PURCHASE AGREEMENT RELATING TO TUSCARAWAS OPEN MRI, L.P.

 

                                                                  Exhibit 2.3(1)

 

                         PURCHASE AGREEMENT RELATING TO

 

                            TUSCARAWAS OPEN MRI, L.P.

 

 

 

         THIS   PURCHASE   AGREEMENT is made as of September 30, 2005 by and among

Tuscarawas Open MRI, LP, an Ohio limited partnership ("TOM"),   ORION HEALTHCORP,

INC., a Delaware   corporation   ("ORION"),   each of the   undersigned   individuals

identified on the signature   page hereof (the "SELLING   INVESTORS"   and together

with Orion, the "Sellers"),   and UNION HOSPITAL,   an Ohio nonprofit   corporation

(the "PURCHASER").

 

                                   WITNESSETH:

 

         WHEREAS,   the   Sellers   own   partnership   interests   in TOM,   which   is

organized as an Ohio limited   partnership,   with authority to issue   partnership

interests to evidence ownership of TOM, all pursuant to its Limited   Partnership

Agreement (the "PARTNERSHIP AGREEMENT"); and

 

         WHEREAS,   the   Selling   Investors   will   collectively   sell   29% of the

limited   partnership   units   to the   Purchaser   and   Orion   will   sell   its   41%

partnership units to the Purchaser,   such that upon the Closing Date (as defined

below) the Purchaser will own 70% of the partnership units of TOM (collectively,

the "UNITS"); and

 

         NOW, THEREFORE,   it is mutually   understood,   agreed and represented as

follows:

 

 

                                   ARTICLE I

 

                                TRANSACTION TERMS

 

         1.1 SALE. The Sellers agree to sell,   and the Purchaser   agrees to buy,

the Units and each of the Selling Investors shall sell such amount of his or her

Units to the Purchaser   for the purchase   price as is set forth on the signature

page hereof.

 

         1.2 PAYMENT AND DELIVERY.   The purchase   price for the Units,   shall be

paid by the Purchaser (as set forth in SECTION 2.3 below).   At the Closing,   the

Units   being sold shall be   delivered   by the   Sellers to TOM,   which shall then

re-issue them to the Purchaser.

 

         1.3 AGREEMENT TO INDEMNIFY.

 

         a. The Purchaser agrees to indemnify and hold harmless the Sellers from

any   and   all   damages,    losses,   costs,   and   expenses   (including   reasonable

attorneys'   fees) that any one Seller may incur (i) by reason of the Purchaser's

failure to fulfill any of the terms and conditions of this Agreement, or (ii) by

reason of   breach   of any of the   Purchaser's   representations,   warranties,   or

agreements   contained herein. The Purchaser further agrees and acknowledges that

these   indemnifications shall survive any sale or transfer, or attempted sale or

transfer, of any portion of the Units.

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         b. Each Seller   agrees   severally   (and not jointly and   severally)   to

indemnify   and hold   harmless the   Purchaser   from any and all damages,   losses,

costs, and expenses (including reasonable attorneys' fees) that it may incur (i)

by reason of the Seller's   failure to fulfill any of the terms and conditions of

this    Agreement,    or   (ii)   by   reason   of   breach   of   any   of   the   Seller's

representations, warranties, or agreements contained herein. Each Seller further

agrees and acknowledges   that these   indemnifications   shall survive any sale or

transfer, or attempted sale or transfer, of any portion of the Units.

 

         1.4     ACKNOWLEDGEMENTS.    The   Purchaser    agrees,    acknowledges    and

understands that:

 

         a. No federal or state agency has made any finding or   determination as

to the fairness of the sale of the Units for investment or any recommendation or

endorsement of the Units.

 

         b. The Units have not been registered under the Securities Act of 1933,

as   amended,   or any   similar   law then in effect   (the   "SECURITIES   ACT") and,

therefore,   Purchaser   bears the economic   risk of the   investment   indefinitely

because the Units may not be sold unless   subsequently   registered under the Act

or an exemption from such registration is available;   registration under the Act

is   extremely   unlikely   at any   time in the   future   and the   Sellers   have not

represented   or   covenanted to take any action   necessary to make   available any

rules or any exemption for sale of the Units without registration.

 

         c. Neither the Units nor this Agreement has been   registered   under the

securities   laws   of any   state.   The   Purchaser   agrees   that a   legend   to the

foregoing effect may be placed upon any and all certificates and other documents

issued to represent the Units.

 

         d. To prevent the illegal sale of the Units, TOM will not recognize the

transfer   of the Units on its   records   unless   sold   pursuant   to an   effective

registration statement, pursuant to an exemption under the Act, or in accordance

with the Partnership Agreement.

 

 

                                   ARTICLE 2

 

                                      CLOSING

 

         2.1 THE CLOSING.   The consummation of the transactions   contemplated by

this Agreement (the "CLOSING") shall take place at the offices of Miller & Kyler

commencing at 9:00 a.m. local time on the date of this Agreement,   or such other

place and date as is agreed to by the parties hereto. Following the satisfaction

or   waiver   of all   conditions   to the   obligations   of the   parties   hereto   to

consummate the   transactions   contemplated   hereby (other than   conditions   with

respect   to actions   the   respective   parties   hereto   will take at the   Closing

itself),   the transactions   contemplated by this Agreement to occur upon Closing

shall be effective as of 12:01 a.m. on October 1, 2005 (the "CLOSING DATE").

 

                                       -2-

 

<PAGE>

 

         2.2 CLOSING DELIVERIES BY SELLERS AND TOM. At the Closing, Sellers will

deliver to Purchaser, duly executed by Sellers where appropriate:

 

         a. Original certificates evidencing the good standing of TOM, issued as

of a recent date prior to the Closing Date, by the Secretary of State of Ohio;

 

         b. A release   agreement in   substantially   the form attached   hereto at

EXHIBIT A (the "RELEASE AGREEMENT"); and

 

         c.   Such    other    instruments    of   title,    certificates,    consents,

endorsements,   assignments, assumptions and other documents or instruments, in a

form   reasonably   satisfactory   to the   Purchaser   and   its   counsel,   as may be

reasonably   requested   by the   Purchaser   in order to transfer   the Units to the

Purchaser,   to carry out the   transaction   contemplated by this Agreement and to

comply with the terms hereof.

 

         2.3 CLOSING DELIVERIES OF THE PURCHASER.   At the Closing, the Purchaser

will deliver to Sellers, duly executed by Purchaser where appropriate:

 

         a. Payment of seventy   percent   (70%) of the purchase   price payable to

Orion in the   amount   set forth on the   signature   page   hereof   in   immediately

available funds;

 

         b. A note payable to Orion for the   remaining   thirty   percent (30%) of

the   purchase   price   payable to Orion in the amount set forth on the   signature

page   hereof,   in   substantially   the form   attached   hereto   at   EXHIBIT B (the

"HOSPITAL NOTE");

 

         c.   Payment   of   100% of the   purchase   price   to   each of the   Selling

Investors in the amount set forth on the signature   page hereof,   such amount to

be by cashier's or certified check;

 

         d. The Release Agreement;

 

         e. Original   Certificate   evidencing the good standing of the Purchaser

issued as of a recent date prior to the Closing   Date by the   Secretary of State

of Ohio; and

 

         f. Such other instruments, certificates, consents or other documents as

may be reasonably necessary to carry out the transactions contemplated hereby.

 

 

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

 

         3.1   PURCHASER'S    REPRESENTATIONS,    WARRANTIES,   AND   COVENANTS.   The

Purchaser represents, warrants, and covenants to the Sellers that as of the date

hereof and the Closing Date:

 

         a. The   Purchaser   is   acquiring   the   Units   for the   Purchaser's   own

account,   solely for   investment,   and not with a view to resale or distribution

(other   than   a   subsequent   transfer   of the   Units   pursuant   to an   effective

registration statement, pursuant to an exemption under the Act, or in accordance

with the Partnership Agreement).

 

                                      -3-

<PAGE>

 

         b. The Purchaser is acquiring the Units without   having been   furnished

any offering literature or prospectus.

 

         c. The   Purchaser   and/or the   Purchaser's   advisors   have received all

documents that the Purchaser has requested   relating to an investment in TOM and

has provided   answers to all of the   Purchaser's   questions   concerning   such an

investment. In evaluating the suitability of an investment in TOM, the Purchaser

has not relied upon any   representations   or other information   (whether oral or

written) other than those contained in documents executed by Sellers.

 

         d. The execution, delivery and performance of this Agreement are within

the powers of the Purchaser,   have been duly authorized by all necessary action,

and do not and will not (i) violate any provision of the governing   documents of

the   Purchaser   or   of   any   law,   rule,   regulation,    order,   writ,   judgment,

injunction,    decree,    determination    or   award   presently   in   effect   having

applicability   to the   Purchaser;   (ii)   require the consent or approval   of, or

filing or registration   with, any governmental   body, agency or authority or any

other third party; or (iii) result in a breach of or constitute a default under,

or result in the imposition of any lien, charge or encumbrance upon any property

of the   Purchaser   pursuant to, any   indenture or other   agreement or instrument

under which the Purchaser is a party hereto or by which it or its properties may

be bound or affected.   This Agreement   constitutes the legal,   valid and binding

obligation   of the   Purchaser   in   accordance   with its   terms,   except   as such

enforceability   may be   limited by   bankruptcy   or similar   laws   affecting   the

enforceability of creditors' rights generally.

 

         3.2 SELLERS' REPRESENTATIONS,   WARRANTIES,   AND COVENANTS. Each Seller,

as applicable,   represents,   warrants,   and covenants severally (and not jointly

and   severally) to the Purchaser that as of the date hereof and the Closing Date

(it being   understood   and agreed that none of the Selling   Investors,   but only

Orion, makes the representation and warranty in Section 3.2.c.):

 

         a. He, she or it has good and marketable   title to the Units being sold

to the Purchaser,   subject to no encumbrance or restraint on transfer, except as

set forth in the   Partnership   Agreement and the securities laws of Ohio and the

Securities Act.

 

         b. The execution, delivery and performance of this Agreement are within

the powers of each Seller,   have been duly   authorized by all necessary   action,

and this Agreement   constitutes the legal,   valid and binding obligation of each

Seller   in   accordance   with its   terms,   except as such   enforceability   may be

limited by bankruptcy or similar laws affecting the enforceability of creditors'

rights generally

 

         c. The execution,   delivery and   performance of this Agreement by Orion

does not and will not (i) violate any   provision of the   governing   documents of

Orion   or of any law,   rule,   regulation,   orde