SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (the "Settlement Agreement"), dated as of October 20, 2003, is made and entered into between Plaintiffs THEODORE ORLOWSKI and LAWRENCE J. GLADORA (hereinafter "Plaintiffs") on behalf of themselves and the Class defined below, and JOHN R. McGINLEY, JR. as LIQUIDATING RECEIVER of Defendants ST. FRANCIS HEALTH SYSTEM, ST. FRANCIS MEDICAL CENTER, ST. FRANCIS HOSPITAL CRANBERRY, and ST. FRANCIS HEALTH CARE SERVICES, INC. (hereinafter "St. Francis Entities."), and Defendant RAYMOND J. KHOURY (hereinafter Khoury). This Settlement Agreement is subject to and conditioned upon the approval of the Court of Common Pleas of Allegheny County, Pennsylvania (the "Court").

WHEREAS, on or about September 20, 2002, Plaintiffs filed a class action complaint in the Court, at G.D. 02-17811 (the "Class Action"), alleging that they and others similarly situated are vested participants in the St. Francis Medical Center Employees' Retirement Plan (the "Pension Plan"); that St. Francis Entities and Khoury are obligated to provide all pension benefits promised to them; that St. Francis Entities and Khoury are failing to live up to this obligation by attempting to limit participants' pensions to the amount the employer and fiduciaries have chosen to deposit into the Pension Plan (which presently consists of approximately $49 million); that plan fiduciaries breached their duties; and that the Pension Plan assets are insufficient to provide all of the benefits promised to participants;

WHEREAS, Plaintiffs further allege in the Class Action that the governing contractual document is the booklet provided to participants, which contains provisions stating benefits are to be paid in full, and which fails to advise that benefits could be cut in the manner Defendants propose;

WHEREAS, Plaintiffs further contend that even if they could not prevail on a normal contract theory, application of the doctrine of estoppel and principles relating to the employer's fiduciary duty and duty of good faith and fair dealing would justify judgment for Plaintiffs;v

WHEREAS, St. Francis Entities and Khoury deny any wrongdoing, and contend that Plaintiffs are entitled to no recovery in excess of the amount in the Pension Plan, since the aforementioned booklet provides: "This summary is not a contract but is intended to give you a short, non-technical description of your Plan. If there is any inconsistency between the description in this summary and the actual provisions of the Plan, the provisions of the Plan document will govern. The Plan document is available for examination at the Personnel Office during regular business hours;"

WHEREAS, St. Francis Entities and Khoury further contend that Section 13.02 of the Pension Plan document limits Plaintiffs benefits to the amount in the pension fund (so that Plaintiffs are entitled to no more than the approximately $49 million in the fund);

WHEREAS, St. Francis Entities and Khoury further contend that Section 13.04 of the Pension Plan document provides that if assets are insufficient to fund all benefits within a class, then the benefits for persons in that class will be proportionately reduced so that the allocation completely exhausts the amount available, and no benefits shall be provided for persons in any succeeding class. The classes in descending order of priority are as follows (as there was no provision for disability retirement under the Pension Plan):

Class 1: Participants who are retired and receiving a monthly benefit (i.e., Participants already in pay status)

Class 2: Participants who are eligible for immediate normal retirement (i.e., Participants who have attained age 65, but have not yet commenced their benefit)

Class 3 : Participants who are eligible for immediate early retirement (i.e., Participants who have attained age 55 and completed 10 years of service, but have not yet commenced their benefit)

Class 4: Participants who do not satisfy the requirements for classes 1 through 3, but nonetheless have a vested pension benefit (i.e., Participants who satisfied the vesting schedule applicable upon their termination of employment, but are not yet eligible for early or normal retirement);

WHEREAS, St. Francis Entities and Khoury have moved to dismiss the Class Action on the basis of arguments set forth in Preliminary Objections, which are still pending before the Court;

WHEREAS, the parties have investigated the facts and the law relating to the matters alleged in the Class Action;

WHEREAS, Plaintiffs served a number of discovery requests; St. Francis Entities and Khoury responded; the Court held a hearing on a motion for protective order; and St. Francis Entities and Khoury have provided documents;

WHEREAS, the parties have also engaged in an informal exchange of information;

WHEREAS, the St. Francis Entities together with St. Francis Hospital of New Castle, St. Francis Foundation and St. Francis Plaza, Inc. (collectively, the "Receiver Entities") are collectively insolvent, have ceased all business operations, have liquidated all assets, are under supervision of the Court and the Court-appointed Liquidating Receiver, and pending before the Court are competing motions to distribute the liquidated assets to secured and unsecured creditors of the Receiver Entities. Plaintiffs (Pension Plan participants) are unsecured creditors. As of September 26, 2003, the total estate of the Receiver Entities is approximately $104,000,000. Claims by allegedly secured and priority creditors are pending before the Court asserting they have a priority interest of approximately $90,000,000. Unsecured creditors other than Plaintiffs (hereinafter defined "Unsecured Creditors") have pending claims before the Court for approximately $45,800,000, not including unliquidated claims. The risks that Plaintiffs and other Pension Plan participants would obtain little or no money from the estate should the Court grant the claims of these other creditors are substantial;

WHEREAS, the parties participated in a mediation with the Court-appointed Special Master and have engaged in extensive, arms length negotiations regarding the settlement of the claims alleged in the Class Action;

WHEREAS, based upon analysis of the facts and the law applicable to the claims alleged in the Class Action, the burdens and expense of litigation, including the risks and uncertainties associated with protracted trials and appeals, the risks and uncertainties of recovering from an insolvent entity even in the event Plaintiffs were to prevail, the fact that the total amount of monthly payments currently being paid by the plan exceeds the amount of interest being earned; and the certainty and cost-efficiencies provided by the payments set forth in this Settlement Agreement, Plaintiffs and their counsel have concluded that this Settlement Agreement provides substantial benefits to the proposed Class and is fair, reasonable, and in the best interest of the Class;

WHEREAS, St. Francis Entities, the Liquidating Receiver and Khoury have concluded that entering into this Settlement Agreement is desirable to avoid the time, risk, and expense of continued litigation of the claims alleged in the Class Action;

NOW, THEREFORE, the parties stipulate and agree that the claims of the Class against St. Francis Entities and Khoury shall be finally settled and compromised on the terms and conditions set forth below, which the parties believe are fair, reasonable and adequate:

DEFINITIONS

1. The following terms shall have the meanings set forth below:

a. "Class" shall mean the class defined in paragraph 2 below.

b. "Class Counsel" shall mean the law firms of Specter Specter Evans & Manogue, P.C., and attorneys William T. Payne and Edward Olds and John Stember.

c. "Class Member" shall mean any person who is included within the definition of the Class set forth in paragraph 2 below.

d. "Court" means the Court of Common Pleas of Allegheny County, Pennsylvania.

e. "Counsel for Defendants" shall mean the law firms of Kirkpatrick & Lockhart LLP, counsel for St. Francis Entities and Khoury, and Eckert Seamans Cherin & Mellott, LLC, counsel for the Liquidating Receiver.

f. "Defendants" shall mean Defendant St. Francis Entities, Defendant Khoury, and the Liquidating Receiver.

g. "Effective Date" shall mean the first day after which the last of all of the following events and conditions have occurred or been met:

i. This Settlement Agreement has been fully executed;

ii. The Court has entered an Order Granting Conditional Certification Of Class As Defined In The Settlement Agreement, Appointment Of Class Representatives And Class Counsel, Approval Of Form And Manner Of Notice, And Setting Dates For Objections And Hearing (" Conditional Approval Order");

iii. The Court has entered a Final Order Approving Class Settlement and Judgment (the "Final Order");

iv. Five days have passed after the latest of the following has occurred: (1) the entry of a Final Order, providing there are no objections (only Class Members filing objections are entitled to appeal); (2) in the event that there is an objection filed, the time to appeal from the Final Order has expired and no notice of appeal has been filed with the Court; (3) in the event that there is a timely appeal of the Final Order, the appeal has been finally dismissed; (4) in the event that there is a timely of appeal of the Final Order, the Final Order has been affirmed on appeal and either no further appellate review is available or the time to request further appellate review of any appellate decision affirming the Final Order has expired without further appellate review being sought; or (5) if a request for further appellate review of an appellate decision is filed, the request has been denied or dismissed or, if granted, has resulted in affirmance of the Final Order, and either no further appellate review is available or the time to request further appellate review has expired.

h. "Estate's Assets" shall mean all assets of the entities being liquidated in Case No. 5695 of 2002 now before the Court (which does not include any monies in the Pension Fund).

i. "Final Approval" shall mean the entry of the Final Order Approving Class Settlement and Judgment.

j. "Liquidating Receiver" shall mean the Court-appointed liquidating receiver of the St. Francis Entities, John R. McGinley, Jr.

k. "Pension Plan" shall mean the St. Francis Medical Center Employees' Retirement Plan.

l. "Petition for Termination" shall mean Petition Seeking Approval Of Termination Of St. Francis Medical Center Employees' Retirement Plan dated August 8, 2003.

m. "Plaintiffs" shall mean Theodore Orlowski and Lawrence J. Gladora.

n. "Unsecured Creditors" shall mean all persons or entities (excluding Class Members) that have unsecured claims against the Estate's Assets.

CLASS CERTIFICATION

2. Plaintiffs and Defendants agree and hereby stipulate to the Court's certification of a Class, pursuant to Pa. R. Civ. P. 1702, 1708, 1709 and 1711. This stipulation is without prejudice to Defendants' right or ability to seek reconsideration of and to oppose class certification should this Settlement Agreement not be finally approved. The stipulated class is defined as follows: All persons presently entitled to a vested benefit from the Pension Plan, which is payable now or in the future, but excluding participants for whom the Pension Plan previously purchased annuities. Plaintiffs shall serve as representatives of the Class, and Class Counsel shall serve as counsel for the Class.

3. Plaintiffs and Defendants stipulate that Class Members' rights as Pension Plan participants are joint, and their joinder in the action is compulsory under Pa. R. C. P. 2227(a).

4. Plaintiffs and Defendants further agree that, in light of the joint interest of Class Members in the Pension Plan and in light of the insolvency and pending liquidation of the St. Francis Entities, the Class to which Plaintiffs and Defendants stipulate shall be a mandatory class without the right of self-exclusion, as authorized under Pa. R. C. P. 1711.

SETTLEMENT CONSIDERATION

5. On the Effective Date, the Liquidating Receiver shall, pursuant to this Settlement Agreement, (i) cause $13,000,000 from the Estate's Assets to be contributed to the Pension Plan, and (ii) amend and terminate the Pension Plan by adopting the resolutions in the form of Exhibit 3 hereto (the "Amendment"). Within 60 days after the Effective Date, the Liquidating Receiver shall send to each Class Member a benefit statement ("Statement") showing the amount that the Class Member is to receive as a first distribution. Class Counsel and the Liquidating Receiver will determine the content and amount of detail to be provided in the Statement, which will at a minimum inform Class Members that their distribution will be calculated in the manner set forth in the Pension Plan document, as amended. The Statement will also instruct Class Members to do one of the following within 60 days of the date of the Statement: (i) accept the calculation and indicate the manner by which the Class Member will accept distribution; or (ii) object to the calculation in the manner and within the time-frame detailed in the Statement. Within 30 days of receipt of an acceptance of calculation, the Liquidating Receiver will process the acceptance and will make the first distribution. Within 90 days of the receipt of an objection, the Liquidating Receiver shall resolve the objection and mail to the objectors another Statement. Payment of the first distribution for these objecting Class Members after resolution of the objections will be made in accordance with the other provisions of this paragraph. The Liquidating Receiver shall provide Class Counsel copies of all objections and resolutions of objections. In the event that the Class Member neither accepts nor objects to the calculation within 60 days of the date of the Statement, the Liquidating Receiver, within 30 days thereafter, shall cause the Class Member's first distribution to be paid involuntarily to the Class Member and shall be required to withhold applicable taxes.

6. In the event that any portion of the reserve described in the Amendment remains after all lump sum distributions described in Paragraph 5 have been made (including lump sums paid after review of objections submitted), the Liquidating Receiver shall cause a second lump sum distribution to be calculated and paid to Class Members in accordance with the Amendment. Any second lump sum shall be paid according to the instructions submitted by the Class Member with respect to the lump sum distributions described in Paragraph 5. In the event that a Class Member's lump sum under Paragraph 5 was involuntarily paid, any second lump sum also shall be involuntarily paid.

7. The Liquidating Receiver shall be entitled to pay from the Pension Plan either directly or by reimbursing the Estate's Assets, one-half of the reasonable administrative expenses incurred in connection with the administration and termination of the Pension Plan ("Administrative Expenses") from September 1, 2002 until the date all assets of the Pension Plan are distributed. Through September 30, 2003, the total of Administrative Expenses are $215,312. At least ten days prior to final distribution of the reserve and payment of any additional Administrative Expenses for the period after September 30, 2003, Class Counsel shall be provided with a written itemization showing the nature and amount of each Administrative Expense. If Class Counsel believe that they need additional information to assess the reasonableness of any expense, the parties will confer as to what, if any, additional information should be provided.

8. In addition, if there are funds remaining after the wind up of the Estate in accordance with the global settlement reached with representatives of other claimants and Class Counsel, then Class Counsel may petition the Court for a distribution for the Class from any excess monies held by the Estate.

9. The Liquidating Receiver hereby stipulates as follows: (i) that he has provided Class Counsel with all insurance policies, of which he is aware after a diligent search and which could be viewed as reasonably related to Plaintiffs' claims; and (ii) that, as of September 26, 2003, he has valued the Estate's Assets to be $104,496.307.60.

CLASS RELEASE

10. As of the Effective Date, Plaintiffs, on behalf of themselves and each Class Member, hereby release, and forever discharge the Pension Plan, Khoury, the Liquidating Receiver, the Receiver Entities, the Sisters of St. Francis of Millvale, Pennsylvania, the Millvale Franciscans, Inc. and the St. Francis Entities, their present and former officers, directors, employees, parent companies, subsidiaries, affiliates, predecessors, successors, assigns, actuaries, agents, representatives, and insurers and the past and present Pension Plan fiduciaries (collectively, the "Released Parties") from liability as to all claims, demands, debts, causes of action, contracts, damages, costs (including attorneys' fees and court and litigation costs and expenses, except as otherwise specified in this Settlement Agreement), obligations and losses of every kind and sort, known or unknown, whether at law or in equity, that Plaintiffs (individually or as representatives of the Class) or any Class Member has against Khoury, the Liquidating Receiver, the St. Francis Entities and the other Released Parties relating to the claims in this lawsuit for benefits from the Pension Plan and/or arising out of the Pension Plan and/or the administration and/or termination thereof. This paragraph does preclude any claim or lawsuit to enforce the terms of this Settlement Agreement.

CONDITIONAL APPROVAL OF SETTLEMENT

11. Upon the full execution of this Settlement Agreement, Plaintiffs and Defendants will jointly move, that the Court enter a Conditional Approval Order. The Joint Motion for Conditional Approval Order shall request that the Court:

a. Authorize the procedures set forth in the Settlement Agreement;

b. Conditionally certify the Class;

c. Appoint Class Counsel as attorneys for the Class;

d. Approve and direct mailed notice of the proposed settlement to the Class Members substantially in the form set forth in Exhibit 1 hereto (the "Mailed Notice") and publication notice in the form set forth in Exhibit 2 hereto (the "Publication Notice"), said notices to provided in the manner set forth in paragraph 12 below, the costs of which will be paid from the Estate's Assets;

e. Set a deadline for Class Members to object to the proposed settlement;

f. Set a date for Plaintiffs, Class Counsel and Defendants to respond to any objections, and to serve the objectors with the responses;

g. Set a date for hearing of a motion for final approval of this Settlement Agreement and for certification of the Class.

12. Notice of the proposed settlement set forth in this Settlement Agreement shall be provided by Mailed Notice, U.S. mail, First Class, postage prepaid, directly to the last known address of Class Members, and by Publication Notice in the Pittsburgh Post-Gazette, on two occasions at least one week apart. The last publication of the Publication Notice shall occur in that newspaper no later than 21 days after entry of the Conditional Approval Order. The costs of providing these notices shall be paid out of the Estate's Assets.

13. Ten days prior to the hearing on the motion for final approval of this Settlement Agreement, Class Counsel shall file an application and supporting brief with the Court for an award of reasonable attorneys' fees, costs and expenses, in an amount of $850,000. Defendants shall not oppose any award of fees, costs and expenses to Class Counsel less than or equal to $850,000 ("Attorneys' Fees"). Defendants further agree that all amounts awarded for attorneys' fees, costs and expenses to Class Counsel less than or equal to $850,000 shall be paid from the Estate's Assets, and shall not be paid from the Pension Plan (which includes the $13,000,000 contributed to the Pension Plan as described in paragraph 5 above). If the Attorneys' Fees are approved by the Court, the Liquidating Receiver, on the Effective Date, shall cause $850,000 from the Estate's Assets to be deposited in the trust account of William T. Payne.

FINAL APPROVAL OF SETTLEMENT AND JUDGMENT

14. Plaintiffs and Defendants shall jointly request that the Court enter the Final Order Approving Class Settlement and Judgment, which proposed order and judgment shall request that the Court:

a. Approve the Settlement Agreement as fair, reasonable and adequate and direct consummation of the Agreement and its terms and provisions;

b. Dismiss the Class Action with prejudice;

c. Award Attorneys' Fees;

d. Reserve jurisdiction over all matters relating to the administration and consummation of the terms of this Settlement Agreement, including those relating to claims processing and payment;

e. Authorize the Liquidating Receiver in his sole discretion but in consultation with Class Counsel, and without requiring further approval of the Court, to implement the settlement before the provisions set forth in the definition of Effective Date at paragraph 1(g)(iv) above, in which case all provisions in the Settlement Agreement specifying actions to be taken on or after the Effective Date shall, to the extent necessary, be deemed to provide that those actions shall be taken on or after the date the Liquidating Receiver elects to implement the settlement; and

f. Authorize that, in the event the Liquidating Receiver chooses to exercise his discretion to implement the settlement as set forth in subparagraph (e) above, anyone seeking to appeal from this Court's rulings must first (i) request to intervene upon a representation of inadequacy of counsel, (ii) request a stay of implementation of the settlement, and (iii) post an appropriate bond. Absent satisfaction of each of these three requirements, the Liquidating Receiver is authorized to proceed with implementation of the settlement, even if such implementation would moot any such appeal.

NO ADMISSION OF LIABILITY

15. This Settlement Agreement, whether or not it becomes effective, its exhibits, and negotiations and proceedings related to this Settlement Agreement shall not be:

a. Construed as an admission by Defendants or of any of the Released Parties of the truth of any fact alleged, the validity of any claim asserted, or the deficiency of any defense raised in the Class Action, or claim otherwise asserted against the Estate's Assets;

b. Construed as an admission of any liability, negligence, fault, or wrongdoing on the part of Defendants or any of the Released Parties, all of which Defendants deny; and/or

c. Except as required by law or legal process, offered or received as evidence of an admission of any liability, negligence, fault or wrongdoing, or in any way referred to for any reason by any Class Member, Class Counsel, or any other counsel on any Class Member's behalf in the Class Action or in any civil, criminal or administrative action or proceeding, other than such proceedings as may be necessary to effectuate the provisions of this Settlement Agreement.

FAILURE OF EFFECTUATION

16. If the conditions to the effectiveness of this Settlement Agreement set forth in paragraph 1(g) above do not occur or are not met, then this Settlement Agreement shall be deemed null and void and shall have no further force or effect.

17. In the event that this Settlement Agreement does not become effective, Plaintiffs and Defendants shall be restored to their respective positions as of the date and time immediately prior to the execution of this Settlement Agreement and they shall proceed in all respects as if this Settlement Agreement and any related orders had not been executed or entered. Defendants expressly reserve the right to seek reconsideration of or oppose class certification should the Settlement Agreement not receive Final Approval, and Plaintiffs and Class Counsel agree not to rely upon or refer to this Settlement Agreement, any orders approving the settlement, or the aborted settlement for litigation purposes.

MISCELLANEOUS PROVISIONS

18. All of the attached exhibits are incorporated by this reference as though fully set forth herein.

19. This Settlement Agreement and its exhibits may not be modified or amended, nor may any of its provisions be waived, except by a writing signed by all parties.

20. The headings in this Settlement Agreement are used for the purpose of convenience and ease of reference only and are not meant to have legal effect, nor are they intended to influence the construction of this Settlement Agreement in any way.

21. This Settlement Agreement shall not be construed more strictly against one party than another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one of the parties.

22. The administration and consummation of the settlement set forth in this Settlement Agreement shall be under the authority of the Court, and the Court shall retain jurisdiction after entering the final order approving class settlement and judgment for the purpose of entering orders to enforce the terms of this Settlement Agreement.

23. Written notices or other submissions to be provided to Class Counsel shall be addressed to Joseph N. Kravec, Jr. of Specter Specter Evans & Manogue, P.C., Koppers Building 26th Floor, 436 Seventh Avenue, Pittsburgh, PA 15219. Written notices or other submissions to be provided to Counsel for Defendants shall be addressed to Wendy West Feinstein of Eckert Seamans Cherin & Mellott, LLC, 600 U.S. Steel Tower, 44th Floor, 600 Grant Street, Pittsburgh, PA 15219.

24. The waiver by one party of any breach of this Settlement Agreement by any other party shall not be deemed a waiver of any other prior or subsequent breach of this Settlement Agreement.

25. This Settlement Agreement and its exhibits constitute the entire agreement among the parties, and no representations, warranties, or inducements have been made to any party concerning this Settlement Agreement other than those contained and memorialized in such documents. Any and all prior agreements or understandings, whether written or oral, are merged herein and superseded hereby.

26. This Settlement Agreement and any of the exhibits may be executed in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument.

27. This Settlement Agreement shall be binding upon, and inure to the benefit of, the heirs, successors and assigns of the parties.

28. The construction, interpretation, operation, effect and validity of this Settlement Agreement, and all documents necessary to effectuate it, shall be governed by the laws of the Commonwealth of Pennsylvania without regard to the conflicts of law principles thereof.

29. Any dispute relating in any way to this Settlement Agreement, and all documents necessary to effectuate it, shall be brought in the Court.

30. All counsel and any other person executing this Settlement Agreement and any of the exhibits hereto, or any related settlement documents, warrant and represent that they have the full authority to do so, that they have the authority to take all appropriate action required or permitted to be taken pursuant to the Settlement Agreement to effectuate its terms, and that they are authorized to enter into any insubstantial modifications or amendments to this Settlement Agreement on behalf of the parties hereto which they deem appropriate.

31. Plaintiffs, Class Counsel, Defendants and Counsel for Defendants agree to cooperate fully with one another in seeking entry of the Conditional Approval Order and to promptly agree upon and execute all such other documentation as may be reasonably required to obtain final approval of the Settlement Agreement by the Court.

32. In entering into and implementing the Settlement Agreement, Plaintiffs, Class Counsel, Defendants and Counsel for Defendants are not giving any tax advice. For advice on tax issues, Class Members and any other affected persons should contact an accountant or a tax lawyer.

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