MEDCATH CORPORATION AMENDED AND RESTATED OUTSIDE DIRECTORS' STOCK OPTION AND AWARD PLAN

(a) “ Award ” means an award to an Outside Director pursuant to Article III.

(b) “ Award Agreement ” means an agreement described in Article V between the Company and an Outside Director, setting forth the terms, conditions and limitations applicable to an Award to the Outside Director.

(c) “ Beneficiary ,” with respect to an Outside Director, means (i) one or more persons as the Outside Director may designate as primary or contingent beneficiary in a writing delivered to the Company or the Committee or (ii) if there is no such valid designation in effect at the Outside Director’s death, the Outside Director’s estate.

(d) “ Board ” means the Board of Directors of the Company.

(e) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, and applicable regulations.

(f) “ Committee ” means the Compensation Committee of the Board.

(g) “ Company ” means MedCath Corporation, a Delaware corporation.

(h) “ Effective Date” means, subject to Article XI, March 4, 2009.

(i) “ Fair Market Value ” of a share of Stock means, on any given date, the closing price of such share of Stock as reported on the Nasdaq National Market for such date, or if the Stock was not traded on the Nasdaq National Market on such day, then on the next preceding day that the Stock was traded on such exchange, all as reported by such source as the Committee may select.

(j) “ Outside Director ” means any member of the Board who is not an employee of the Company or any Subsidiary.

(k) “ Plan ” means the MedCath Corporation Amended and Restated Outside Directors’ Stock Option and Award Plan, as set forth herein and as amended from time to time. Prior to the Effective Date, the Plan was known as the MedCath Corporation Outside Directors’ Stock Option Plan.

(l) “ Restricted Stock ” means an Award of Stock under Section 4.3 that has certain restrictions attached to the ownership thereof.

(m) “ Restricted Stock Unit ” means an Award of a unit under Section 4.4 that represents the right to receive one share of Stock.

(n) “ Restricted Stock Unit Account ” means the individual bookkeeping account maintained by the Company in the name of an Outside Director to record the Outside Director’s Restricted Stock Units and other amounts granted to the Outside Director under Section 4.4.

(o) “ Stock ” means shares of Common Stock, par value $.01, of the Company which may be authorized but unissued, or issued and reacquired.

(p) “ Stock Option ” means a right to purchase a share of Stock granted pursuant to Section 4.2.

(q) “ Subsidiary ” means any corporation, partnership, limited liability company, association, joint venture or other entity, that directly or indirectly through one or more intermediaries is controlled by or is under common control with the Company and any other entity in which the Company has a significant equity interest, as determined by the Committee.

(a) The exercise price per share of any Stock Option shall be no less than the Fair Market Value per share of Stock subject to the Stock Option on the date such Stock Option is granted.

(b) A Stock Option may be exercised, in whole or in part, by giving notice of exercise to the Company or an agent designated by the Company to administer the exercise of Stock Options and complying with such other exercise terms and procedures as the Committee may specify.

(c) The term of each Stock Option shall not exceed ten (10) years.

(d) The exercise price of the Stock subject to the Stock Option may be paid, at the discretion of the Committee, by delivery to the Company or its designated agent of an irrevocable written notice of exercise form together with either (i) irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the shares as to which the Stock Option is to be exercised and to deliver the sale or margin loan proceeds directly to the Company to pay the exercise price, (ii) payment in full of the Stock Option exercise price in cash or cash equivalent acceptable to the Committee, or (iii) a sufficient number of shares of Stock (delivered by attestation of ownership or actual delivery of one or more share certificates) to pay the exercise price; provided that , any such payment method will not be permitted to the extent to do so would result in additional accounting expense to the Company.