ASSET PURCHASE AGREEMENT

Exhibit 10.2

ASSET PURCHASE AGREEMENT

HEART HOSPITAL OF DTO, LLC

AND

GOOD SAMARITAN HOSPITAL

TABLE OF CONTENTS

		Page
ARTICLE 1 TRANSFER OF ASSETS			1
1.1 Sale of Assets			1
1.2 Excluded Assets			3
1.3 Assumption of Liabilities			4
1.4 Excluded Liabilities			5
1.5 Purchase Price; Noncompetition Consideration			6
1.6 Closing; Effective Time			6
1.7 Tax Allocation			6
1.8 Conveyances			7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER			7
2.1 Organization, Corporate Power and Authority			7
2.2 No Breach			8
2.3 Assets			8
2.4 Inventory			8
2.5 No Outstanding Rights			8
2.6 Personal Property Leases			9
2.7 Real Property			9
2.8 Structural Defects; Condition of Real Property			10
2.9 Government Reimbursement Participation; Health Care Law Compliance			11
2.10 No Violation of Law			12
2.11 Legal Proceedings			12
2.12 Fees and Commissions			12
2.13 Material Contracts			12
2.14 Insurance			13
2.15 Tax Matters			13
2.16 Environmental Matters			13
2.17 Absence of Certain Changes or Events			13
2.18 Employees			16
2.19 Financial Information			17
2.20 Intellectual Property			18
2.21 Completeness of Disclosure			18
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER			19
3.1 Organization, Corporate Power and Authority			19
3.2 No Breach			19
3.3 Legal Proceedings			19
3.4 Fees and Commissions			20
3.5 Funding of Purchase Price			20

TABLE OF CONTENTS
(continued)

		Page
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS OF BUYER			20
4.1 Representations and Warranties to be True and Correct			20
4.2 Covenants			20
4.3 No Action or Proceeding			20
4.4 Seller’s Closing Deliverables			20
4.5 No Material Casualty			22
ARTICLE 5 CONDITIONS TO THE OBLIGATIONS OF SELLER			22
5.1 Representations and Warranties to be True and Correct			22
5.2 Performance			23
5.3 No Action or Proceeding			23
5.4 Buyer’s Closing Deliverables			23
ARTICLE 6 ADDITIONAL AGREEMENTS			24
6.1 Retention and Access to Records			24
6.2 Access to Acquired Assets; Contracts			24
6.3 Misdirected Payments			26
6.4 Cooperation on Tax Matters			26
6.5 Third Party Litigation Cooperation			26
6.6 Confidentiality; Publicity			27
6.7 Cooperation			28
6.8 Costs and Charges			28
6.9 Employees			29
6.10 Medicare and Medicaid Cost Reports			31
6.11 Non-Competition and Non-Solicitation			31
6.12 Change of Name			33
6.13 Contact with Employees and Vendors			33
6.14 Conduct of the Company			33
6.15 Billing for Transition Patients			33
ARTICLE 7 TERMINATION			34
7.1 Termination			34
7.2 Effect of Termination			35
7.3 Disposition of Deposit Upon Termination			35
ARTICLE 8 INDEMNIFICATION			35
8.1 Survival			35
8.2 Indemnification — General			35
8.3 Method of Asserting Claims			36
8.4 Continued Liability for Indemnity Claims			37
8.5 Limitations on and Expiration of Indemnification			38

TABLE OF CONTENTS
(continued)

		Page
ARTICLE 9 MISCELLANEOUS			39
9.1 No Shop			39
9.2 Amendments			40
9.3 Waiver			40
9.4 Notices			40
9.5 Counterparts			41
9.6 Enforceability and Severability			41
9.7 Governing Law			41
9.8 Assignment			41
9.9 Expenses			42
9.10 Parties in Interest			42
9.11 Consents			42
9.12 Third Parties			42
9.13 Entire Agreement			42
9.14 Specific Performance; Injunctive Relief			42
9.15 Headings; Construction			42
9.16 Applicable Date			42
9.17 No Payments for Referrals			42
9.18 Dispute Resolution			43
9.19 Specific Controls Over the General			44
9.20 Construction			44
9.21 Incorporation of Exhibits and Schedules			44
9.22 Execution by Investor Members			44

INDEX TO EXHIBITS AND SCHEDULES

Exhibits

Exhibit A		Capitalized Terms
Exhibit B		Environmental Report
Exhibit C		Bill of Sale and Assignment
Exhibit D		Assignment and Assumption Agreement
Exhibit E		Limited Warranty Deed
Exhibit F		Transition Services Agreement

Schedules

Schedule 1.1(a)		Personal Property
Schedule 1.1(b)		Personal Property Leases
Schedule 1.1(c)		Owned Real Property
Schedule 1.1(e)		Real Property Leases
Schedule 1.1(f)		Licenses
Schedule 1.1(g)		Computer Software
Schedule 1.1(i)		Prepaid Expenses
Schedule 1.1(k)		Intellectual Property Exceptions
Schedule 1.2(a)		Excluded Contracts
Schedule 1.2(d)		Other Excluded Assets
Schedule 1.2(i)		Excluded Computer Software and Hardware
Schedule 1.5(c)		Noncompetition Compensation Distribution
Schedule 1.7		Tax Allocation
Schedule 1.8		Permitted Real Property Encumbrances
Schedule 2.1(c)		Shareholders
Schedule 2.2		Restrictions on Seller’s Authority
Schedule 2.3(a)		Third Party Interests in Acquired Assets
Schedule 2.4		Inventory
Schedule 2.5		Outstanding Rights Affecting Acquired Assets
Schedule 2.6(b)		Leased Equipment
Schedule 2.7(d)		Compliance with Property Legal Requirements
Schedule 2.9		Government Reimbursement Program Investigations
Schedule 2.11		Seller’s Legal Proceedings
Schedule 2.13		Material Contracts
Schedule 2.14		Insurance
Schedule 2.15		Tax Matters
Schedule 2.17(a)		Certain Changes or Events
Schedule 2.17(b)		Conduct of Operations
Schedule 2.18(a)		Employees
Schedule 2.18(b)		Employee Benefit Plans
Schedule 2.19		Historical Financial Information
Schedule 2.20		Intellectual Property
Schedule 3.2		Restrictions on Buyer’s Authority
Schedule 3.3		Buyer’s Legal Proceedings

INDEX TO EXHIBITS AND SCHEDULES
(continued)

Schedule 6.2(c)(i)		Existing Contracts
Schedule 6.2(c)(ii)		Buyer Determined Contracts
Schedule 6.9(a)		Excluded Employees

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”), is entered into as of the date below written (the “ Execution Date ”), by and between Heart Hospital of DTO, LLC, a Delaware limited liability company d/b/a Dayton Heart Hospital (“ Seller ”), and Good Samaritan Hospital, an Ohio public benefit corporation (“ Buyer ”). Defined terms used but not otherwise defined herein shall have the meanings contained in Exhibit A hereto.

WITNESSETH

     WHEREAS, Seller desires to sell (subject to the assumption by Buyer of certain specifically enumerated liabilities), and Buyer desires to purchase, substantially all of Seller’s assets; and

     WHEREAS, the Parties desire to enter into this Agreement for the purpose of setting forth their mutual rights and obligations with respect to the foregoing.

     NOW, THEREFORE, for good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged and accepted, and in consideration of the premises and mutual promises herein contained, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1

TRANSFER OF ASSETS

      1.1 Sale of Assets . At the Closing and subject to the terms and conditions of this Agreement, other than the Excluded Assets, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, all rights, title, and interest in and to all assets of every description, and whether real, personal or mixed, tangible or intangible, owned or leased by Seller and held or used in the Seller’s Business, including the following items (collectively, the “ Acquired Assets ”):

      (a)  All tangible personal property, including all equipment, furniture, fixtures, machinery, vehicles, office furnishings, instruments, leasehold improvements, spare parts and, to the extent assignable or transferable, all rights in all warranties of any manufacturer or vendor with respect thereto owned by Seller or otherwise employed in the conduct and operation of the Business (collectively, the “ Personal Property ”), including the Personal Property described on Schedule 1.1(a) .

      (b)  All leases, leasehold interests or other contractual rights relating to the Personal Property used in the operation of the Business (whether as (sub)lessor or (sub)lessee) (the " Personal Property Leases ”) to which Seller is a Party, including the Personal Property Leases described on Schedule 1.1(b) .

      (c)  Good and marketable title in fee simple absolute to the Owned Real Property described on Schedule 1.1(c) , and, to the extent permitted by law, any rights of Seller against third parties under general warranty deeds, related to any such Owned Real Property, together with all plants, buildings, structures, improvements, construction in progress, appurtenances, covenants, easements, servitudes and fixtures situated thereon, forming a part thereof, or in any manner belonging to or pertaining to such interests of Seller.

      (d)  All Contracts and contract rights of Seller relating to the Acquired Assets or the Business of any type or nature as determined in accordance with the procedures set forth in Section 6.2 , but excluding the Excluded Contracts (all such assigned Contracts, the " Assumed Contracts ”).

      (e)  All real property leases, leasehold interests or other contractual rights, interests, easements and appurtenances relating to the Business (whether as (sub)lessor or (sub)lessee) (the “ Real Property Leases ”) to which Seller is a Party, including the Real Property Leases described on Schedule 1.1(e) .

      (f)  To the extent transferable or assignable and subject to any applicable consent requirements, rights to all state, federal, special or local licenses or permits (including, but not limited to, air, water or other environmental licenses and permits), rights, certificates of need, certificates of exemption, franchises, accreditations, registrations, permits, approvals and consents, and all applications therefor and waivers of any requirements pertaining thereto (each a “ License ” and collectively, the “ Licenses ”), if any, issued to Seller for the Acquired Assets or the Business, including the Licenses described on Schedule 1.1(f) .

      (g)  All computer hardware and data processing equipment held by Seller or used primarily in the conduct of its Business or the operation of the Acquired Assets, and, to the extent assignable or transferable, all rights in all warranties of any manufacturer or vendor with respect thereto and the computer software listed on Schedule 1.1(g) ;

      (h)  All inventories of usable goods and supplies of the Business owned by or, with respect to consigned goods and supplies, owned by Seller, including pharmaceuticals and medications, food, janitorial supplies, office supplies, forms, consumables, disposables, linens, and medical supplies, existing and wherever located (collectively, the “ Purchased Inventory ”).

      (i)  The deposits, escrows, prepaid expenses or other advance payments of Seller relating to the Business which are assumable and usable by Buyer listed on Schedule 1.1(i) (collectively, the “ Prepaid Expenses ”).

      (j)  To the extent transferable or assignable and subject to any applicable consent requirements, all documents, books, records, operating and policy manuals and files owned by Seller, pertaining to or used primarily in connection with the Business, operations of Seller or the Acquired Assets, whether in hard copy or other form, including all patient records, medical records, medical staff records, clinical records, financial records, equipment records and medical and administrative libraries, personnel records and purchase and vendor records, existing and wherever located (collectively, the “ Transferred Records ”), but excluding the Excluded Records, subject to the Parties’ rights under Section 6.1 .

      (k)  To the extent held or used in or ancillary to the Business or operation of the Acquired Assets, trademarks, trade names, service marks, copyrights and any applications therefor, mask works, net lists, schematics, technology, know-how, trade secrets ideas, algorithms, process, domain names or intangible proprietary information or material set forth on Schedule 1.1(k) .

      (l)  The names, logos and symbols used by Seller in connection with the Business or the Acquired Assets, including the name “ Dayton Heart Hospital, ” all goodwill associated with the Business of Seller as a going concern, all warranties (express or implied) and all telephone and facsimile numbers as currently used by Seller primarily in support of the Business.

      (m)  Any insurance proceeds and insurance proceeds receivable (including applicable deductibles, co-payments or self-insured requirements) arising from the Acquired Assets to the extent provided in Section 4.5 .

      (n)  All claims of Seller against third parties, choate or inchoate, known or unknown, contingent or otherwise, relating to the Acquired Assets.

      1.2 Excluded Assets . Notwithstanding anything to the contrary, Seller is not selling, and Buyer is not purchasing or assuming obligations with respect to, the following assets which shall remain the property of Seller after the Closing (the “ Excluded Assets ”):

      (a)  All rights under Contracts identified on Schedule 1.2(a) as excluded from this Agreement pursuant to those procedures set forth in Section 6.2 together with any Employee Benefit Plan of any nature whatsoever applicable to Seller’s employees (except that Buyer shall have liability for and to the extent provided in Section 6.9 ) and all contracts with any Government Reimbursement Program or other third-party payor or other party that reimburses Seller for the provision of medical services (collectively, the “ Excluded Contracts ”).

      (b)  The corporate record books, minute books, corporate seals and tax records of Seller and all records of any kind that Seller is required by Legal Requirements to retain in its own possession together with those records maintained by MedCath with respect to its Affiliates (including Seller) that reflect the consolidated purchase of goods and services by MedCath for such Affiliates (collectively, the “ Excluded Records ”), subject to the Parties’ rights under Section 6.1 .

      (c)  All claims of Seller against third parties, choate or inchoate, known or unknown, contingent or otherwise, relating to the Excluded Assets.

      (d)  Such other property and assets, if any, specifically described on Schedule 1.2(d) .

      (e)  With respect to the amount by which any retrospective settlement of any cost report exceeds such original cost report relating to a period prior to the Effective Time, all rights of Seller now existing or which may hereafter exist with respect to any payment or reimbursement owed to Seller by any Government Reimbursement Program or other payor which is attributable to any period of time prior to the Effective Time.

      (f)  All rights of Seller under this Agreement or any agreement contemplated hereby.

      (g)  All claims for refunds of Taxes, if any, and other governmental charges (other than those contained in Section 1.2(e) above) of whatever nature.

      (h)  All personnel records and other books and records (or copies thereof, as applicable) that Seller is required by law to retain in its possession; provided, however, that the originals or copies of all such records shall be provided to Buyer at the Closing.

      (i)  All computer software and hardware listed on Schedule 1.2(i) .

      (j)  All cash, cash equivalents, short term investments, investments in debt securities limited as to use under indenture agreements, investments in fixed income securities, and deposits to fund unemployment benefits, and the accounts in which those assets are deposited.

      (k)  All accounts receivable of Seller, and all rights to payment, whether billed or unbilled, recorded or unrecorded, accrued and existing, whether or not written off, as of the Effective Time with respect to the Business, including, without limitation, rights to payment for all goods and services that Seller provides at the Hospital to its patients prior to the Effective Time subject to Section 6.15 (collectively, the “ Accounts Receivable ”).

      (l)  All provider numbers and related agreements related to any Government Reimbursement Programs.

      (m)  All bank accounts of Seller.

      (n)  The name “ MedCath ” and all rights related thereto.

      1.3 Assumption of Liabilities . As of the Effective Time, Buyer shall assume and agree to pay, discharge and perform according to their terms only the following liabilities and obligations of Seller (collectively, the “ Assumed Liabilities ”):

      (a)  All liabilities and obligations arising out of operation of the Business or the use or ownership of the Acquired Assets from and after the Effective Time.

      (b)  All liabilities and obligations under or arising out of the Assumed Contracts and the Real Property Leases; provided, however, Buyer shall not assume any liabilities or obligations arising out of or in connection with Seller’s breach or alleged breach of such Assumed Contracts or Real Property Leases which occurred prior to the Effective Time.

      (c)  All liabilities and obligations arising under any Licenses from and after the Effective Time, to the extent such liabilities and obligations relate solely to Buyer’s use or ownership of the Business or the Acquired Assets, except to the extent that such liabilities and obligations otherwise constitute Excluded Liabilities or Excluded Assets.

      (d)  Notwithstanding Sections 1.2(a) and 1.4(d) to the contrary, all liabilities and obligations of Seller as of the Effective Time for accrued paid time off expenses, whether for vacation sick pay or otherwise (collectively, the “ Accrued PTO ”), attributable to the Transferred Employees; provided, however, that Seller shall pay to Buyer in immediately available funds as of the Effective Time an amount equal to the Accrued PTO expenses attributable to the

Transferred Employees reflected on the Seller’s books as of the Closing Date or arising from its operation of the Business prior to the Effective Time.

      (e)  All obligations to provide patient care to existing patients of the Hospital as of the Closing Date.

      1.4 Excluded Liabilities . Except for the Assumed Liabilities, Buyer shall not assume or become liable or obligated in any way and Seller shall retain and remain solely liable for any obligation to pay, perform and discharge all Liabilities of Seller, regardless of when asserted, including without limitation, any of the following (collectively, the “ Excluded Liabilities ”):

      (a)  Any obligations or liabilities of Seller under the Excluded Contracts.

      (b)  Obligations or liabilities of Seller by reason of any failure to comply with the rules and regulations of any Government Reimbursement Program which is attributable to any period of time ending prior to the Effective Time.

      (c)  Any obligation or liability of Seller arising out of or relating to any violation of any Legal Requirements prior to the Effective Time.

      (d)  Any obligation or liability of Seller arising out of or relating to any Employee Benefit Plan of any nature whatsoever maintained by Seller or its Affiliates for the benefit of its or their employees (except that Buyer shall have liability for and to the extent provided in Section 6.9 ).

      (e)  Any accounts payable reflected on the Seller’s books as of the Closing Date or arising from the operation of the Business prior to the Effective Time, subject to the terms of Sections 1.3(d) and 1.4 (g) .

      (f)  With respect to any retrospective settlement of any cost report for an amount less than such original cost report relating to a period ending prior to the Effective Time, all obligations of Seller now existing or which may hereafter exist with respect to any payment or reimbursement owed by Seller to any Government Reimbursement Program or other payor which is attributable to any period of time ending prior to the Effective Time.

      (g)  Obligations or liabilities for Taxes, including, without limitation, (1) any Taxes arising as a result of Seller’s operation of the Business or ownership of the Acquired Assets prior to the Effective Time; (2) any Taxes that will arise as a result of the sale of the Acquired Assets pursuant to this Agreement; and (3) any deferred Taxes of any nature; provided however, it is acknowledged that Buyer shall have the obligation to pay its proportionate share of all real and personal property Taxes due as a result of the ownership or operation of the Acquired Assets following the Effective Time.

      (h)  Obligations or liabilities to Government Reimbursement Programs for overpayments and other financial obligations arising from adjustments or reductions in reimbursement attributable to events, transactions, circumstances, or conditions occurring or existing prior to the Effective Time.

      (i)  Seller’s expenses relating to this Agreement.

      (j)  All professional liability claims or other claims for acts or omissions of Seller.

      1.5 Purchase Price; Noncompetition Consideration .

      (a)  Subject to the terms of this Agreement, the consideration payable by Buyer for the Acquired Assets will be an amount equal to Forty-Seven Million Five Hundred Thousand Dollars ($47,500,000) (the “ Purchase Price ”).

      (b)  Prior to the date hereof, a deposit of One Million Dollars ($1,000,000) (“ Buyer’s Deposit ”) has been delivered by Buyer to Michael J. Burdge, Esq. (the “ Escrow Agent ”) under the terms of the Escrow Agreement by and among Escrow Agent, Seller and Buyer dated as of March 4, 2008, as modified by that certain Letter Agreement, dated as of the date hereof (collectively, the " Escrow Agreement ”). Upon the closing of the transaction contemplated by this Agreement, the Escrow Agent shall deliver the Buyer’s Deposit to Seller and such funds shall be applied to the Purchase Price. If the transaction contemplated by this Agreement is not consummated as set forth in this Agreement, the Buyer’s Deposit shall be disbursed by the Escrow Agent in accordance with the terms of the Escrow Agreement and Section 7.3 .

      (c)  At Closing, Buyer shall pay an aggregate amount equal to Seven Million Five Hundred Thousand Dollars ($7,500,000) (the “ Noncompetition Compensation ”) as consideration for the execution of this Agreement by MedCath and each Investor Member who is an individual for purposes of acknowledging the application of, and agreeing to be bound by, those terms and conditions set forth in Sections 6.11 and 9.17 . Such Noncompetition Compensation shall be distributed by Buyer to MedCath and each such Investor Member in such amounts set forth on Schedule 1.5(c) .

      1.6 Closing; Effective Time .

      (a)  The closing of the transactions contemplated by this Agreement shall take place at 10 a.m., local time, at 325 John H. McConnell Blvd., Suite 600, Columbus, Ohio, on May 16, 2008, or at such other time and date and/or at such other location as the Parties may mutually designate in writing (such closing being called the “ Closing ” and such date being called the “ Closing Date ”).

      (b)  The transactions contemplated by this Agreement shall be effective as of 11:59 p.m. on May 17, 2008 (“ Effective Time ”).

      (c)  At the Closing, Seller shall deliver to Buyer the Seller’s Closing Documents.

      (d)  At the Closing, Buyer shall deliver to Seller the payment of the Purchase Price and the Buyer’s Closing Documents.

      1.7 Tax Allocation . The Purchase Price will be allocated among the Acquired Assets for all Tax purposes in accordance with Section 1060 of the Code as described on Schedule 1.7 hereto. After the Closing, the Parties shall make consistent use of such allocation for all Tax purposes and in any Tax Returns filed with the Internal Revenue Service in respect thereof,

including IRS Form 8594. In any Proceeding related to the determination of any Tax, neither Buyer nor Seller shall contend or represent that such allocation is not a correct allocation.

      1.8 Conveyances . Conveyance of the Real Property to Buyer shall be by limited warranty Deed subject only to the Permitted Real Property Encumbrances (as defined below). Conveyance of the Personal Property shall be by a Bill of Sale and Assignment between Seller and Buyer. “ Permitted Real Property Encumbrances ” shall mean: (a) public and utility easements, rights of ingress and egress and building lines and use or occupancy restrictions and covenants of record; (b) liens for Taxes that are not yet due and payable on the Closing Date; (c) such other title matters existing prior to the Effective Time that are created by or with the written consent of Buyer; (d) minor survey exceptions, reciprocal and utility easement agreements and other customary encumbrances on title to real property that do not individually or in the aggregate diminish the value or use of such property in any material respect; (e) zoning, use and building laws, regulations, ordinances and codes of any Governmental Authority or agency applicable to the Real Property; and (f) those additional encumbrances identified in Schedule 1.8 .

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SELLER

     As of the Execution Date and again as of the Closing Date, Seller represents and warrants to Buyer that, except as contained in the disclosure Schedules attached hereto and incorporated herein:

      2.1 Organization, Corporate Power and Authority .

      (a)  Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the State of North Carolina and is duly qualified to do business and is in good standing under the laws of the State of Ohio. Seller has the corporate power and authority to own, lease and operate and hold its properties and to carry on its Business as now conducted.

      (b)  Seller has full corporate power and authority to execute, deliver and perform the corporate obligations and covenants contained in this Agreement and Seller’s Closing Documents and to carry out the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and Seller’s Closing Documents by Seller and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Seller. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable in accordance with its terms, subject to applicable Exceptions. Each of Seller’s Closing Documents, when duly executed and delivered by Seller and the other Parties thereto, will constitute the legal, valid and binding obligation of Seller enforceable in accordance with its respective terms, subject to applicable Exceptions.

      (c)  Schedule 2.1(c) sets forth (i) a true and complete list of each Person who owns, directly or indirectly, five percent (5%) or more of any class of equity interest of Seller, provided that nothing herein shall require a listing of the shareholders of MedCath Corporation and (ii) all

trustees, directors, managers and executive officers of Seller. Except as set forth on Schedule 2.1(c) , Seller has no equity, investment or other interest in any Person.

      2.2 No Breach . Except as described on Schedule 2.2 , neither the execution and delivery of this Agreement and related agreements contemplated herein by Seller nor the consummation or performance of the transactions contemplated hereby or in the Seller’s Closing Documents will, directly or indirectly (with or without notice, lapse of time or both): conflict with or result in any violation of or constitute a breach or default under any term of (A) the respective charter documents, bylaws, the articles of organization, operating agreements or other organizational documents of Seller, (B) any Contract, permit or other instrument to which Seller is a party, or by which Seller is bound or to which the Business or any of the Acquired Assets is subject, assuming however all third party consents to assignments of Contracts have been obtained, (C) any judgment to which Seller, the Business or any of the Acquired Assets is bound or subject, or (D) any Legal Requirement, (ii) will not result in the creation of any lien or other encumbrance upon the Business or any property which is required to be part of the Acquired Assets, and (iii) do not require any notice to or any permit, authorization, consent or approval of any Governmental Authority or of any other Person.

      2.3 Assets .

      (a)  Except as described on Schedule 2.3(a) , Seller is the sole and exclusive legal and equitable owner of all right, title and interest in, has good and marketable title in fee simple absolute to, and is in possession of all Acquired Assets. Except as described on Schedule 2.3(a) , no Affiliate of Seller or any Person has any direct or indirect ownership, leasehold or other interest in the Acquired Assets. As of the Closing Date, all of the Acquired Assets are free and clear of any encumbrances, except for Permitted Real Property Encumbrances.

      (b)  The Acquired Assets and the Excluded Assets constitute all assets which are held or used by Seller in the conduct of the Business and operation of the Hospital. The Acquired Assets constitute all assets that are necessary for Buyer to conduct the Business and operation of the Hospital as currently conducted subject to exclusion of the Excluded Assets.

      2.4 Inventory . The items of inventory of Seller as of the Effective Time (i) are (and will be) of a quality and quantity useable or saleable in the ordinary course and are (and will be) of a quantity sufficient to enable Buyer and its Affiliates to carry on the Business as currently conducted, (ii) are (and will be) not in excess of reasonable quantities for anticipated sale in the ordinary course and, except as set forth in Schedule 2.4 , carried at amounts which reflect valuations pursuant to the Seller’s normal inventory valuation policy and in accordance with GAAP and (iii) do not include any obsolete or defective materials or any inventory items which should be written off or written down for which there is not an adequate reserve calculated in accordance with GAAP.

      2.5 No Outstanding Rights . Except as described on Schedule 2.5 , there are no outstanding rights (including any right of first refusal), interests, options or Contracts giving any Person any current or future right to obtain an equity interest in Seller or to require Seller or, from and after the Effective Time, Buyer, to sell or transfer to such Person or to any third party any interest in any of the Acquired Assets.

      2.6 Personal Property Leases .

      (a)  Schedule 1.1(b) is an accurate and complete list of all Personal Property Leases (but excluding the Equipment Leases set forth in Schedule 1.1(b) ). The Seller does not have any liability with respect to any of such Personal Property Leases except as expressly set forth therein.

      (b)  Equipment Leases. Schedule 2.6(b) is an accurate and complete list of all equipment leased or subleased by Seller or any of its Affiliates (the listed equipment being collectively called the “ Leased Equipment ”), including identification of the lease or sublease affecting such Leased Equipment or any interest therein to which the Seller or any of its Affiliates now are a party or by which any of such entity’s interests in the Leased Equipment is or will be bound. Neither the Seller nor any of its Affiliates have entered into a Contract and made a commitment to lease equipment other than as disclosed in Schedule 2.6(b) . Seller and/or its Affiliates are in peaceable possession of the Leased Equipment and have exclusive use of the Leased Equipment. Except as disclosed on Schedule 2.6(b) , none of such Leased Equipment is subject to any licenses, use restrictions, exceptions, reservations, limitations or other impediments which adversely affect the value to the Business of the leasehold interest therein or which interfere with or impair the present and continued use thereof in the usual and normal conduct of the Business as currently conducted. Except as disclosed on Schedule 2.6(b) , none of such Leased Equipment which involves a payment in excess of $25,000 per annum is subject to any lien (except liens for current taxes not yet due and payable, and liens to be discharged prior to the Effective Time by Seller) which could, by foreclosure or enforcement, terminate or otherwise adversely affect any Personal Property Lease to which the Leased Equipment is subject.

      2.7 Real Property .

      (a)  Schedule 1.1(e) sets forth an accurate and complete list of all Real Property Leases, including identification of the lease or sublease to which Seller or any of its Affiliates is a party or by which any of such entity’s interests in real property is bound affecting such real estate or any interest therein. Except as described on Schedule 1.1(e) , neither the Seller nor any of its Affiliates leases any real property used in conjunction with the operation of the Business. Seller has made available to Buyer accurate, correct and complete copies of all Real Property Leases and all amendments thereto. Neither Seller nor any of its Affiliates have (i) any material liability with respect to any Real Property Lease except as expressly set forth therein, or (ii) received any notice from any other party to any Real Property Leases of any uncured defaults. Seller and/or each Affiliate is in peaceable possession of the real property subject to the Real Property Leases (“ Leased Real Property ”)(other than exceptions of record that do not materially interfere with the use of such property for its intended purpose) and none of the Leased Real Property is subject to any easements, rights of way, licenses, grants, building or use restrictions, exceptions, reservations, limitations or other impediments which materially interfere with or impair the present and continued use thereof in the usual and normal conduct of the Business as currently conducted. The Leased Real Property is not subject to any other leases or tenancies of any nature whatsoever.

      (b)  Schedule 1.1(c) sets forth an accurate and complete list of each parcel constituting the Owned Real Property, and, with respect to each such parcel, includes its street address, if any. Except as set forth in Schedule 1.1(c) and, except for Permitted Real Property Encumbrances, there are no contracts or agreements, oral or written, relating to or affecting the Owned Real Property that would affect or restrict rights to ownership or use or any interest therein. Except as set forth on Schedule 1.1(c) and subject to the Permitted Real Property Encumbrances, Seller is the sole and exclusive legal and equitable owner of all right, title and interest in and has good and marketable title in fee simple absolute to and is in possession of all Owned Real Property, including the buildings, structures and improvements situated thereon and appurtenances thereto, in each case as of the Effective Time free and clear of all Liens other than Permitted Real Property Encumbrances.

      (c)  Neither the whole nor any portion of any Owned Real Property or Leased Real Property (together with the rights to extract aggregate, collectively, “ Real Property ”) has been condemned, requisitioned or otherwise taken by any public authority, no notice of any such condemnation, requisition or taking has been received, and no such condemnation, requisition or taking of the Real Property is threatened in writing.

      (d)  Except as set forth on Schedule 2.7(d) , Seller has received no written notice from any Governmental Authority that either the Owned Real Property or the Leased Real Property is not in compliance with all applicable Legal Requirements, and Seller has received no written notice from any Governmental Authority that the buildings, structures, other improvements and fixtures on such Real Property and the operations of the Business in or about any Real Property therein conducted do not conform to all Legal Requirements. Schedule 2.7(d) sets forth all of the Real Property for which permits and licenses have been or are being obtained. Seller has all easements and rights reasonably necessary or appropriate to conduct the Business at the Real Property.

      (e)  None of the utility companies serving any building or facility of Seller has threatened Seller in writing with any reduction in service. All installation and connection charges have been paid for in full.

      (f)  Seller has not filed any challenges or appeals regarding the amount of taxes on, or the assessed valuation of, the Real Property, and Seller has not made any special arrangements or agreements with any Governmental Authority with respect thereto. There is no tax assessment (which is in addition to the normal, annual general real estate tax assessment) pending or threatened with respect to any portion of the Real Property.

      2.8 Structural Defects; Condition of Real Property . Seller has received no written notice from an architect, engineer or Governmental Authority that there are structural defects in any improvement or structure situated on the Real Property which would prevent Buyer from conducting the Business following the Effective Time as currently conducted, except for routine maintenance and repairs which occur in the ordinary course

      2.9 Government Reimbursement Participation; Health Care Law Compliance .

      (a)  Seller is eligible to receive payment without restriction under Title XVIII of the Social Security Act (“ Medicare ”) and is a “ provider ” with valid and current provider agreements with one or more provider numbers with Government Reimbursement Programs through fiscal intermediaries. Seller is in compliance with the conditions of participation for the Government Reimbursement Programs in all material respects. Except as described on Schedule 2.9 , there are no pending, or threatened Proceedings or investigations under the Government Reimbursement Programs involving Seller. The cost reports of Seller, as applicable, for the Government Reimbursement Programs referred to above, and for payment and reimbursement of any other cost report settlements, required to be filed prior to the Effective Time, have been or will be properly filed and are or will be complete and correct in all material respects. The cost reports required to be filed by Seller do not claim, and Seller has not received any payment or reimbursement in excess of, the amount provided by law or any applicable agreement, except where excess reimbursement was noted on the cost report. Except as described on Schedule 2.9 , there are no claims, actions or appeals pending before any commission, board or agency, including any fiscal intermediary or carrier, Governmental Authority or the Administrator of the Centers for Medicare and Medicaid Services, with respect to any Government Reimbursement Program cost reports or claims filed on behalf of Seller referred to above or any disallowances by any commission, board or agency in connection with any such cost reports.

      (b)  Neither Seller, nor to Seller’s Knowledge, any partner, member, director, officer or employee of Seller, nor any agent acting on behalf of or for the benefit of any of the foregoing, has directly or indirectly in connection with the Business or the Acquired Assets in violation of any Legal Requirements: (i) offered or paid any remuneration, in cash or in kind, to, or made any financial arrangements with, any past, present or potential customers, past or present suppliers, patients, medical staff members, contractors or third party payors of Seller; (ii) given or agreed to give, or is aware that there has been made or that there is any agreement to make, any gift or gratuitous payment of any kind, nature or description (whether in money, property or services) to any customer or potential customer, supplier or potential supplier, contractor, third party payor or any other Person; (iii) made or agreed to make, or is aware that there has been made or that there is any agreement to make, any contribution, payment or gift of funds or property to, or for the private use of, any governmental official, employee or agent where either the contribution, payment or gift or the purpose of such contribution, payment or gift is or was illegal under the Legal Requirements of the United States or under the Legal Requirements of any state or any other Governmental Authority having jurisdiction over such payment, contribution or gift; (iv) established or maintained any unrecorded fund or asset for any purpose or made any misleading, false or artificial entries on any of its books or records for any reason; or (v) made, or agreed to make, or is aware that there has been made or that there is any agreement to make, any payment to any Person with the intention or understanding that any part of such payment would be used for any purpose other than that described on the documents supporting such payment.

      (c)  Neither Seller nor any partner, member, director, officer or employee of Seller is a party to any Contract (including any joint venture or consulting agreement) related to Seller, its Business or the Acquired Assets with any physician, health care facility, hospital, nursing

facility, home health agency or other Person who is in a position to make or influence referrals to or otherwise generate business for Seller with respect to the Hospital or the Purchased Assets, to provide services, lease space, lease equipment or engage in any other venture or activity, to the extent that any of the foregoing is prohibited by Legal Requirements.

      (d)  The Hospital is fully accredited by The Joint Commission (“ Joint Commission ”), and Seller has made available to Buyer true and complete copies of the most recent Joint Commission accreditation survey report and deficiency list for the Hospital, if any, and the Hospital’s plan of correction, if any.

      (e)  Seller is in compliance with the Medicare Fraud and Abuse Amendments of 1977, as amended by the Medicare Patient and Program Protection Act of 1987 (the “ Anti-Kickback Statute ”), federal prohibitions on physician “ self-referrals ” (the “ Stark Law ”), the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”), the civil monetary penalties law, 42 U.S.C. § 1320a-7a(b) (“ CMP ”), Federal False Claims Act, 42 U.S.C. §§ 3729 – 3733 (“ FCA ”), and Orders.

      2.10 No Violation of Law . Seller (a) is not in violation of any Legal Requirements and (b) has not received any current written notice of any alleged violation or non-compliance with any Legal Requirement.

      2.11 Legal Proceedings . Except as described on Schedule 2.11 , there are no Proceedings instituted or pending or threatened against Seller that challenge, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated hereby, and there are no Orders outstanding or threatened against Seller that challenge, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated hereby. Except as described on Schedule 2.11 , Seller is not a party to any Proceedings, and Seller and the Acquired Assets are not subject to any Orders. Seller has not received notice of any pending action, suit, Proceeding or investigation by or before any court, arbitrator or Governmental Authority concerning the Business or the affairs of Seller or to which the Acquired Assets are subject, and, to Seller’s Knowledge, there is no basis for any such action. There is no action, suit or Proceeding or investigation that is currently being threatened in writing against Seller or against any stockholder, officer, director, manager, member or employee of Seller in relation to or otherwise involving the Business, Acquired Assets or affairs of Seller.

      2.12 Fees and Commissions . Any fees associated with the retention of a financial advisor of or other intermediary who has acted on behalf of Seller in connection with the negotiation or consummation of this Agreement or the transactions contemplated thereby are the sole and exclusive obligation of the Seller, including any broker’s, finder’s or originator’s fees or commissions by reason of services rendered for or, at the instance of, Seller in connection with this Agreement or the transactions contemplated hereby.

      2.13 Material Contracts . Schedule 2.13 lists all Material Contracts. Except as described on Schedule 2.13 , each Material Contract (a) has been entered into by Seller in the normal course of its Business, and (b) is in full force and effect, and has not been amended or modified except as described on Schedule 2.13 . Seller is not currently in default in any material

respect, nor has Seller received any written notice that it is in default, with respect to any Material Contract, and no other party to any Material Contract is currently in default in any material respect or has any defense, counterclaim or offset right. Seller has not assigned or encumbered any such Material Contract in any manner.

      2.14 Insurance . Schedule 2.14 sets forth a true and complete list of all insurance policies or self-insurance funds maintained by Seller covering the ownership and operation of the Business and the Acquired Assets, indicating the types of insurance, policy numbers, terms, identity of insurers and amounts and coverages (including applicable deductibles). Seller has one or more “ business interruption ” insurance policies in customary form and amount covering Business and the Acquired Assets (which coverage includes coverage from the date hereof until the Closing Date), and the proceeds of such policies are assignable to Buyer as to the period from the date hereof until the Closing Date if the Closing occurs as contemplated hereunder. All of such policies are now and will be until the Closing in full force and effect on an occurrence basis with no premium arrearages. Such policies of insurance shall not be assigned to Buyer as part of the Acquired Assets and Buyer acknowledges that all of the coverages listed on Schedule 2.14 with respect to the Purchased Assets will cease with respect to events occurring after the Effective Time.

      2.15 Tax Matters .

      (a)  For purposes of this Section 2.15 , “ Tax Returns ” means all reports, estimates, declaration of estimated Tax, information statements and returns relating to, or required to be filed in connection with, any Taxes and any schedules attached to or amendments of (including refund claims with respect to) any of the foregoing.

      (b)  Except as described on Schedule 2.15 (i) all Tax Returns required to be filed by or on behalf of Seller in respect of income, assets or other items relating to Seller, in all cases, have been duly filed on a timely basis or within the applicable final extension periods granted to it; (ii) such Tax Returns are true, complete and correct in all respects; and (iii) all Taxes owed by Seller with respect to any taxable period or partial taxable period of Seller ending prior to the Effective Time have been paid or will be timely paid by Seller.

      2.16 Environmental Matters . Attached hereto as Exhibit B is the original environmental report prepared by Seller (the “ Report ”). Seller is in compliance with all terms and conditions of all permits, licenses and authorizations, and is in compliance in all material respects with all other Legal Requirements and regulations relating to the emission, discharge, release or threatened release of any Hazardous Materials into air, surface water, groundwater or lands (“ Environmental Requirements ”). No discharge or release of any Hazardous Material caused by Seller has occurred on or otherwise affects any property owned or operated by the Seller that is included within the Acquired Assets which violates Environmental Requirements.

      2.17 Absence of Certain Changes or Events .

      (a)  Except as set forth in Schedule 2.17(a) , since September 30, 2007, there has not been any development (including consummation of the transactions contemplated hereby) or threatened development of a nature which would be reasonably likely to cause any material

adverse change in the financial condition, net worth, assets, liabilities, personnel, or operations (including any of the Seller’s or its Affiliate’s relationships with suppliers (other than Buyer), employees and customers) of the Business or the ability of Seller to perform its obligation under this Agreement and any related agreements (collectively, “ Material Adverse Effect ”); provided, however, that none of the following shall in themselves constitute, and none of the following shall be taken into account in determining whether there has been or will be a Material Adverse Effect: (i) any change, effect or circumstance to the extent arising primarily by reason of a deterioration in the financial markets, the general economy or the industries in which the Seller operates; (ii) any change, effect or circumstance to the extent directly arising out of action taken by Buyer or any of its Affiliates, the announcement of this transaction and the consummation of the transactions contemplated hereby; (iii) any change, effect or circumstance to the extent attributable primarily to any acts of war involving the United States or hostilities or terrorist activity involving the United States, including without limitation, any continuation or material worsening of hostilities involving the combat of terrorism or other national security issues involving the United States; (iv) general economic, regulatory or political conditions or changes, (v) changes in Legal Requirements or GAAP after the Execution Date; (vi) compliance with the terms of this Agreement; or (vii) an earthquake or other natural disaster, subject to the provisions of Section 4.5 .

      (b)  Except as specifically set forth in Schedule 2.17(b) , and except as expressly authorized by this Agreement to accomplish the transactions contemplated hereby, since January 1, 2008, Seller has conducted (and from the date hereof through the Effective Time, will continue to conduct) the Business and its operations only in the ordinary course in all material respects. Without limiting the generality of the foregoing, since September 30, 2007, and, except as set forth on Schedule 2.17(b) and, except for transactions required to effect this Agreement, Seller has not (and from the Execution Date through the Effective Time, will not):

     (i) created or suffered to exist any liens, encumbrances or other restrictions with respect to any of the Acquired Assets, except for the Permitted Real Property Encumbrances;

     (ii) sold, leased to others, licensed to others, disposed of, or otherwise transferred any of the material assets or properties of the Business, except for (i) sales of inventory in the usual and ordinary course of the Business, (ii) sales of old or obsolete equipment that has been replaced with equipment that is functionally equivalent and (iii) sales of other obsolete equipment with an aggregate value of less than $100,000;

     (iii) suffered any material loss, or material interruption in use, of any material asset or property of the Business (whether or not covered by insurance) on account of fire, flood, riot, strike or other hazard or act of God in excess of $100,000;

     (iv) purchased, called, redeemed or otherwise acquired (other than for cash) or declared or paid any dividends or other distributions (other than cash) on or with respect to, any equity interest in Seller or any of its Affiliates;

     (v) (A) increased the rate or terms of compensation (including termination and severance pay), commission, bonus or other direct or indirect remuneration (or the rate

thereof) payable or to become payable to any of Seller’s employees, officers, directors or persons otherwise serving in such capacities, other than regularly scheduled increases in base salary in the ordinary course and consistent with past practice in all material respects; or (B) adopted, amended or terminated any Employee Benefit Plan, unless such adoption, amendment or termination affects all Affiliates of MedCath that own or operate hospitals, or entered into any employment, consulting, severance or termination agreement;

     (vi) waived any rights relating to the Business or arising under or in connection with any of the Acquired Assets, individually or in the aggregate in excess of $100,000;

     (vii) acquired any assets or properties individually or in the aggregate in excess of $100,000 other than in the ordinary course and consistent with past practice;

     (viii) entered into any merger, consolidation, recapitalization or other business combination or reorganization;

     (ix) made any loans, advances or capital contributions to or investments in any Person, other than (A) loans and advances to employees in amounts that do not individually exceed $10,000 or in the aggregate exceed $50,000 and (B) loans and advances to any holders of an equity interest in Seller;

     (x) induced any employee receiving annual compensation in excess of $50,000, to leave his or her employment, or acted to otherwise adversely affect the relations with any such employee receiving annual compensation in excess of $50,000;

     (xi) delayed payment of payables, changed credit practices or done anything to materially and adversely affect the relationship of the Business with any customers or supplier that is material to the Business (other than Buyer);

     (xii) failed to replenish inventories and supplies in the ordinary course and consistent in all material respect with prior practice, or made any purchase commitment materially in excess of the usual requirements of the Business or at any price materially in excess of the then-current market price or upon terms and conditions more onerous than those usual and customary in the industry or made any material change in its selling, pricing, advertising or personnel practices inconsistent with its prior practice;

     (xiii) commenced or terminated any line of business;

     (xiv) made any change in its general pricing practices or policies or any change in its credit or allowance practices or policies other than in the ordinary course;

     (xv) received written notice from any customer or supplier representing during the last fiscal year sales or purchases of $100,000 or more that such customer or supplier has ceased, may cease or will cease to do business with it;

     (xvi) entered into any transaction, agreement, contract or understanding with any Person (other than Buyer) affecting the Business or altered the terms of any transaction, agreement, contract or understanding with any Person (other than Buyer) affecting the Business which involves expenditure in excess of $100,000;

     (xvii) without limiting the foregoing, entered into any material transaction resulting in a liability or expenditure in excess of $100,000, other than in the ordinary course;

     (xviii) entered into any material amendment, modification, termination (partial or complete) or granted any material waiver under or given any material consent with respect to any Contract that is required to be disclosed in the Schedules to this Agreement;

     (xix) made any change in any method of accounting or accounting practice that applied only to Seller and not to MedCath and its subsidiaries on a consolidated basis;

     (xx) made or deferred any capital expenditure in each case in excess of $100,000 individually and $250,000 in the aggregate; and

     (xxi) except for this Agreement, entered into any oral or written agreement, contract, commitment, arrangement or understanding with respect to any of the matters described in this Section 2.17(b) .

      2.18 Employees .

      (a)  Schedule 2.18(a) lists the employees of Seller and their current rates of compensation, dates of hire, status (i.e., exempt or non-exempt) and eligibility for, and participation in, Employee Benefit Plans. Except as described on Schedule 2.18(a) , (i) there are no collective agreements or bargaining relationships or other contracts or understandings with any labor organization with respect to Seller’s employees, (ii) the Seller has no Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Seller, and to the Seller’s Knowledge no such efforts have occurred within the past three years, (iii) there is no worker’s compensation liability, experience or matter outside the Ordinary Course of Business, (iv) there are no strikes, slowdowns, work stoppages, material grievances, material unfair labor practices claims or other material employee or labor disputes currently pending or threatened against or involving the Seller and none has occurred within the last three years, (v) the Seller has not engaged in any unfair labor practices within the meaning of the National Labor Relations Act, (vi) during the three year period preceding the Closing Date, the Seller has not implemented any layoffs of employees that could implicate the Worker Adjustment and Retraining Notification Act, 29 U.S. Stat. § 2101 et seq. (the " WARN Act ”), (vii) there are no pending or threatened in writing complaints or charges before any Governmental Authority regarding employment discrimination, safety or other employment-related charges or complaints, wage and hour claims, unemployment compensation claims, worker’s compensation claims or the like involving any current or former employee of Seller, (viii) Seller is in compliance in all material respects with all Legal Requirements and Contracts respecting employment and employment practices, labor relations, terms and

conditions of employment and wages and hours and (ix) Buyer will not be subject to any claim or liability for severance pay as a result of the consummation of the transactions contemplated by this Agreement as long as Buyer fulfills its obligations under the term of this Agreement.

      (b)  All Employee Benefit Plans maintained by the Seller or to which the Seller is obligated to contribute, are listed on Schedule 2.18(b) hereto. With respect to the Employee Benefit Plans:

     (i) a copy of each such Employee Benefit Plans has been made available to the Buyer and/or its agents;

     (ii) all such Employee Benefit Plans have been maintained, funded and administered in compliance in all material respects with all applicable Legal Requirements, including ERISA and the Code;

     (iii) no Employee Benefit Plan is or has within the last three years been subject to the minimum funding requirements of Section 412 or 430 of the Code or Title IV of ERISA;

     (iv) the Seller does not have any obligation to contribute to any “ multiemployer plan ” within the meaning of Section 3(37) of ERISA;

     (v) each Employee Benefit Plan intended to qualify under Section 401(a) of the Code has received a favorable determination letter or is entitled to rely on an opinion letter from the Internal Revenue Service that such Employee Benefit Plan is a “ qualified plan ” under Section 401(a) of the Code, the related trust is exempt from tax under Section 501(a) of the Code, and no facts or circumstances exist that would be reasonably likely to jeopardize the qualification of such Employee Benefit Plan; and

     (vi) with respect to the Employee Benefit Plans, all required contributions have been made or properly accrued on the Seller’s financial statements.

      2.19 Financial Information .

      (a)  Schedule 2.19 hereto contains the following financial statements and financial information (collectively, the “ Historical Financial Information ”): (i) audited balance sheets and income statements of the Seller for the twelve-month periods ended September 30, 2007 and September 30, 2006; (ii) unaudited balance sheet and income statement of the Seller dated for the period from October 1, 2007 through December 31, 2007; and (iii) the most recently available unaudited balance sheet and income statement of Seller.

     The financial statements included in the Historical Financial Information have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods indicated provided that the unaudited statements are not footnoted and are subject to customary year end adjustments, and Seller has not changed any accounting policy or methodology throughout all periods presented that applied only to Seller and not to MedCath and its subsidiaries on a consolidated basis. The balance sheets contained in the Historical Financial Information present fairly in all material respects the financial condition of Seller as of the dates

indicated thereon, and the income statements contained in the Historical Financial Information present fairly in all material respects the results of operations of Seller for the periods covered thereby.

      (b)  Except for (i) liabilities that are disclosed in this Agreement, the Historical Financial Statements, Contracts entered into in connection herewith and schedules and exhibits hereto and thereto, and (ii) liabilities that were incurred after February 29, 2008, in the ordinary course of business, there are no material liabilities of any nature of Seller relating to the Hospital or the Acquired Assets and Assumed Liabilities.

      2.20 Intellectual Property .

      (a)  Except as described on Schedule 2.20 , there is no unauthorized use, disclosure, infringement or misappropriation of any intellectual property rights of Seller, any trade secret of Seller, or any intellectual property right of any third party to the extent licensed by or through Seller, including any employee or former employee of Seller, relating in any way to any of the Acquired Assets. There are no royalties, fees or other payments payable by Seller to any Person by reason of the ownership, use, sale or disposition of intellectual property related to any of the Acquired Assets except as set forth in the Contracts.

      (b)  Except as described on Schedule 2.20 , Seller is not nor will be as a result of the execution and delivery of this Agreement or any of the documents described herein or the performance of its obligations under this Agreement or any of the documents described herein, in breach of any license, sublicense or other Contract relating to the intellectual property included in the Acquired Assets, provided that no representation is made regarding the absence of a breach due to the failure to obtain any required third party consent to the assignment of any Contract.

      (c)  Except as described on Schedule 2.20 , Seller has no patents, registered trademarks, registered service marks or registered copyrights related to any of the Acquired Assets, and Seller is not infringing upon any patents, trademarks, service marks, copyrights or in violation of any trade secret or other proprietary right of any third party related to any of the Acquired Assets. Seller has not brought any Proceeding against any third party for infringement of intellectual property or breach of any license or Contract involving intellectual property related to any of the Acquired Assets.

      2.21 Completeness of Disclosure . No representation or warranty by Seller in this Agreement or statement made by Seller in any schedule to this Agreement, or any certificate or other document furnished or to be furnished to Buyer pursuant hereto, or in connection with the negotiation, execution or performance of this Agreement, contains or will at the Closing contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or thereon or necessary to make any statement herein or therein not misleading in any material respect.

     EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 2 , THE ACQUIRED ASSETS ARE BEING SOLD TO BUYER “ AS IS, WHERE IS, AND WITH ALL FAULTS ”, AND SELLER EXPRESSLY

DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BUYER

     As of the Execution Date and again as of the Closing Date, Buyer represents and warrants to Seller that, except as contained in the disclosure Schedules attached hereto and incorporated herein:

      3.1 Organization, Corporate Power and Authority .

      (a)  Buyer is an Ohio public benefit corporation duly organized, validly existing and in good standing under the laws of the State of Ohio.

      (b)  Buyer has full corporate power and authority to execute, deliver and perform the corporate obligations and covenants contained in this Agreement and Buyer’s Closing Documents and to carry out the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and Buyer’s Closing Documents by Buyer and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Buyer. This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable in accordance with its terms, subject to applicable Exceptions. Each of Buyer’s Closing Documents, when duly executed and delivered by Buyer and the other Parties thereto, will constitute the legal, valid and binding obligation of Buyer enforceable in accordance with its respective terms, subject to applicable Exceptions.

      3.2 No Breach . Neither the execution and delivery of this Agreement and related agreements contemplated herein by Buyer nor the consummation or performance of the transactions contemplated hereby or in the Buyer’s Closing Documents will, directly or indirectly (with or without notice, lapse of time, or both): (i) conflict with or result in the breach or violation of the governing documents of or resolutions adopted by Buyer; (ii) conflict with or result in the breach or violation of any provision of any Order of any Governmental Authority, in either such case, to which Buyer, or any of the Acquired Assets, are bound, or cause any acceleration thereof; or (iii) contravene, conflict with, or result in a violation in any Legal Requirements. Except for the other approvals and consents described on Schedule 3.2 , Buyer is not and will not be required to give any notice to or obtain any consent from any Governmental Authority in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

      3.3 Legal Proceedings . Except as provided in Schedule 3.3 , there are no Proceedings instituted, pending or threatened against Buyer that challenge, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated hereby, and there are no Orders