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ASSET PURCHASE AGREEMENT BY AND AMONG SUN CITY CARDIAC CENTER ASSOCIATES SUN CITY CARDIAC CENTER, INC. MEDCATH PARTNERS, LLC MEDCATH INCORPORATED AND BANNER HEALTH Dated as of September 29, 2009

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT BY AND AMONG SUN CITY CARDIAC CENTER ASSOCIATES SUN CITY CARDIAC CENTER, INC. MEDCATH PARTNERS, LLC MEDCATH INCORPORATED AND BANNER HEALTH Dated as of September 29, 2009 | Document Parties: MEDCATH CORP | MedCath Incorporated | SUN CITY CARDIAC CENTER ASSOCIATES | Sun City Cardiac Center, Inc, MedCath Partners, LLC You are currently viewing:
This Asset Purchase Agreement involves

MEDCATH CORP | MedCath Incorporated | SUN CITY CARDIAC CENTER ASSOCIATES | Sun City Cardiac Center, Inc, MedCath Partners, LLC

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Title: ASSET PURCHASE AGREEMENT BY AND AMONG SUN CITY CARDIAC CENTER ASSOCIATES SUN CITY CARDIAC CENTER, INC. MEDCATH PARTNERS, LLC MEDCATH INCORPORATED AND BANNER HEALTH Dated as of September 29, 2009
Governing Law: Arizona     Date: 10/1/2009
Industry: Healthcare Facilities     Law Firm: Moore Van     Sector: Healthcare

ASSET PURCHASE AGREEMENT BY AND AMONG SUN CITY CARDIAC CENTER ASSOCIATES SUN CITY CARDIAC CENTER, INC. MEDCATH PARTNERS, LLC MEDCATH INCORPORATED AND BANNER HEALTH Dated as of September 29, 2009, Parties: medcath corp , medcath incorporated , sun city cardiac center associates , sun city cardiac center  inc  medcath partners  llc
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Exhibit 99.2

ASSET PURCHASE AGREEMENT

BY

AND

AMONG

SUN CITY CARDIAC CENTER ASSOCIATES

SUN CITY CARDIAC CENTER, INC.

MEDCATH PARTNERS, LLC

MEDCATH INCORPORATED

AND

BANNER HEALTH

Dated as of September 29, 2009

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

1.

 

DEFINITIONS; INTERPRETATION

 

 

1

 

 

 

1.1

 

Definitions

 

 

1

 

 

 

1.2

 

Interpretation

 

 

8

 

 

 

 

 

 

 

 

 

 

2.

 

SALE OF ASSETS AND CERTAIN RELATED MATTERS

 

 

8

 

 

 

2.1

 

Sale and Transfer of the Assets

 

 

8

 

 

 

2.2

 

Excluded Assets

 

 

9

 

 

 

 

 

 

 

 

 

 

3.

 

FINANCIAL ARRANGEMENTS

 

 

10

 

 

 

3.1

 

Purchase Price

 

 

10

 

 

 

3.2

 

Assumed Liabilities

 

 

10

 

 

 

3.3

 

Excluded Liabilities

 

 

10

 

 

 

3.4

 

Post Closing Purchase Price Adjustment

 

 

11

 

 

 

3.5

 

Allocation of Purchase Price

 

 

13

 

 

 

3.6

 

Prorations and Utilities

 

 

13

 

 

 

3.7

 

Tax Proration

 

 

13

 

 

 

3.8

 

Interest

 

 

13

 

 

 

3.9

 

Banner Interim Management Agreement

 

 

13

 

 

 

 

 

 

 

 

 

 

4.

 

CLOSING

 

 

13

 

 

 

4.1

 

Closing

 

 

13

 

 

 

4.2

 

Deliveries of Seller at Closing

 

 

14

 

 

 

4.3

 

Deliveries of Buyer at Closing

 

 

15

 

 

 

4.4

 

Additional Acts

 

 

15

 

 

 

 

 

 

 

 

 

 

5.

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

 

15

 

 

 

5.1

 

Status of Seller

 

 

15

 

 

 

5.2

 

Powers; Consents; Absence of Conflicts With Other Agreements, Etc.

 

 

16

 

 

 

5.3

 

Binding Agreement

 

 

16

 

 

 

5.4

 

[Intentionally Left Blank]

 

 

16

 

 

 

5.5

 

Financial Statements

 

 

16

 

 

 

5.6

 

Contracts; No Defaults

 

 

17

 

 

 

5.7

 

Real Property

 

 

17

 

 

 

5.8

 

Title

 

 

17

 

 

 

5.9

 

Condition of Assets

 

 

18

 

 

 

5.10

 

Zoning

 

 

18

 

 

 

5.11

 

Intellectual Property

 

 

18

 

 

 

5.12

 

Insurance

 

 

19

 

 

 

5.13

 

Litigation or Proceedings

 

 

19

 

 

 

5.14

 

Governmental Authorizations; Compliance

 

 

19

 

 

 

5.15

 

Regulatory Compliance; Improper Payments

 

 

19

 

 

 

5.16

 

HIPAA Matters

 

 

20

 

 

 

5.17

 

Compliance Program

 

 

20

 

 

 

5.18

 

Medicare Participation; Accreditation

 

 

20

 

 

 

5.19

 

Intentionally Omitted

 

 

21

 

 

 

5.20

 

Reimbursement

 

 

21

 

 

 

5.21

 

Medical Staff Matters

 

 

21

 

 

 

5.22

 

Statutory Funds

 

 

22

 

 

 

5.23

 

Controlled Substances

 

 

22

 

 

 

5.24

 

Intentionally Omitted

 

 

22

 

i


 

 

 

 

 

 

 

 

 

 

 

 

5.25

 

Tax Liabilities

 

 

22

 

 

 

5.26

 

ERISA Compliance

 

 

22

 

 

 

5.27

 

Employees and Employee Relations

 

 

23

 

 

 

5.28

 

Environmental Matters

 

 

24

 

 

 

5.29

 

Medical Waste

 

 

24

 

 

 

5.30

 

Brokers

 

 

24

 

 

 

5.31

 

Absence of Certain Changes

 

 

24

 

 

 

5.32

 

SCCC.

 

 

26

 

 

 

5.33

 

No Other Representations.

 

 

26

 

 

 

5.34

 

Statements and Other Documents Not Misleading

 

 

26

 

 

 

 

 

 

 

 

 

 

6.

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

26

 

 

 

6.1

 

Authority of Buyer

 

 

26

 

 

 

6.2

 

Powers; Consents; Absence of Conflicts With Other Agreements, Etc.

 

 

26

 

 

 

6.3

 

Binding Agreement

 

 

27

 

 

 

6.4

 

Litigation

 

 

27

 

 

 

6.5

 

Brokers

 

 

27

 

 

 

6.6

 

Buyer’s Acknowledgement

 

 

27

 

 

 

6.7

 

Statements and Other Documents Not Misleading

 

 

27

 

 

 

 

 

 

 

 

 

 

7.

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

 

 

27

 

 

 

7.1

 

Seller’s Deliverables

 

 

27

 

 

 

7.2

 

Compliance with Agreement

 

 

27

 

 

 

7.3

 

Representations and Warranties

 

 

28

 

 

 

7.4

 

Action/Proceeding

 

 

28

 

 

 

7.5

 

Consents and Approvals

 

 

28

 

 

 

7.6

 

Absence of Certain Changes

 

 

28

 

 

 

7.7

 

Releases

 

 

28

 

 

 

7.8

 

Payments to SCCC

 

 

28

 

 

 

 

 

 

 

 

 

 

8.

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

 

 

28

 

 

 

8.1

 

Buyer’s Deliverables

 

 

28

 

 

 

8.2

 

Compliance with Agreement

 

 

28

 

 

 

8.3

 

Action/Proceeding

 

 

28

 

 

 

8.4

 

Representations and Warranties

 

 

29

 

 

 

 

 

 

 

 

 

 

9.

 

ADDITIONAL AGREEMENTS AND COVENANTS

 

 

29

 

 

 

9.1

 

Post-Closing Access to Information

 

 

29

 

 

 

9.2

 

Employee Matters.

 

 

29

 

 

 

9.3

 

[RESERVED]

 

 

30

 

 

 

9.4

 

Notices and Consents

 

 

30

 

 

 

9.5

 

Notice of Developments and Consents

 

 

30

 

 

 

9.6

 

Affirmative Covenants of Seller

 

 

31

 

 

 

9.7

 

Negative Covenants of Seller

 

 

31

 

 

 

9.8

 

Noncompetition Agreement

 

 

32

 

 

 

9.9

 

Insurance

 

 

33

 

 

 

9.10

 

Misdirected Payments

 

 

33

 

 

 

9.11

 

Use of Controlled Substance Permit

 

 

33

 

 

 

 

 

 

 

 

 

 

10.

 

INDEMNIFICATION

 

 

34

 

 

 

10.1

 

Indemnification by Seller

 

 

34

 

 

 

10.2

 

Indemnification by Buyer

 

 

34

 

 

 

10.3

 

Survival/Indemnity Period

 

 

35

 

ii


 

 

 

 

 

 

 

 

 

 

 

 

10.4

 

Limitations

 

 

35

 

 

 

10.5

 

Notice and Procedure

 

 

36

 

 

 

10.6

 

Exclusive Remedy

 

 

37

 

 

 

10.7

 

Disregarding Materiality Exceptions

 

 

37

 

 

 

 

 

 

 

 

 

 

11.

 

TERMINATION

 

 

37

 

 

 

11.1

 

Termination Events

 

 

37

 

 

 

11.2

 

Effect of Termination

 

 

38

 

 

 

 

 

 

 

 

 

 

12.

 

GENERAL

 

 

38

 

 

 

12.1

 

Notice

 

 

38

 

 

 

12.2

 

Confidentiality; Public Announcement

 

 

40

 

 

 

12.3

 

Cost of Transaction

 

 

40

 

 

 

12.4

 

Choice of Law; Waiver of Jury Trial

 

 

40

 

 

 

12.5

 

Benefit/Assignment

 

 

41

 

 

 

12.6

 

Waiver of Breach

 

 

41

 

 

 

12.7

 

Severability

 

 

41

 

 

 

12.8

 

Entire Agreement/Amendment; Counterparts

 

 

41

 

 

 

12.9

 

Further Assurances

 

 

41

 

 

 

12.10

 

No Third Party Beneficiaries

 

 

41

 

 

 

12.11

 

Divisions and Headings

 

 

41

 

 

 

12.12

 

No Inferences

 

 

42

 

iii


 

ASSET PURCHASE AGREEMENT

      THIS ASSET PURCHASE AGREEMENT (“ Agreement ”) is made and entered into as of September 29, 2009, by and among SUN CITY CARDIAC CENTER ASSOCIATES, an Arizona general partnership (“ Seller ”), and BANNER HEALTH, an Arizona nonprofit corporation (“ Buyer ” and collectively with the Seller, the “ Parties ” and each a “ Party ”). Sun City Cardiac Center, Inc., MedCath Partners, LLC and MedCath Incorporated are parties to this Agreement solely for the purposes of Section 9.8 and Article X hereof.

W I T N E S S E T H:

      WHEREAS , Seller and/or Seller-Related Parties own and operate a business (the “ Business ”) providing cardiac services at and from its location at 10415 W Thunderbird Blvd, Sun City, Arizona (the “ Center ”);

      WHEREAS , Buyer owns and operates Banner Boswell Medical Center, Sun City, Arizona, and desires to add the Center to its operations; and

      WHEREAS , Buyer desires to acquire substantially all the assets of Seller and/or Seller-Related Parties primarily or exclusively used and/or useful in the Business, and Seller and the Seller-Related Parties desire to sell those assets to Buyer, all as more fully set forth below.

      NOW , THEREFORE , for and in consideration of the premises, and the agreements, covenants, representations and warranties set forth below, and other good and valuable consideration, the receipt and adequacy all of which are forever acknowledged, the parties hereby agree as follows:

      1. DEFINITIONS; INTERPRETATION

      1.1 Definitions Capitalized terms used in this Agreement shall have the following meanings:

     “ Accrued PTO ” has the meaning set forth in Section 3.2(a) .

     “ Affiliate ” means as to the Person in question, any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question and any successors or assigns of such Persons; and the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person whether through ownership of voting securities, by contract or otherwise. For purposes of this Agreement, “Affiliates” of Seller shall include, without limitation, the Seller-Related Parties and MedCath Corporation.

     “ Agency Settlements ” has the meaning set forth in Section 2.1(vii) .

     “ Agreement ” has the meaning set forth in the Preamble.

     “ Assets ” has the meaning set forth in Section 2.1 .

     “ Assignment and Assumption Agreement ” has the meaning set forth in Section 4.2(b) .

     “ Assumed Contracts ” has the meaning set forth in Section 2.1(iv) .

     “ Assumed Liabilities ” has the meaning set forth in Section 3.2(a) .

1


 

     “ Banner Interim Management Agreement ” has the meaning set forth in Section 3.9 .

     “ Balance Sheet Date ” means August 31, 2009.

     “ Benefit Plans ” means all “employee benefit plans,” as defined in Section 3(3) of ERISA, all “specified fringe benefit plans” as defined in Section 6039D of the Code and the rules and regulations promulgated thereunder, and all other stock purchase, stock option, equity-based, retention bonus, bonus, incentive compensation, deferred compensation, profit sharing, severance, change in control, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, disability, group insurance, vacation, holiday, sick leave, fringe benefit, welfare and other employee benefit plans or employment (including severance and change in control) agreements, programs, policies or other arrangements (whether formal or informal, oral or written, qualified or non-qualified, and whether or not subject to ERISA), including any funding mechanism therefor or otherwise, (i) which are currently, or at any time within the last six years were, maintained or contributed to by Seller or any ERISA Affiliate, (ii) under which any employee or former employee of Seller or any ERISA Affiliate has any present or future right to benefits or (iii) under which Seller or any ERISA Affiliate has any present or future liability.

     “ Bill of Sale ” has the meaning set forth in Section 4.2(a) .

     “ Business ” has the meaning set forth in the Recitals.

     “ Business Intellectual Property ” means the Intellectual Property Assets used by Seller in the Business.

     “ Buyer ” has the meaning set forth in the Preamble.

     “ Buyer Basket ” has the meaning set forth in Section 10.4(a)(i) .

     “ Buyer Indemnified Parties ” has the meaning set forth in Section 10.1 .

     “ Cap ” has the meaning set forth in Section 10.4(a)(iii) .

     “ Cash Purchase Price ” has the meaning set forth in Section 3.1 .

     “ Center ” has the meaning set forth in the Preamble.

     “ Claims ” has the meaning set forth in Section 10.5(a) .

     “ Closing ” has the meaning set forth in Section 4.1 .

     “ Closing Cash Payment Amount ” has the meaning set forth in Section 3.1 .

     “ Closing Date ” has the meaning set forth in Section 4.1 .

     “ Closing Date Accrued PTO ” means the Accrued PTO as of the Effective Time for employees who are hired by Buyer as of Closing.

     “ Closing Date Working Capital ” means an amount equal to the Value of Inventory.

2


 

     “ CMS ” means the Centers for Medicare and Medicaid Services.

     “ COBRA ” means Title I, Subtitle B, Part 6, of ERISA.

     “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

     “ Competing Business ” has the meaning set forth in Section 9.8(a) .

     “ Confidential Information ” has the meaning set forth in Section 12.2 .

     “ Contracts ” has the meaning set forth in Section 5.6 .

     “ Covered Entities ” has the meaning set forth in Section 5.16(a) .

     “ Draft Computation ” has the meaning set forth in Section 3.4(b) .

     “ Effective Time ” has the meaning set forth in Section 4.1 .

     “ Employees ” has the meaning set forth in Section 5.27(b) .

     “ Encumbrances ” means any mortgages, liens, restrictions, agreements, claims, easements, encroachments, rights of way, building use, exceptions, variances, reservations, pledges, security interests, conditional sales agreements, rights of first refusal, options, obligations, restrictions, liabilities, charges or limitations of any nature.

     “ Environmental Claim ” means any claim, action, cause of action, investigation or notice (in each case in writing or, if not in writing, to the Knowledge of Seller) by any Person alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, or release or threat of release into the environment, of any Materials of Environmental Concern at any location of the Business, whether or not owned or operated by Seller.

     “ Environmental Laws ” means, as they exist on the date hereof, all applicable United States federal, state, local and non-U.S. laws, regulations, codes and ordinances relating to pollution or protection of human health (as relating to the environment or the workplace) and the environment (including ambient air, surface water, ground water, land surface or sub-surface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern, including, but not limited to, Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”), 42 U.S.C. § 9601 et seq., Resource Conservation and Recovery Act (“ RCRA ”), 42 U.S.C. § 6901 et seq., Toxic Substances Control Act (“ TSCA ”), 15 U.S.C. § 2601 et seq., Occupational Safety and Health Act (“ OSHA ”), 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., each as may have been amended or supplemented, and any applicable environmental transfer statutes or laws.

     “ Equipment Lease ” has the meaning set forth in Section 4.2(j) .

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

3


 

     “ ERISA Affiliate ” means (a) any company, entity, trade or business that is required to be aggregated with Seller under Code Sections 414(b), (c) or (m); and (b) any other company, entity, trade or business that has adopted or is participating in any Benefit Plan related to Seller.

     “ Excluded Assets ” has the meaning set forth in Section 2.2 .

     “ Excluded Contracts ” has the meaning set forth in Section 2.1(iv) .

     “ Excluded Liabilities ” has the meaning set forth in Section 3.3 .

     “ Federal Healthcare Programs ” means the Medicare, Medicaid and TRICARE programs.

     “ Federal Privacy Regulations ” means the regulations contained in 45 C.F.R. Parts 160 and 164, as amended.

     “ Federal Transaction Regulations ” means the regulations contained in 45 C.F.R. Parts 160 and 162, as amended.

     “ Financial Statements ” has the meaning set forth in Section 5.5(a) .

     “ Firm ” has the meaning set forth in Section 3.4(b) .

     “ GAAP ” means generally accepted accounting principles applied on a consistent basis.

     “ Governmental Authority ” means any nation or government, any state, local authority or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of government, including any governmental authority, bureau, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, any contractor of a governmental or quasi-governmental entity, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

     “ Governmental Authorization ” means any approval, certificate of authority, certificate of need, accreditation, license, registration, permit, franchise, right, or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any law.

     “ Health Care Laws ” has the meaning set forth in Section 5.15(a) .

     “ HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as codified at 42 U.S.C. Sections 1320d through d-8.

     “ Hired Employees ” shall have the meaning set forth in Section 9.2(c) .

     “ Indebtedness ” shall mean any long-term indebtedness (including the current portion thereof), any indebtedness for borrowed money, including from a bank or other financial institution, any intercompany or related party indebtedness, capital lease obligations, any guaranty, and letters of credit.

     “ Indemnitee ” has the meaning set forth in Section 10.5(a) .

     “ Indemnitor ” has the meaning set forth in Section 10.5(a) .

4


 

     “ Intellectual Property Assets ” means all intellectual property rights (common law, statutory or otherwise), including patents (including all reissues, divisions, continuations and extensions), trademarks, service marks, trade names, copyrights, and registrations and applications for any and all of the foregoing, internet domain names, formulae, algorithms, designs, inventions, methodologies, specifications, know-how, trade secrets, computer software programs and code (both object and source), development tools and proprietary information, technologies and processes, and all documentation and media describing or relating to the above, in any format, whether hard copy or machine-readable only.

     “ Interest Commencement Date ” has the meaning set forth in Section 3.8 .

     “ Knowledge ”, “ Known ” or similar terms, whether or not capitalized, shall mean (a) with respect to a natural Person, if (i) the Person is actually aware of the fact or matter, or (ii) a prudent Person in a similar position would be expected to discover or otherwise become aware of the fact or matter in the course of conducting a reasonable investigation regarding the accuracy of the representations and warranties made herein; (b) with respect to Seller, if any of the Persons identified on Schedule 1.1 has knowledge of that fact or other matter (as set forth in (a) above) and (c) with respect to Buyer, if any of the Persons identified on Schedule 1.2 has knowledge of that fact or other matter (as set forth in (a) above). A Person shall be deemed to have conducted a reasonable investigation if he or she makes inquiry of Persons actively employed by that entity who have principal responsibility for those matters.

     “ Lease ” and “ Leased Real Property ” shall have the meanings set forth in Section 5.7(a) .

     “ Losses ” has the meaning set forth in Section 10.1 .

     “ Material Adverse Effect ” means any event, occurrence, fact, condition, change or effect that (i) is, or is reasonably likely in the future to be, individually or in the aggregate, materially adverse to the business, operations, results of operations, condition (financial or otherwise), properties (including intangible properties), rights, obligations or assets of Seller with respect to the Business, provided that none of the following (individually or in combination) shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Material Adverse Effect: (1) any adverse effect resulting from changes in U.S. economic conditions; (2) any adverse effect resulting from general changes or developments in the industry in which Seller operates the Business; (3) any adverse effect resulting from the announcement, execution or delivery of this Agreement or the pendency or consummation of the transactions contemplated hereby; (4) any adverse effect resulting from any change in GAAP or the interpretation thereof or any change in applicable laws; (5) the failure by Seller to take any action prohibited by this Agreement; unless, in the case of the foregoing clauses (1) and (2), such changes or developments referred to therein would materially disproportionately impact Seller with respect to the operation of the Business relative to other industry participants; or (ii) materially impairs or delays, or is reasonably likely to materially impair or delay, the ability of Seller to consummate the transactions contemplated by this Agreement or to perform its obligations under this Agreement.

     “ Materials of Environmental Concern ” means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products and by-products, asbestos-containing materials, PCBs, and any other chemicals, pollutants, substances or wastes, in each case regulated under any Environmental Law.

     “ MedCath Partners ” means MedCath Partners, LLC, a North Carolina limited liability company.

     “ Medical Waste ” includes, but is not limited to, (a) pathological waste, (b) blood, (c) sharps, (d) wastes from surgery or autopsy, (e) dialysis waste, including contaminated disposable equipment and

5


 

supplies, (f) cultures and stocks of infectious agents and associated biological agents, (g) contaminated animals, (h) isolation wastes, (i) contaminated equipment, (j) laboratory waste and (k) various other biological waste and discarded materials contaminated with or exposed to blood, excretion, or secretions from human beings or animals. “Medical Waste” also includes any substance, pollutant, material, or contaminant listed or regulated under the Medical Waste Tracking Act of 1988, 42 U.S.C. § 6992, et seq. (“ MWTA ”), and applicable state law.

     “ Medical Waste Law ” means the following, including regulations promulgated and orders issued thereunder, all as may be amended from time to time: the MWTA, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33 USCA § 2501 et seq., the Marine Protection, Research, and Sanctuaries Act of 1972, 33 USCA § 1401 et seq., The Occupational Safety and Health Act, 29 USCA § 651 et seq., the United States Department of Health and Human Services, National Institute for Occupations Self-Safety and Health Infectious Waste Disposal Guidelines, Publication No. 88-119, and any other federal, state, regional, county, municipal, or other local laws, regulations, and ordinances insofar as they purport to regulate Medical Waste, or impose requirements relating to Medical Waste.

     “ Objection Notice ” has the meaning set forth in Section 3.4(b) .

     “ OIG ” has the meaning set forth in Section 5.17 .

     “ Ordinary Course ” has the meaning set forth in Section 5.31 .

     “ Party ” has the meaning set forth in the Preamble.

     “ Permitted Encumbrances ” means (1) any Encumbrances for ad valorem Taxes which are to be prorated pursuant to Section 3.7 and which are not yet due and payable or which are being contested in good faith and for which full reserves for the amount assessed have been recorded and paid to Buyer, (2) Encumbrances imposed by applicable law and incurred in the ordinary course of business for obligations not yet due and payable (which do not significantly differ from such Encumbrances normally imposed by law upon Seller in the ordinary course of business) to lessors, carriers, warehousemen, laborers, materialmen and the like, (3) rights of lessors under personal property leases to which any Company is a party, (4) rights of licensors under licenses to which Seller is a party; and (5) easements, zoning, rights of way and similar Encumbrances on any real property owned or occupied by Seller which do not individually or in the aggregate materially impact Seller’s use of the Real Property.

     “ Person ” means any individual, corporation, company, body corporate, association, partnership, limited liability company, firm, joint venture, trust or Governmental Authority.

     “ Prohibited Activities ” has the meaning set forth in Section 9.8(a) .

     “ Provider Agreements ” has the meaning set forth in Section 5.18 .

     “ Provider Numbers ” has the meaning set forth in Section 5.18 .

     “ Purchase Price ” has the meaning set forth in Section 3.1 .

     “ Real Estate Laws ” means all applicable zoning and other land use and similar laws, codes, ordinances, rules, regulations and orders, including the Americans With Disabilities Act (other than Environmental Laws).

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     “ Real Property ” means real property used by Seller in the operation of the Business, including easements appurtenant benefiting Seller or the Business, together with all buildings, improvements and fixtures thereon, all easements and other appurtenances and rights thereto and together with any rights or interests of Seller in any adjacent streets, rights of way or drainage areas serving the Business.

     “ Restricted Territory ” means Sun City, Arizona; Sun City West, Arizona; and all areas within a 5 mile radius of the Center.

     “ SCCC ” means Sun City Cardiac Center, Inc., an Arizona corporation.

     “ Seller ” has the meaning set forth in the Preamble.

     “ Seller Basket ” has the meaning set forth in Section 10.4(a)(ii) .

     “ Seller Indemnified Parties ” has the meaning set forth in Section 10.2 .

     “ Seller Parties ” has the meaning set forth in Section 3.3(a) .

     “ Seller-Related Parties ” means each of SCCC, MedCath Partners, and MedCath Incorporated.

     “ Separation Date ” has the meaning set forth in Section 9.2(d) .

     “ Target Accrued PTO ” means an amount equal to Fifty Seven Thousand Eight Hundred Eighty Nine and 32/100 Dollars ($57,889.32), which is the aggregate amount of Accrued PTO for each employee of Seller and its Affiliates in respect of the Business as of August 29, 2009. Schedule 1 sets forth the calculation of the Target Accrued PTO.

     “ Target Working Capital ” means an amount equal to One Hundred Sixty Thousand Three Hundred Three and No/100 Dollars ($160,303.00).

     “ Tax Allocation ” has the meaning set forth in Section 3.5 .

     “ Taxes ” means (i) any and all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, unclaimed property, transfer, franchise, profits, license, lease, rent, service, service use, withholding, payroll, employment, excise, severance, privilege, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (ii) any liability for payment of amounts described in clause (i) as a result of transferee liability or otherwise through operation of law, and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

     “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

     “ Third Party Intellectual Property Assets ” has the meaning set forth in Section 5.11(b) .

     “ Value of Inventory ” has the meaning set forth in Section 3.4(a) .

     “ WARN Act ” means the Worker Adjustment and Retraining Notification Act, as amended.

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      1.2 Interpretation In this Agreement, unless the context otherwise requires:

          (a) References to this Agreement are references to this Asset Purchase Agreement and to the Schedules and Exhibits hereto;

          (b) References to Articles and Sections are references to articles and sections of this Agreement;

          (c) References to any Party to this Agreement shall include references to its successors and permitted assigns;

          (d) References to a judgment shall include references to any order, writ, injunction, decree, determination or award of any court or tribunal;

          (e) The terms “hereof,” “herein,” “hereby,” and any derivative or similar words will refer to this entire Agreement;

          (f) References to any document (including this Agreement) are references to that document as amended, consolidated, supplemented, novated or replaced by the Parties from time to time;

          (g) References to any law are references to that law as of the date hereof and the Closing Date, and all rules and regulations promulgated thereunder;

          (h) The word “including” shall mean including, without limitation; and

          (i) References to a gender include all other genders, and references to the singular refer to the plural and vica versa, as the context so requires.

      2. SALE OF ASSETS AND CERTAIN RELATED MATTERS

      2.1 Sale and Transfer of the Assets . Subject to the terms and conditions of this Agreement, Seller agrees to sell, transfer, assign, convey and deliver to Buyer, and Buyer agrees to purchase and acquire at Closing all assets, tangible and intangible, real, personal or mixed, other than the Excluded Assets, owned or leased by Seller or any Affiliate of Seller and used primarily or exclusively in the Business, including, without limitation, the following items (collectively, the “ Assets ”):

          (i) all equipment, whether movable or attached to the Real Property, vehicles, furniture and furnishings identified in Schedule 2.1(i) ;

          (ii) all supplies and inventory;

          (iii) subject to applicable law, all originals or copies of current financial, patient, medical staff and personnel records relating to the Business and personnel employed or engaged by Buyer at the Closing;

          (iv) all right, title and interest of Seller in, to or under all commitments, contracts, leases, purchase orders and agreements outstanding in respect of the Business or that otherwise relate to the Assets other than the contracts described in Section 2.2 or identified on Schedule 2.1(iv) as being the “ Excluded Contracts ” (collectively, the “ Assumed Contracts ”);

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          (v) Seller’s goodwill in respect of the Business;

          (vi) all “prepaid but not yet earned” revenue of Seller;

          (vii) rights to settlements and retroactive adjustments, positive or negative if any, for periods starting on or after the Effective Time arising under the terms of the Medicare program, the TRICARE program or the Medicaid program of any state, including AHCCCS, and against any third party payor programs which settle upon a basis other than an individual claims basis (“ Agency Settlements ”); and

          (viii) Seller’s right to use all Business Intellectual Property Assets.

      2.2 Excluded Assets . Notwithstanding anything herein to the contrary, the following assets that are associated with Seller’s operations of the Business are not intended by the Parties to be a part of the Assets and shall be excluded from such purchase and the definition of the Assets (collectively, the “ Excluded Assets ”):

          (i) all cash and cash equivalents;

          (ii) all rights to Agency Settlements, if any, for periods ending on or prior to the Effective Time;

          (iii) Seller’s records books, minute books, tax records, and any records that by law Seller is required to retain in its possession (copies of which shall be given to Buyer);

          (iv) all assets, rights, funds, contracts, agreements and insurance policies in connection with any Benefit Plan described on Schedule 5.26 ;

          (v) all of Seller’s insurance policies and proceeds and any tax refunds arising in connection with the Business;

          (vi) all accounts receivable relating to services rendered by Seller prior to the Effective Time, which it will be the sole obligation of Seller to collect;

          (vii) Seller’s Provider Numbers and other licenses and Governmental Authorizations;

          (viii) all claims, causes of action and judgments in favor of Seller relating to the Business or the Assets;

          (ix) all of Seller’s deferred charges, advance payments, prepaid and deferred items (including prepaid rent), credits, rebates due from suppliers, security and other deposits (including without limitation any deposits with respect to the Leased Real Property), claims for refunds, rights of offset, and credits of all kinds with respect to the Business;

          (x) all managed care contracts and medical director agreements;

          (xi) all accounting and outpatient billing systems, software and related computers;

          (xii) all other systems, software and related computers used by MedCath Incorporated on an enterprise wide basis to manage its businesses, including without limitation, the Business; and

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          (xiii) those other assets set forth on Schedule 2.2 .

      3. FINANCIAL ARRANGEMENTS

      3.1 Purchase Price . Subject to the terms and conditions hereof, in reliance upon the representations, warranties, covenants and agreements of Seller and Seller-Related Parties herein set forth and as consideration for the sale and purchase of the Assets as herein contemplated, Buyer shall assume the Assumed Liabilities and shall pay to Seller a cash purchase price (the “ Cash Purchase Price ”) equal to (i) Sixteen Million Eight Hundred Eighty Seven Thousand Nine Hundred Forty Seven and No/100 Dollars ($16,887,947.00) (the “ Closing Cash Payment Amount ”) plus (ii) the amount, if any, by which the Closing Date Working Capital exceeds the Target Working Capital, minus (iii) the amount, if any, by which the Target Working Capital exceeds the Closing Date Working Capital, minus (iv) the amount, if any, by which the Closing Date Accrued PTO exceeds the August Accrued PTO, and plus (v) the amount, if any, by which the August Accrued PTO exceeds the Closing Date Accrued PTO (the “ Purchase Price ”). On the Closing Date, Buyer shall wire transfer to an account designated by Seller an amount equal to the Closing Cash Payment Amount. There shall be an adjustment to the Cash Purchase Price as provided in Section 3.4 hereof.

      3.2 Assumed Liabilities . As of the Closing Date, Buyer shall assume and agree to pay, perform and discharge in accordance with their respective terms only the following obligations and liabilities of Seller or the Seller-Related Parties in respect of the Business (collectively, the “ Assumed Liabilities ”): (i) the obligations and liabilities first arising during and relating to the period after Closing under the Assumed Contracts, and (ii) the obligations and liabilities of Seller as of the Closing Date for accrued and unpaid vacation, sick and personal leave (“ Accrued PTO ”) for those employees of Seller as are hired by Buyer. Notwithstanding anything above to the contrary, Buyer shall not be liable for (x) uncured defaults in performance of the Assumed Liabilities for periods prior to Closing; and (y) unpaid amounts in respect of the Assumed Liabilities that are past due as of Closing in accordance with the terms of the obligation and not accrued on the books of Seller.

      3.3 Excluded Liabilities . Except as expressly provided to the contrary in Section 3.2 above, under no circumstance shall Buyer be obligated to pay or assume, and none of the Assets shall be or become liable for or subject to, any liability of Seller, Seller’s Affiliates, or Seller-Related Parties whether fixed or contingent, recorded or unrecorded, known or unknown, and whether or not set forth on the Schedules hereto (collectively, the “ Excluded Liabilities ”). Without limiting the foregoing, Buyer shall not be obligated for any of the following liabilities:

          (a) any obligation or liability accruing, arising out of, or relating to acts or omissions of Seller or any of its Affiliates, or any of their respective medical staff, employees, agents, vendors or representatives (collectively with Seller, the “ Seller Parties ”) in connection with the Assets, or the operation of the Business, in each case occurring prior to Closing;

          (b) any obligation or liability accruing, arising out of, or relating to any breach of any Assumed Contract by any of the Seller Parties prior to Closing;

          (c) any obligation or liability accruing, arising out of, or relating to any Excluded Contract;

          (d) any accounts payable (including the current portion thereof) or Indebtedness;

          (e) any liability or obligation for severance with respect to employees of Seller or its Affiliates;

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          (f) any obligation or liability accruing, arising out of, or relating to any federal, state or local investigations, claims or actions with respect to acts or omissions (or suspected or alleged acts or omissions) of Seller, any of its Affiliates or any of their respective employees, medical staff, agents, or vendors prior to Closing;

          (g) any civil or criminal obligation or liability accruing, arising out of, or relating to any acts or omissions of Seller, any of its Affiliates or any of their respective directors, officers, employees and agents claimed to violate any laws;

          (h) any liabilities or obligations of Seller or any of its Affiliates of every kind and nature, known and unknown, arising under the terms of the Federal Healthcare Programs or any other third-party payor programs or health insurers, in respect of, arising out of or as a result of (i) periods on or prior to Closing; and (ii) the consummation of the transactions contemplated hereby, including claims for overpayments or other excessive reimbursement or non-covered services or any penalties or sanctions relating thereto;

          (i) any (i) Taxes arising or resulting from or in connection with Seller’s ownership and/or operation of the Business and the Assets for periods ending on or prior to the Closing Date and (ii) any income Taxes resulting from or payable in connection with the sale of the Assets pursuant to this Agreement;

          (j) except for the Accrued PTO, any liability with respect to Seller’s employees relating to periods on or prior to Closing, including liability for (A) any compensation, accrued payroll, Benefit Plan (as described on Schedule 5.26 ) benefits, pension, profit sharing, deferred compensation, or any other employee health and welfare benefit plans, liability for any EEOC claim, wage and hour claim, unemployment compensation claim or workers’ compensation claim or personnel policy, including those relating to any termination of employment, and all employee wages and benefits, (B) any payroll taxes, or (C) any liability arising on or prior to the Closing Date under the WARN Act;

          (k) liabilities for expenses incurred by Seller incidental to the preparation of this Agreement, the preparation or delivery of materials or information requested by Buyer, or the consummation of the transactions contemplated hereby, including all broker, counsel and accounting fees or any account payable that is attributable to legal and accounting fees and similar costs incurred by Seller which are directly related to the sale of any of the Assets;

          (l) liabilities arising from or in connection with (i) any order of any Governmental Authority, (ii) the violation of any law, (iii) the violation of any integrity or compliance agreement of any Federal Healthcare Program, each of the foregoing involving Seller or relating to or arising in connection with the Business or the use, operation, ownership or possession of the Assets prior to Closing;

          (m) liabilities relating to any of the Excluded Assets; and

          (n) any other liability, fixed or contingent, known or unknown, relating to or arising out of the ownership, operation or use of the Business or the Assets prior to the Closing unless expressly included as an Assumed Liability.

      3.4 Post Closing Purchase Price Adjustment .

          (a) On September 30, 2009, Seller shall conduct its customary fiscal year end physical inventory of the supplies and inventory on hand at the Center. Buyer shall be entitled to observe

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such inventory count. Based on such physical inventory, the value of inventory and supplies shall be determined by applying Seller’s normal accounting methodologies and procedures, and Seller shall prepare a schedule thereof (the “ Value of Inventory ”). The amount of the Value of Inventory shall be increased or decreased, as appropriate, to reflect the value of any additions to, or deletions from, the inventory and supplies of the Center between the date of the physical inventory and the Effective Time.

          (b) Within 30 days after the Closing Date, Seller shall prepare, and deliver to Buyer, (i) Seller’s determinations of the Closing Date Working Capital, (ii) Seller’s calculation of the Closing Date Accrued PTO, and (iii) Seller’s calculation of the actual Cash Purchase Price based upon such Closing Date Working Capital and Closing Date Accrued PTO (collectively, the “ Draft Computation ”). Seller will make available to Buyer and its auditors all records and work papers used in preparing the Draft Computation. If Buyer disagrees with any aspect of the Draft Computation, Buyer may, within 30 days after receipt of the Draft Computation, deliver a notice (an “ Objection Notice ”) to Seller setting forth Buyer’s determination of the Closing Date Working Capital and/or Closing Date Accrued PTO and Buyer’s calculation of the actual Cash Purchase Price. If Buyer does not deliver an Objection Notice to Seller within 30 days after receipt of the Draft Computation, then the Parties will be deemed to have agreed to the Draft Computation and such computations shall be deemed to be finally determined as set forth therein. Seller and Buyer shall use reasonable efforts to resolve any disagreements as to the Draft Computation and the Objection Notice, but if they do not obtain a final resolution within 30 days after Seller has received the Objection Notice, Seller and Buyer shall jointly retain an independent accounting firm mutually agreed upon by Buyer and Seller (the “ Firm ”) to resolve any remaining disagreements. Seller and Buyer shall direct the Firm to render a determination within 30 days after its retention and Seller, Buyer and their respective agents shall cooperate with the Firm during its engagement. The Firm may consider only those items and amounts in the Draft Computation or Objection Notice which Seller and Buyer are unable to resolve and in resolving any such disagreements the Firm shall act as experts and not as arbitrators. In resolving any disputed item, the Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Firm’s determination shall be based solely on written submissions by Seller and Buyer (i.e., not on independent review) and on the definitions included herein. The determination of the Firm shall be conclusive and binding upon Seller, Buyer and the Sellers. Until the Firm makes its determination, the costs and expenses of the Firm shall be borne equally by Seller, on the one hand, and Buyer (on behalf of the Sellers in accordance with their respective Allocation Percentages), on the other hand; provided that, when the Firm makes its determination, any costs and expenses (including costs and expenses previously advanced) of the party whose determination of the actual Cash Purchase Price was closest to the Firm’s determination of the same shall be paid by the other party.

          (c) Post-Closing Adjustment Payment.

          (i) Payment by the Buyer . If the final Cash Purchase Price as determined in accordance with Section 3.4(b) is greater than the Closing Cash Payment Amount, then within five (5) business days after the final determination of the final Cash Purchase Price, Buyer shall pay to Seller, by wire transfer or delivery of other immediately available funds, an amount equal to the product of such difference plus simple interest thereon from the Closing Date to the date of payment at an interest rate equal to 5.0% per annum; and

          (ii) Payment by Seller . If the final Cash Purchase Price is less than the Closing Cash Payment Amount, then within five (5) business days after the determination thereof, Seller shall pay to Buyer, by wire transfer or delivery of other immediately available funds, an amount equal to such difference plus simple interest thereon from the Closing Date to the date of payment at an interest rate equal to 5.0% per annum; and

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          (iii) Dispute . If, pursuant to this Section 3.4 , there is a dispute as to the final determination of the final Cash Purchase Price, Buyer, on the one hand, and Seller, on the other hand, shall promptly pay to the other, as appropriate, such amounts as are not in dispute, together with interest thereon, pending final determination of such dispute pursuant to this Section 3.4 .

      3.5 Allocation of Purchase Price . The Parties agree that Seller shall prepare an allocation of the Purchase Price (and all other capitalized costs) among the Assets in accordance with Section 1060 of the Code (and any similar provisions of state, local or foreign law, as appropriate) (“ Tax Allocation ”) and in accordance with the allocation methodology set forth on Exhibit 3.5 . Within 120 days after the Closing Date, Seller shall deliver the Tax Allocation to Buyer for review. Buyer shall notify Seller in writing within thirty (30) days after receipt of the Tax Allocation of any disagreement or objections Buyer may have with the Tax Allocation which objection may be based only on the Tax Allocation not having been prepared in a manner consistent with the methodology set forth on Exhibit 3.5 , in which case Buyer and Seller shall use good faith efforts to reach agreement. In the event Buyer and Seller fail to agree within thirty (30) days after Buyer so notifies Seller, then Buyer and Seller shall promptly engage an accounting firm of national reputation to resolve the dispute within sixty (60) days of the engagement. Buyer and Seller shall report, act and file all Tax Returns (including, but not limited to IRS Form 8594) in all respects and for all purposes consistent with the Tax Allocation as finally determined pursuant to this Section 3.5 . Neither Buyer nor Seller shall take any position (whether in audits, Tax Returns, or otherwise) that is inconsistent with the Tax Allocation as finally determined pursuant to this Section 3.5 , unless required to do so by applicable law.

      3.6 Prorations and Utilities . To the extent not otherwise prorated pursuant to this Agreement, Buyer and Seller shall prorate as of the Closing Date, any and all current real estate and personal property lease payments, charges against the real estate, power and utility charges and all other income and expenses that are normally prorated upon the sale of a going concern.

      3.7 Tax Proration . Buyer and Seller shall prorate as of the Closing Date any amounts with respect to (i) ad valorem taxes on the Assets and (ii) property taxes on the Assets. If current year tax assessments are not available, payments for ad valorem and property taxes shall initially be determined based on the previous year’s taxes and shall later be adjusted to reflect the current year’s taxes when the tax bills are finally rendered.

      3.8 Interest . Unless otherwise provided herein to the contrary, any payment required to be made by any Party pursuant to this Agreement (including pursuant to Article 10 ), if not paid on the date that payment is required to be made hereunder (the “ Interest Commencement Date ”), shall include interest from the Interest Commencement Date to the day such payment is made, computed at a rate equal to the prime rate as published in The Wall Street Journal on the Interest Commencement Date plus two percent. The imposition of interest shall not excuse the failure to make that payment.

      3.9 Banner Interim Management Agreement . Concurrently with the Closing, Buyer and SCCC shall enter into an Interim Management Agreement (the “ Banner Interim Management Agreement ”) providing for Buyer’s performance of services in connection with the day-to-day operations of the Business for the period set forth in that agreement.

      4. CLOSING

      4.1 Closing . The consummation of the sale and purchase of the Assets and the other transactions contemplated by and described in this Agreement (“ Closing ”) shall take place at the offices of Mariscal Weeks McIntyre & Friedlander, P.A., 2901 North Central, Suite 200, Phoenix, Arizona, or such other place as shall be mutually agreed upon in writing by the Parties, at 10:00 a.m., local time, on

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the first business day following the satisfaction or waiver by the appropriate Party of all the conditions to Closing specified in Articles 7 and 8 hereof, or on another date as the Parties may mutually designate (the “ Closing Date ”). Closing shall be effective as of the close of business as of the Closing Date or at such other time as the Parties agree (the “ Effective Time ”). Notwithstanding the foregoing, the Parties anticipate a Closing Date of September 29, 2009 with an Effective Time of 5:00 p.m. on September 30, 2009.

      4.2 Deliveries of Seller at Closing . At Closing and unless otherwise waived in writing by Buyer, Seller shall deliver to Buyer the following:

          (a) a Bill of Sale (the “ Bill of Sale ”), fully executed by Seller, the form of which is attached hereto as Exhibit 4.2(a) ;

          (b) an Assignment and Assumption Agreement (the “ Assignment and Assumption Agreement ”), fully executed by Seller, the form of which is attached hereto as Exhibit 4.2(b) ;

          (c) a copy of resolutions duly adopted by the board of directors or other authorized governing body of Seller authorizing and approving the transactions contemplated hereby, Seller’s performance of the transactions contemplated hereby and the execution, delivery and performance of this Agreement and the documents described herein to which Seller is a party, certified as true and of full force as of Closing by an appropriate officer of Seller;

          (d) the signature and incumbency of the officers of Seller authorized to execute and deliver this Agreement and the other agreements and documents that Seller is required to deliver on or before the Closing Date pursuant to this Agreement, certified as true and accurate as of Closing by an appropriate officer of Seller;

          (e) a certificate of an officer of Seller certifying that each covenant and agreement of Seller to be performed prior to or as of Closing pursuant to this Agreement has been performed in all material respects and that each of the representations and warranties of Seller set forth herein is true and correct in all material respects (except with respect to representations and warranties that contain materiality or Material Adverse Effect qualifiers, which representations and warranties shall be true and correct in all respects) as of the Closing Date or, if made as of a specified date, only as of such date;

          (f) a certificate of existence and good standing (or its functional equivalent) of Seller from the Arizona Corporation Commission, to the extent applicable, dated the most recent practical date prior to Closing;

          (g) an assignment of the lease agreement for the Sun City, Arizona Business facility located at 10415 W Thunderbird Blvd (the “ Business Lease Agreement ”) fully executed by the Lessor and by Seller as Lessee, in substantially the form attached hereto as Exhibit 4.2(g) ;

          (h) the Banner Interim Management Agreement in the form attached hereto as Exhibit 4.2(h) ;

          (i) [Intentionally Omitted];

          (j) the Equipment Lease Agreement (the “ Equipment Lease ”) between Buyer and MedCath Partners in the form attached hereto as Exhibit 4.2(j) ; and

          (k) Memorandum of Lease, in recordable form, for the Business Lease Agreement.

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      4.3 Deliveries of Buyer at Closing . At Closing and unless otherwise waived in writing by Seller, Buyer shall deliver to Seller the following:

          (a) the Closing Cash Payment Amount;

          (b) the Bill of Sale, the Assignment and Assumption Agreement, the Business Lease Agreement and the corresponding Memorandum of Lease, the Banner Interim Management Agreement, and the Equipment Lease Agreement, each fully executed by Buyer;

          (c) the signature and incumbency of the officers of Buyer authorized to execute and deliver this Agreement and the other agreements and documents that Buyer is required to deliver on or before the Closing Date pursuant to this Agreement, certified as true and accurate as of Closing by an appropriate officer of Buyer;

          (d) a certificate of an authorized officer of Buyer certifying that each covenant and agreement of Buyer to be performed prior to or as of Closing pursuant to this Agreement has been performed in all material respects and that each of the representations and warranties of Buyer set forth herein is true and correct in all material respects (except with respect to representations and warranties that contain materiality or Material Adverse Effect qualifiers, which representations and warranties shall be true and correct in all respects) as of the Closing Date or, if made as of a specified date, only as of such date; and

          (e) a certificate of existence and good standing of Buyer from the Arizona Corporation Commission, dated the most recent practical date prior to Closing.

      4.4 Additional Acts . From time to time after Closing, Seller and Buyer shall execute and deliver other instruments of conveyance and transfer, and take other actions as the other may reasonably request, to convey and transfer more effectively full right, title and interest to, to vest in, and to place Buyer in legal and actual possession of any and all of the Assets, and to pay to the appropriate Party hereto any payments received, as contemplated by and in accordance with the terms of this Agreement. In addition, the Parties will provide reasonable assistance to each other by making records and personnel available in connection with collection of accounts receivable and resolution of disputes and similar matters, whether the matter arose before or after the closing.

      5. REPRESENTATIONS AND WARRANTIES OF SELLER

     As of the date hereof, except as disclosed in the Schedules, Seller represents and warrants to Buyer the following, but only with respect to the Business, except as expressly noted otherwise, as of the date hereof:

      5.1 Status of Seller . Seller is a general partnership validly existing under the laws of the State of Arizona. Seller is duly qualified or licensed to transact business in all jurisdictions where required and in which it conducts business except where failure to be so qualified would not have a Material Adverse Effect. Seller has the requisite power and authority to enter into this Agreement, perform its obligations hereunder and to conduct its businesses as now being conducted. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary partnership action on the part of Seller.

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      5.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc. The execution, delivery and performance of this Agreement and all other agreements referenced in or ancillary hereto by Seller, and the consummation of the transactions contemplated herein by Seller:

          (a) are within Seller’s powers and are not in contravention of the terms of any of its governing documents or any amendments thereto;

          (b) except as set forth on Schedule 5.2 , will neither constitute a violation of or a default under, or conflict with, any term or provision of any Contract (as defined in Section 5.6 ), or any other restriction of any kind to which Seller is a party or by which Seller is bound, nor permit the acceleration of the maturity of the Assumed Liabilities, or the creation of any Encumbrance affecting any Assets;

          (c) except as set forth on Schedule 5.2 , do not require Seller to obtain any approval or consent of, or give notice to or make any filing with any Governmental Authority bearing on the validity of this Agreement that is required by law or the regulations of any such Governmental Authority; it being acknowledged that Buyer’s intent is to take steps reasonably necessary or appropriate to obtain any required licenses and Governmental Authorizations to operate the Business;

          (d) will not violate any statute, law, rule or regulation of any Governmental Authority to which Seller or the Assets may be subject, the violation of which would have a Material Adverse Effect; it being acknowledged that Buyer’s intent is to take steps reasonably necessary or appropriate to obtain any required licenses and Governmental Authorizations to operate the Business; and

          (e) will not violate any judgment of any court or Governmental Authority to which Seller or any Assets may be subject.

      5.3 Binding Agreement . This Agreement and all agreements contemplated by this Agreement to which Seller is or shall become a party are and will constitute the valid and legally binding obligation of Seller and will be enforceable against Seller in accordance with the respective terms hereof or thereof, except as enforceability may be restricted, limited or delayed by applicable bankruptcy or other laws affecting creditors’ rights generally and except as enforceability may be subject to general principles of equity.

      5.4 [Intentionally Left Blank]

      5.5 Financial Statements .

          (a) Schedule 5.5(a) hereto contains copies of the following financial statements of Seller in respect of the Business (the “ Financial Statements ”): (i) balance sheets dated as of September 30, 2006, 2007 and 2008 and as of the Balance Sheet Date and (ii) income statements for the fiscal years ended September 30, 2006, 2007 and 2008 and for the portion of 2009 ended on the Balance Sheet Date. The Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods indicated. The Financial Statements fairly present the financial condition and results of operations of the Seller in respect of the Business as of the dates and for the periods indicated thereon.

          (b) With the exception of the liabilities set forth on the Financial Statements, the liabilities set forth on Schedule 5.5(b) , and the liabilities incurred in the ordinary course of the business of Seller since the date of the most recent Financial Statements, Seller has no Knowledge of any material

16


 

liabilities with respect to the Business of any kind that are to be reflected on a balance sheet pursuant to GAAP.

      5.6 Contracts; No Defaults . Attached hereto as Schedule 5.6 is a list of all contracts, agreements, commitments or obligations related to the Business or the Assets (other than with respect to Excluded Assets), whether written or oral, express or implied, to which Seller is a party or by which Seller, the Business or the Assets are bound, (i) that limits the right of the Seller or the Business to engage in or to compete with any person or entity in any business; (ii) for the purchase or sale of supplies, services, equipment, or other items, or for the performance of services for others in excess of Twenty-five Thousand and No/100 Dollars ($25,000) in any one instance or over time and which may not be terminated on no more than ninety (90) days’ notice; (iii) for the lease of any property, tangible or intangible; or (iv) otherwise material to the Assets or the operations of the Business (the “ Contracts ”). Seller has provided to Buyer true and complete copies of the Contracts. There is not, under any of the Contracts, any existing default, event of default or other event which, with or without due notice or lapse of time or both, would constitute a default or event of default on the part of Seller, except defaults, events of default and other events as to which requisite waivers or consents have been obtained or where the failure to obtain such requisite waiver or consent would not be reasonably likely to cause a Material Adverse Effect. Except as noted in Schedule 5.6 , all Contracts are in full force and effect, to Seller’s Knowledge, there has been no threatened cancellation, termination or nonrenewal thereof, there are no outstanding disputes thereunder, each is with an unrelated third party and was entered into on an arm’s length basis in the ordinary course of business, and all will continue to be binding in accordance with their terms as of the Closing Date.

      5.7 Real Property .

          (a) Seller owns no real property used by Seller in the operation of the Business. A list and general description of the use of all Business-related real property leased by Seller as lessee from any third parties under any oral or written lease or license (each, a “ Lease ”), is contained on Schedule 5.7(a) hereto (the “ Leased Real Property ”). Seller has a good and valid leasehold interest in all of the Leased Real Property, free and clear of all Encumbrances other than Permitted Encumbrances. There are no agreements or amendments, oral or written, pertaining to the Leased Real Property other than as set forth in the Leases referenced on Schedule 5.7(a) . The Leased Real Property constitutes all of the real property used by Seller in the operation of the Business.

          (b) To Seller’s Knowledge, the Leased Real Property is in material compliance with all Real Estate Laws. Seller has not received any notice of violation from any Governmental Authority of any Real Estate Law on the use, occupancy or operation of the Leased Real Property. To Seller’s Knowledge, no Real Estate Law or any restrictive covenant of record prohibits, limits or conditions the use or operation of the Leased Real Property as currently used or operated. To Seller’s Knowledge, Seller has all easements, servitudes, and rights of way necessary for reasonable access to the Leased Real Property. All utilities serving the Leased Real Property are adequate to operate the Business in the manner it is currently operating. Seller has received no written notice of any action to alter the zoning or zoning classification or to condemn, requisition or otherwise take all or any portion of the Leased Real Property.

      5.8 Title .

          (a) Except as disclosed on such Schedule 5.8 , Seller has (i) good and marketable title to all of the owned Assets, free and clear of all Enc


 
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