareholders of the Company without such further approval. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

     Section 10.5      Waiver.  At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) subject to the requirements of applicable law, waive compliance with any of the agreements or conditions contained for the benefit of such party contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure of any party to assert any rights or remedies shall not constitu te a waiver of such rights or remedies.

     Section 10.6      Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other parties hereto (and any purported assignment without such consent shall be void and without effect), except that Parent may assign all or any of its rights and obligations hereunder to any Affiliate of Parent, provid ed that no such assignment shall relieve Parent of its obligations hereunder.

     Section 10.7      Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania (without regard to conflict of laws principles).

     Section 10.8      Counterparts; Effectiveness; Third Party Beneficiaries.  This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective only when actually signed by each party hereto and each such party has received counterparts hereof signed by all of the other parties hereto. No provision of this Agreement is intended to or shall confer upon any Person other than the parties hereto any rights or remedies hereunder or with respect hereto, except as otherwise expressly provided in Section 7.5 (which is intended to be for the benefit of the persons covered thereby), the last two sentences of Section 9.2(e) (which are intended to be for the benefit of the Parent Parties) and in Article III (which is intended to be for the benefit of the Persons who held Shares, Company Options or Restricted Shares immediately prior to the Effective Time).

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     Section 10.9      Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by virtue of any Law, or due to any public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are fulfilled to the extent possible.

     Section 10.10    Entire Agreement.  This Agreement (including the exhibits and schedules thereto) constitutes the entire agreement of the parties hereto with respect to its subject matter and supersedes all oral or written prior or contemporaneous agreements and understandings among the parties with respect to such subject matter.

     Section 10.11    Remedies.  (a)  Each of the parties hereto agree that to the extent it has incurred losses or Damages in connection with this Agreement, (i) the maximum aggregate liability of Parent, Merger Sub, the Guarantor and any Parent Party for such losses or Damages shall be limited to $50 million (inclusive of the Parent Fee but exclusive, (x) in the case of Parent and Merger Sub, of any amounts payable pursuant to the second sentence of Section 9.2(e) of this Agreement and (y) in the case of the Guarantor, of any costs associated with enforcing the Guarantee pursuant to t he terms thereof), (ii) the maximum aggregate liability of the Company for such losses or Damages shall be limited to $50 million (inclusive of the Termination Fee but exclusive of any amounts payable pursuant to the second sentence of Section 9.2(e) of this Agreement), and (iii) in no event shall either party seek to recover any money damages in excess of such amounts in connection therewith.

     (b)      The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy they may have at law or in equity, and that the Company’s sole and exclusive remedy with respect to any breach shall be the remedy in Section 9.2(e) and Section 10.11(a).

     Section 10.12    Jurisdiction.

     (a)      In any action or proceeding between any of the parties arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, each of the parties hereto: (i) irrevocably and unconditionally consents and submits, for itself and its property, to the exclusive jurisdiction and venue of any Pennsylvania state court or the United States District Court for the Eastern District of Pennsylvania; (ii) agrees that all claims in respect of such action or proceeding must be commenced, and may be heard and determined, exclusively in the aforementioned courts; (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in the aforementioned courts; and (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient for um to the maintenance of such action or proceeding in the aforementioned courts. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the

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judgment or in any other manner provided by law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by law.

     (b)      EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THING S, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.12.

     Section 10.13  Authorship; Interpretation.  The parties agree that the terms and language of this Agreement were the result of negotiations between the parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation. The parties intend that each representation and each warranty contained in this Agreement shall have independent significance. Accordingly, except as otherwise expressly provided in this Agreement, nothing contained in any representation or warranty, or the fact that any representation or warranty may be mor e specific or less specific than any other representation or warranty, shall in any way limit, restrict or otherwise affect the scope, applicability or meaning of any other representation or warranty contained in this Agreement.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be duly executed by their respective authorized officers as of the day and year first written above.

Signature Page to Agreement and Plan of Merger