Exhibit 10.37.2

EXECUTION COPY

AMENDED AND RESTATED

ASSET PURCHASE AGREEMENT

AMONG

HEALTHSOUTH CORPORATION,

HEALTHSOUTH MEDICAL CENTER, INC.

AND

THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ALABAMA

December 31, 2005

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TABLE OF CONTENTS

 

         PAGE

ARTICLE I

     1

Section 1.1

  Assets Purchased at the Closing    1

Section 1.2

  Excluded Assets    2

Section 1.3

  Assumed Liabilities, Contracts and Leases    2

Section 1.4

  Purchase Price    2

Section 1.5

  Allocation of Purchase Price    3

Section 1.6

  The Closing    3

Section 1.7

  Prorations    3

Section 1.8

  Costs    4

Section 1.9

  Purchaser’s Costs    4

Section 1.10

  Sellers’ Costs    4 ARTICLE II REPRESENTATION AND WARRANTIES OF SELLERS    4

Section 2.1

  Financial Reporting    4

Section 2.2

  Reduced Business    4

Section 2.3

  Authority    4

Section 2.4

  Corporate Status    5

Section 2.5

  Title to Assets and Power to Convey    5

Section 2.6

  No Conflicts    5

Section 2.7

  Real Property    5

Section 2.8

  Leases    5

Section 2.9

  Contractual and Other Obligations    6

Section 2.10

  Employment Matters    6

Section 2.11

  Trademarks, Service Marks, Trade Names, Copyrights and Data Processing Systems
   6

Section 2.12

  Insurance    6

Section 2.13

  Environmental Matters    6

Section 2.14

  Litigation and Regulatory Investigations    7

Section 2.15

  Other Consents    7

Section 2.16

  No Brokers    7

Section 2.17

  Provider Numbers    7

Section 2.18

  Taxes    7

Section 2.19

  License    8

Section 2.20

  Records    8

Section 2.21

  Sufficiency of Assets    8

Section 2.22

  Facility Compliance    8

Section 2.23

  Absence of Certain Developments    8 ARTICLE III    8 REPRESENTATIONS AND
WARRANTIES OF PURCHASER    8

Section 3.1

  Organization    8

 

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Section 3.2

  Authority    8

Section 3.3

  No Conflicts    8

Section 3.4

  No Brokers    8

Section 3.5

  Due Diligence    9

ARTICLE IV

   9

CERTAIN COVENANTS OF SELLERS

   9

Sellers hereby covenant to and agree with Purchaser as follows:

   9

Section 4.1

  Satisfaction of Conditions    9

Section 4.2

  Real Estate Investment Trust    9

Section 4.3

  Negative Covenant    9

Section 4.4

  Operations    9

Section 4.5

  Continued Operation Until Closing    10

ARTICLE V CERTAIN COVENANTS OF PURCHASER

   10

Section 5.1

  Satisfaction of Conditions    10

Section 5.2

  Cooperation with purchaser of Digital Hospital    10

ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS

   10

Section 6.1

  Public Announcements    10

Section 6.2

  Further Assurances    10

Section 6.3

  MetroWest Beds    10

Section 6.4

  Intentionally Deleted    10

Section 6.5

  Pita Stop Property, Bernstein Condominium Unit, McCoy Condominium Unit    11

Section 6.6

  Gamma Knife Partnership    11

Section 6.7

  Provider Numbers; Cost Report    11

ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF PURCHASER

   11

Section 7.1

  Representations and Warranties True    11

Section 7.2

  Compliance with this Agreement    12

Section 7.3

  Documents to be Delivered    12

Section 7.4

  No Injunctions    12

Section 7.5

  Change of Ownership Approval from SHPDA, License and CHOW Application    12

Section 7.6

  Real Estate Investment Trust    12

Section 7.7

  Absence of Certain Developments    12

ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF SELLERS

   13

Section 8.1

  Representations and Warranties True    13

Section 8.2

  Compliance with this Agreement    13

Section 8.3

  Payment of Purchase Price    13

Section 8.4

  Documents to be Delivered    13

 

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Section 8.5

   No Injunction    13

ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

   13

Section 9.1

   Survival of Representations and Warranties    13

Section 9.2

   Indemnification by the Sellers    13

Section 9.3

   Indemnification by Purchaser    14

Section 9.4

   Notice of Claims    15

Section 9.5

   Deductible Amount    16

Section 9.6

   Limitation    16

ARTICLE X TERMINATION

   16

Section 10.1

   Termination Events    16

Section 10.2

   Effect of Termination    16

ARTICLE XI MISCELLANEOUS PROVISIONS

   17

Section 11.1

   Amendment    17

Section 11.2

   Expenses    17

Section 11.3

   Waiver of Compliance    17

Section 11.4

   Notices    17

Section 11.5

   Assignment    18

Section 11.6

   Dispute Resolution    18

Section 11.7

   Counterparts    19

Section 11.8

   Headings    19

Section 11.9

   Entire Agreement    19

Section 11.10

   Third Parties    19

Section 11.11

   Performance Following Closing    20

Section 11.12

   Governing Law    20

ARTICLE XII DEFINITIONS

   20

 

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SCHEDULES   

Schedule 1.1(b)

  

Contracts

Schedule 1.1(c)

  

List of Material Assets

Schedule 1.3

  

Assumed Liabilities

Schedule 1.5

  

Allocation

Schedule 2.5

  

Exceptions to the Title to the Assets

Schedule 2.8

  

Leases

Schedule 2.9

  

Contractual and Other Obligations

Schedule 2.10

  

Employment Matters

Schedule 2.11

  

Intellectual Property

Schedule 2.12

  

Insurance

Schedule 2.13

  

Environmental Matters

Schedule 2.14

  

Litigation and Regulatory Investigations

Schedule 2.15

  

Required Consents or Approvals

Schedule 2.17

  

Provider Numbers

Schedule 2.18

  

Delinquent Taxes

Schedule 2.18(a)

  

Contested Taxes

Schedule 2.21

  

Sufficiency of the Assets

EXHIBITS   

Exhibit A

  

Real Property Description

Exhibit B

  

Description of Pita Stop Property

Exhibit C

  

Description of Bernstein Condominium and McCoy Condominium

Exhibit D

  

Form of Deed

Exhibit E

  

Form of Title Policy

 

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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT

THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this “Agreement”) is made
and entered into as of December 31, 2005, by and among HealthSouth Corporation,
a Delaware corporation (“HealthSouth”), HealthSouth Medical Center, Inc., an
Alabama corporation (“HMC”) (HealthSouth and HMC, collectively, “Sellers”; each
a “Seller”) and The Board of Trustees of The University of Alabama
(“Purchaser”).

W I T N E S S E T H:

WHEREAS, the parties hereto have previously executed an Asset Purchase
Agreement, dated as of July 20, 2005 (the “Existing Agreement”) concerning the
subject matter hereof, and wish to amend and restate the Existing Agreement in
its entirety; and

WHEREAS, in the Existing Agreement, Sellers were to retain the certificate of
need, 219-bed license and existing services at HealthSouth Medical Center (the
“Hospital”) for use in connection with a sale of Seller’s Digital Hospital.
Pursuant to this Agreement, Sellers will sell the Hospital and all related
operating rights (including Sellers’ interest in the certificate of need,
219-bed license and existing services for the Hospital). The parties have agreed
that, upon consummation of the sale provided for in this Agreement, such related
rights will no longer be retained by Seller for use in connection with the
Digital Hospital or otherwise.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree to amend and restate the Existing Agreement in its entirety as follows:

ARTICLE I

Section 1.1 Assets Purchased at the Closing. On the basis of the representations
and warranties and subject to the terms and conditions set forth in this
Agreement, at the Closing, Purchaser agrees to purchase from Sellers, and
Sellers, for themselves and their Affiliates, agree to sell, assign, bargain,
convey and deliver to Purchaser, the following assets of Sellers (collectively,
the “Assets”), free from any liens, claims and encumbrances, except those listed
on Schedule 1.3 hereto:

(a) the medical center and Real Property currently known as “HealthSouth Medical
Center” located at 1201 11th Avenue South, Birmingham, Alabama as more
particularly described on Exhibit A hereto, excluding the following properties:
the Pita Stop Property, as described on Exhibit B hereto, the Bernstein
Condominium and the McCoy Condominium, as described on Exhibit C hereto;

(b) all of Sellers’ rights under those contracts listed on Schedule 1.1(b)
hereto (as well as any contracts specifically related to the Hospital and
mutually approved in writing by Sellers and Purchasers);

(c) all operating assets, as materially listed on Schedule 1.1(c) hereto,
including, without limitation, the real property, intellectual property,
personal property, furniture, fixtures,

 

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equipment, improvements, vehicles, patient records, financial records, personnel
files, inventory and supplies; and

(d) all of Sellers’ interests in the rights to operate the Hospital as a
219-acute care licensed hospital with all health services permitted to be
provided therein as of the date of this Agreement, including without limitation
the rights granted to Sellers under all applicable licenses (including the DPH
license), permits, franchises, certificates of need and any other right
possessed or held by Sellers relating to the ownership and operation of the
Hospital (if any of such licenses, permits, franchises, certificates of need or
other authorizations (each an “Authorization”) shall not be transferable, then
Seller shall relinquish those items in favor of Purchaser and cooperate in all
reasonable ways to facilitate the issuance of such Authorizations in favor of
Purchaser).

Section 1.2 Excluded Assets. Purchaser and Sellers acknowledge and agree that
Purchaser is not acquiring any cash, accounts receivable, working capital, the
operating business unit comprising the outpatient center (apart from the real
property on which such business is located and which is part of the Assets)
located on the campus of the Hospital or the real property or improvements
thereon associated with the hospital being constructed by Sellers on U.S.
Highway 280 in Jefferson County (the “Digital Hospital”). Although Sellers’
interest in the Gamma Knife Partnership is not included in the Assets, Sellers
shall convey such interest to Purchaser as of December 31, 2006 pursuant to
Section 6.6 of this Agreement.

Section 1.3 Assumed Liabilities, Contracts and Leases.

(a) As of the Closing, Purchaser agrees to assume the liabilities listed on
Schedule 1.3 hereto (with those obligations in Section 1.3(c) hereof, the
“Assumed Liabilities”), including all leases and subleases to which any of the
Assets are subject. Purchaser does not assume any liabilities not specifically
set forth on Schedule 1.3. Sellers agree to provide Purchaser with all books and
records relating to the Assumed Liabilities.

(b) Purchaser assumes and agrees to pay or perform, as the case may be, all
obligations for the time period after the Closing with respect to those
contracts, purchase orders, agreements and leases which are set forth on
Schedule 1.3 hereto.

Section 1.4 Purchase Price.

(a) Unless adjusted pursuant to Section 1.4(b), the purchase price (the
“Purchase Price”) for the Assets shall be THIRTY THREE MILLION DOLLARS
($33,000,000) plus the amount of any negative EBITDAM (as defined in the
Management Agreement) for the period from January 1, 2006 through the Closing
Date. The $33,000,000 portion, less any deductions provided hereunder, of the
Purchase Price shall be paid via bank wire transfer at the Closing by Purchaser,
and the amount of EBITDAM shall be determined by Sellers and paid by Purchaser
as soon as possible after Closing; provided, however, Purchaser shall be given
the opportunity to review and confirm Sellers’ calculation of negative EDITDAM.

 

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(b) The Purchase Price shall be subject to adjustment as follows:

(i) To the extent that any of the following real properties are not conveyed at
the Closing in accordance with Section 6.5 hereof, the Purchase Price shall be
reduced by the amount reflected for such non-conveyed real property as shown
below:

 

Reduction

   Non-Conveyed Real Property $450,000    Pita Stop Property (with parking lot)
$235,000    McCoy Condominium $195,000    Berstein Condominium

(ii) The Purchase Price shall be increased by the cost of any capital
improvements to the Assets made by Sellers after the date of delivery of this
Agreement if Purchaser agrees in writing to such addition to the Purchase Price.

Section 1.5 Allocation of Purchase Price. The Purchase Price for the Assets
being conveyed herein shall be allocated by Purchaser and Sellers among the
Assets being sold by Sellers to Purchaser hereunder in accordance with the
allocation contained on Schedule 1.5 hereto and such allocation shall be used by
all parties hereto for all applicable tax and financial purposes.

Section 1.6 The Closing. The closing of the transactions contemplated by
Section 1.1 (the “Closing”) shall occur on February 6, 2006 so long as the
conditions to Closing outlined in Article VII and Article VIII hereof have been
satisfied or waived. If the conditions to Closing outlined in Article VII and
Article VIII hereof have been not been satisfied or waived on or before
February 6, 2006, the Closing shall occur as soon as such conditions to Closing
have been satisfied or waived. The Closing of the transactions contemplated by
this Agreement shall occur at the offices of Balch & Bingham LLP, 1901 Sixth
Avenue North, Suite 2600, Birmingham, Alabama, or at such other location as
Purchaser and Sellers may agree upon.

Section 1.7 Prorations. All taxes, rent, revenues, water charges, utilities, or
any other similar items relating to the Assets shall be prorated by the parties
as of 12:01 a.m. on the day closing occurs (the “Closing Date”) as if Purchaser
were vested with title to the Assets during the entire day upon which the
Closing occurs. For purposes of proration, municipal ad valorem taxes shall be
assumed to have been paid in advance and all other ad valorem taxes shall be
assumed to be paid in arrears. Any expense amount which cannot be ascertained
with certainty as of the Closing Date shall be prorated on the basis of the
parties’ reasonable estimates of such amount, and shall be the subject of a
final proration sixty (60) days after the Closing Date, or as soon thereafter as
the precise amounts can be ascertained. Purchaser shall promptly notify Sellers
when it becomes aware that any such estimated amount has been ascertained. Once
all rental and expense amounts have been ascertained, Purchaser shall prepare,
and certify as correct, a final proration statement which shall be subject to
Sellers’ approval. Upon Sellers’ acceptance and approval of any final proration
statement submitted by Purchaser, such statement shall be conclusively deemed to
be accurate and final. The parties shall prorate payments with respect to
patient services provided by HMC prior to Closing and Purchaser subsequent to
Closing for patients who are inpatients of the Hospital at the Closing to the
extent payment for such services is received on a single DRG or similar basis.

 

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Section 1.8 Costs. Except as otherwise expressly provided for in this Agreement,
each party will bear its own expenses incurred in connection with the
preparation, execution and performance of its obligations under this Agreement.

Section 1.9 Purchaser’s Costs. Purchaser shall pay (i) all transfer taxes
relating to the transfer of the Real Property to Purchaser; (ii) the cost of any
environmental report required by Purchaser; (iii) the cost of any recordation
fees to put the deed of record with the appropriate governmental authority;
(iv) recordation fees and transfer taxes; (v) the cost of its legal counsel,
advisors and other professionals employed by Purchaser in connection with its
purchase of the Assets from Sellers; and (vi) the cost of all items for which
Purchaser is expressly obligated to pay under this Agreement.

Section 1.10 Sellers’ Costs. Sellers shall pay (i) the cost of the premium for
the Title Policy; (ii) the cost of an ALTA survey of the Real Property in form
and substance satisfactory to Purchaser; (iii) and other expenses related to the
discharge of any lien or encumbrance on the Real Property; (iv) the costs of its
legal counsel, advisors and other professionals employed by Sellers in
connection with the sale of the Assets to Purchaser; and (v) the cost of all
items for which Sellers are expressly obligated to pay under this Agreement.

ARTICLE II

REPRESENTATION AND WARRANTIES OF SELLERS

Sellers hereby represent and warrant to Purchaser, as of the date of execution
of this Agreement, as follows:

Section 2.1 Financial Reporting. HealthSouth is restating its historical
financial reports on a consolidated corporate group basis and on June 27, 2005
and December 2, 2005, filed with the United States Securities and Exchange
Commission its Form 10-K Annual Reports for the years ended December 31, 2002,
2003 and 2004, which included restatements of previously issued consolidated
financial statements for the years ended December 31, 2000 and 2001. Such
restatements have not been completed for the individual subsidiaries which make
up the HealthSouth consolidated group. HMC’s financial reports have not been
restated and Sellers make no representation as to the validity or accuracy of
any financial information regarding HMC.

Section 2.2 Reduced Business. Purchaser has been informed that the scope of the
Hospital’s operations has materially changed since January 1, 2005, and,
notwithstanding any other provision of this Agreement, Sellers make no
representation that further changes will not occur prior to the Closing.

Section 2.3 Authority. Sellers and Sellers’ officers have full power and
authority to execute, deliver and perform this Agreement and all agreements
executed and delivered by Sellers pursuant to this Agreement, and have taken all
action required by law or otherwise to authorize the execution, delivery and the
performance of this Agreement and related documents. This Agreement and the
transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of each of the Sellers. This Agreement constitutes a valid
and legally

 

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binding obligation of Sellers, enforceable against Sellers in accordance with
its terms. Sellers and each of the officers of Sellers have full power and
authority, duly and validly authorized by its Board of Directors, and no further
proceedings on the part of Sellers are necessary, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. HMC’s sole
shareholder has approved the transactions contemplated by this Agreement.

Section 2.4 Corporate Status. HMC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Alabama, and has
all requisite power and authority to own, lease, and operate its properties and
assets, and to carry on its business as is now being conducted. HealthSouth is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and authority to own,
lease, and operate its properties and assets, and to carry on its business as is
now being conducted.

Section 2.5 Title to Assets and Power to Convey. Except as set forth in Schedule
2.5, HMC is the sole owner of, and has good and marketable title to all of the
Assets and has full right and capacity to sell and deliver the Assets
contemplated by this Agreement. Upon the Closing, Purchaser shall have acquired
from HMC, good and marketable, legal and equitable title to the Assets, free and
clear of all pledges, liens, security interests, claims, charges, restrictions,
options, or encumbrances of any nature whatsoever, except as specified on
Schedule 2.5 hereto.

Section 2.6 No Conflicts. Neither the execution and delivery of this Agreement
by Sellers nor the consummation of the transactions contemplated hereby will:
(a) conflict with or violate any provision of the articles of incorporation or
bylaws of either Seller; (b) violate, conflict with, constitute a default (or an
event which, with or without notice, lapse of time or both, or the occurrence of
any other event, would constitute a default) under, result in the termination
of, accelerate the performance required by, cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any property
or assets of Sellers or Sellers’ interests under any agreement or commitment to
which Sellers are a party or by which Sellers are bound or to which the property
of Sellers is subject, except such violations, conflicts or defaults which would
not have a Material Adverse Effect; or (c) violate any federal, state or local
law or any judgment, decree, order, regulation or rule of any court or
governmental authority.

Section 2.7 Real Property. Exhibit A hereto describes the Real Property. Except
as set forth in Schedule 2.5 and except for Permitted Encumbrances, Sellers have
title in fee simple in the Real Property, free and clear of any Encumbrance,
except for the Pita Stop Property and the Bernstein Condominium and the McCoy
Condominium.

Section 2.8 Leases. Schedule 2.8 contains an accurate and complete list of all
leases and subleases pursuant to which Sellers lease real or personal property
with respect to the Assets. Except as set forth in Schedule 2.8, all such leases
are valid, binding and enforceable in accordance with their terms, except to the
extent that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors’ rights
and remedies generally, and are in full force and effect; there are no existing
defaults by Sellers thereunder; no event of material default has occurred which
(whether with or without

 

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notice, lapse of time or the happening or occurrence of any other event) would
constitute a material default thereunder by any party thereto.

Section 2.9 Contractual and Other Obligations. Schedule 2.9 lists all of the
material written or oral contracts, agreements, and commitments of Sellers which
pertain to the Assets.

Section 2.10 Employment Matters. As relates to the Assets, Schedule 2.10
contains a list of all full and part-time employees of Sellers, their wages and
other remuneration of every kind. Except as set forth in Schedule 2.10, the
employment of each employee listed on Schedule 2.10 is terminable at will by
Sellers, without restriction, penalty or payment of any kind.

Section 2.11 Trademarks, Service Marks, Trade Names, Copyrights and Data
Processing Systems. All trademarks, service marks, trade names and copyrights
(including trademarks, service marks, trade names and copyrights relating to
computer software and hardware) used by Sellers at the Hospital are described
and set forth in Schedule 2.11.

Section 2.12 Insurance. A complete list of the insurance policies maintained by
Sellers and a description of all areas of the Hospital that are self-insured by
Sellers and self-insurance reports are set forth in Schedule 2.12. To Sellers’
Knowledge, there are no notices of any pending or threatened termination or
premium increases with respect to any of such policies.

Section 2.13 Environmental Matters. Except as set forth in Schedule 2.13, as
relates to the Assets, to Sellers’ Knowledge:

(i) Sellers have obtained all permits, licenses and other authorizations which
are required in connection with the conduct of the Hospital under regulations
relating to pollution or protection of the environment, including regulations
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation ambient
air, surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes (“Environmental Laws”);

(ii) Sellers have obtained and are in material compliance with the terms and
conditions of all permits, licenses and other authorizations required under
Environmental Laws;

(iii) Sellers have not received notice of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
that may interfere with or prevent continued compliance with the permits,
licenses and other authorizations referred to above or Environmental Laws;

(iv) No asbestos or equipment containing polychlorinated biphenyls or leaking
underground or above-ground storage tanks is contained in or located at any
facility owned, leased or controlled by Sellers;

 

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(v) Sellers have fully disclosed all known past and present noncompliance with
such Environmental Law, and all known past “releases” of a “reportable quantity”
of any “hazardous substance”, or releases of oil, that could form the basis of
any claim, action, suit, proceeding, hearing or investigation under any
Environmental Law; and

(vi) Sellers have not received notice of any past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans that have
resulted in or threaten to result in any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation under any Environmental Law with respect to the Hospital.

Section 2.14 Litigation and Regulatory Investigations. Except as disclosed on
Schedule 2.14 hereto, as it may relate to the Hospital, there are no pending
litigation or regulatory proceedings by or against the Sellers or the Assets. To
Sellers’ Knowledge, there is no pending or threatened action, proceeding,
investigation, order, consent, decree or agreement with regulatory authorities
with respect to the Assets, neither of the Sellers or any other person or
entity, which questions the validity of this Agreement or could prevent or
adversely affect any action taken or to be taken pursuant hereto or which would
result in any revocation, suspension or limitation of any regulatory authority
of the Assets or would have a Material Adverse Effect.

Section 2.15 Other Consents. Except as disclosed on Schedule 2.15 hereto, no
consent, approval or authorization of, or notice to, any non-governmental
(federal, state or local) person or entity, including, without limitation,
parties to loans, contracts, leases or other agreements, is required in
connection with the execution, delivery and performance of this Agreement by
Sellers or the consummation by it of the transactions contemplated hereby.

Section 2.16 No Brokers. Sellers have not contracted for the services of any
broker, salesperson, finder, agent, investment banker or any other person to
whom a commission or fee will be due as a result of the transactions
contemplated by this Agreement. Sellers hereby indemnify and hold Purchaser
harmless from any claim by any other person or entity for a commission or fee
arising out of Sellers’ actions and as a result of the transactions contemplated
by this Agreement.

Section 2.17 Provider Numbers. Attached hereto as Schedule 2.17 is a list of all
Medicaid and Medicare provider numbers (the “Provider Numbers”) in the name of
the Hospital. The Provider Numbers are in full force and effect as of the date
of this Agreement.

Section 2.18 Taxes. Except as provided on Schedule 2.18 hereto, HMC has filed or
caused to be filed on a timely basis all material tax returns and all material
reports with respect to taxes that are or were required to be filed pursuant to
applicable requirements. HMC has paid, or made provision for the payment of, all
material taxes that have or may become due for all periods covered by the tax
returns or otherwise, or pursuant to any assessment received by HMC, except such
taxes, if any, as are listed on Schedule 2.18(a) and are being contested in good
faith and as to which adequate reserves (determined in accordance with generally
accepted accounting principles) have been established by Sellers.

 

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Section 2.19 License. As of the date of this Agreement, HMC holds a valid
license to operate as an acute care hospital issued by the Alabama Department of
Public Health (the “DPH License”), and otherwise has the legal ability to
operate as an acute care hospital.

Section 2.20 Records. The non-financial records of HMC are complete and correct
in all material respects, subject to the representations provided in Sections
2.1 and 2.2 herein.

Section 2.21 Sufficiency of Assets. Except as provided on Schedule 2.21 hereto,
to Sellers Knowledge, the Assets constitute all of the tangible assets, of any
nature whatsoever, necessary to operate the Hospital in the manner presently
operated by HMC.

Section 2.22 Facility Compliance. To Sellers’ Knowledge, Sellers are not in
violation of any building code, zoning or other ordinance relating to the Real
Property.

Section 2.23 Absence of Certain Developments. Subject to the representations
provided in Sections 2.1 and 2.2 herein: (i) there has been no action of eminent
domain with respect to the Real Property and (ii) except as contemplated in
Section 5.3 herein, there are no governmental (federal, state or local)
restrictions to prevent the Hospital from operating as an acute care hospital.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Sellers as of the date hereof as
follows:

Section 3.1 Organization. Purchaser is an Alabama corporation, validly existing
and in good standing under the laws of the State of Alabama, and has all
requisite power and authority to own, lease, and operate its properties and
assets, and to carry on its business as is now being conducted.

Section 3.2 Authority. Purchaser has the power and authority to execute, deliver
and perform this Agreement and all agreements executed and delivered pursuant to
this Agreement, and has taken all actions required by law and its Bylaws to
authorize the execution, delivery and the performance of this Agreement and
related documents.

Section 3.3 No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not violate any provision of any agreement of Purchaser or any provisions of or
result in the acceleration of any obligation under any mortgage, lien, lease,
agreement, instrument, order, arbitration, award, judgment or decree to which
Purchaser is a party or by which it is bound.

Section 3.4 No Brokers. Purchaser has not contracted for the services of any
broker, salesperson, finder, agent, investment banker or any other person to
whom a commission or fee will be due as a result of the transactions
contemplated by this Agreement. Purchaser does hereby indemnify and hold Sellers
harmless from any claim by any other person or entity for a

 

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commission or fee arising out of Purchaser’s actions and as a result of the
transactions contemplated by this Agreement.

Section 3.5 Due Diligence. Purchaser and its attorneys, accountants, and other
authorized representatives have been provided access to the Assets and to
documents and records of each Seller related to the Assets in order to afford
Purchaser such reasonable opportunity of review, examination and investigation.
All due diligence associated with such review, examination and investigation has
been completed to the satisfaction of Purchaser prior to the date of this
Agreement.

ARTICLE IV

CERTAIN COVENANTS OF SELLERS

Sellers hereby covenant to and agree with Purchaser as follows:

Section 4.1 Satisfaction of Conditions. Sellers shall use reasonable good faith
efforts to satisfy or cause the satisfaction of the conditions specified in
Article VII hereof in an expeditious fashion.

Section 4.2 Real Estate Investment Trust. Sellers shall use their best faith
efforts expeditiously to obtain title in fee simple, free and clear of any
encumbrances, except for any subleases, to any of the Assets described in
Exhibit A which is or has been held by Healthcare Realty Trust.

Section 4.3 Negative Covenant. Except as otherwise expressly permitted herein,
between the date of this Agreement and the Closing Date, HMC shall not, and
HealthSouth shall not permit HMC to, without the prior written consent of
Purchaser, (i) make any modification to any material contract; or (ii) enter
into any material compromise or settlement of any litigation (other than
litigation involving allegations of malpractice or employment issues),
proceeding or governmental investigation relating exclusively to the Assets, the
business of HMC or the Assumed Liabilities.

Section 4.4 Operations. Between the date hereof and the Closing, HMC shall:

(a) maintain the Assets in accordance with applicable accrediting standards of
JCAHO;

(b) keep the DPH License in full force and effect without amendment, except as
otherwise provided in Section 4.8;

(c) comply with all material contractual obligations applicable to the
operations of HMC’s business;

(d) continue in full force and effect the insurance coverage under the existing
insurance policies maintained by HMC or substantially equivalent policies;

 

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(e) cooperate with Purchaser and assist Purchaser in identifying the
governmental authorizations required by Purchaser to operate the Assets as an
acute care hospital from and after the Closing; and

(f) maintain all records as they relate to the DPH License.

Section 4.5 Continued Operation Until Closing. Sellers agree to continue
operation of the Hospital until either the Closing occurs or this Agreement is
terminated.

ARTICLE V

CERTAIN COVENANTS OF PURCHASER

Purchaser hereby covenants to and agrees with Sellers as follows:

Section 5.1 Satisfaction of Conditions. Purchaser shall use reasonable good
faith efforts to satisfy or cause the satisfaction of the conditions specified
in Article VIII hereof in an expeditious fashion and shall make all necessary
filings and applications as soon as reasonably possible after the execution of
this Agreement.

Section 5.2 Cooperation with purchaser of Digital Hospital. Purchaser agrees not
to oppose or challenge, directly or indirectly, any application filed with SHPDA
for a change of ownership and/or operation of the Digital Hospital by a
prospective purchaser of the Digital Hospital or either of the Sellers so long
as such operation of the Digital Hospital does not contemplate a certificate of
need for more than 219 acute care beds or services not performed at the Hospital
when the Digital Hospital CON was approved by SHPDA.

ARTICLE VI

ADDITIONAL COVENANTS AND AGREEMENTS

Section 6.1 Public Announcements. Purchaser and Sellers shall collectively make
or issue any announcement or written statement concerning this Agreement and the
transactions contemplated hereby for dissemination to the general public upon
execution of this Agreement.

Section 6.2 Further Assurances. If at any time any party hereto shall reasonably
request any further action by any other party to carry out the purposes of this
Agreement or to further effectuate the transactions contemplated hereby, such
other party, at the expense of the requesting party, shall promptly take such
action (including the prompt execution and delivery of further instruments and
documents).

Section 6.3 MetroWest Beds. Purchaser agrees to notify Sellers in writing, at or
before the Closing, that it shall either: (i) upon approval by SHPDA, as soon as
possible after execution of this Agreement, transfer the MetroWest Beds back to
Sellers or (ii) keep the MetroWest Beds and pay Sellers $100,000. Purchaser
hereby agrees to take the action specified in the notice to Sellers as soon as
practicable after Closing.

Section 6.4 Intentionally Deleted.

 

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Section 6.5 Pita Stop Property, Bernstein Condominium Unit, McCoy Condominium
Unit. At or subsequent to Closing, in the event HealthSouth resolves or settles
all outstanding disputes or litigation with respect to the Pita Stop Property,
HealthSouth shall allow Purchaser, for a period of sixty (60) days from the date
of such resolution or settlement, the option to acquire, via statutory warranty
deed, the Pita Stop Property for $450,000. At or subsequent to Closing, in the
event HealthSouth acquires title to Bernstein Condominium Unit, HealthSouth
shall convey, and Purchaser shall acquire, via statutory warranty deed, the
Bernstein Condominium Unit for $195,000 during a sixty day period subsequent to
such acquisition. At or subsequent to Closing, in the event HealthSouth acquires
title to McCoy Condominium Unit, HealthSouth shall convey, and Purchaser shall
acquire, via statutory warranty deed, the McCoy Condominium Unit for $235,000
during a sixty day period subsequent to such acquisition.

Section 6.6 Gamma Knife Partnership. Sellers shall convey Sellers’ interest in
the Gamma Knife Partnership to Purchaser as of December 31, 2006 for no
additional consideration; provided, however, HMC shall be entitled to its
prorata share of any distributions accruing for the period through December 31,
2006. Subsequent to Closing through December 31, 2006, Purchaser agrees to lease
space to the Gamma Knife Partnership upon the current terms and conditions of
that certain Gamma Knife Agreement, dated as of October 31, 1995, by and between
HMC and the Gamma Knife Partnership, and to assume HMC’s obligations as lessor
under such agreement.

Section 6.7 Provider Numbers; Cost Report. Sellers shall allow Purchaser to file
change of ownership applications with respect to the Hospital’s provider numbers
and to utilize such provider number for services performed subsequent to the
Closing. Notwithstanding the foregoing, Purchaser shall not be entitled to any
funds received with respect to services performed at the Hospital or for costs
incurred at the Hospital prior to the Closing and shall remit to HMC promptly
any such funds received. Notwithstanding the foregoing, Sellers shall not be
entitled to any funds received with respect to services performed at the
Hospital or for costs incurred at the Hospital subsequent to the Closing and
shall remit to Purchaser promptly any such funds received. Sellers shall file a
terminating Medicare cost report for the Hospital as soon as reasonably
practicable after the Closing. Sellers shall reasonably cooperate with Purchaser
with respect to the issuance of new provider numbers for the Hospital and the
obtaining of governmental authorizations for the Hospital.

Section 6.8 Post-Closing Services. On mutually acceptable terms and conditions,
Sellers agree to provide post-Closing services to the Hospital for a reasonable
period of time.

ARTICLE VII

CONDITIONS TO THE OBLIGATIONS OF PURCHASER

All obligations of Purchaser under this Agreement are subject to the fulfillment
or satisfaction, prior to or at the Closing, of each of the following conditions
precedent:

Section 7.1 Representations and Warranties True. The representations and
warranties of Sellers contained in this Agreement shall be materially true and
accurate as of the Closing. Notwithstanding the foregoing, Sellers shall be
permitted, immediately prior to

 

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Closing, to update the schedules to this Agreement; provider, however, any
material modifications to such schedules shall require the approval of Purchaser
as a condition to Closing by Purchaser. Notwithstanding anything in this
Section 7.1 to the contrary, in the event, that such material updates have a
collective value or impact of $500,000 or less, Sellers shall, up to an amount
mutually agreed by Sellers and Purchasers in writing (with a collective maximum
of $500,000), at Sellers’ option, either (a) execute an indemnification
agreement; (b) make the necessary repairs or remediation or (c) accept a
reduction in the Purchase Price in the amount of such liability or defect.

Section 7.2 Compliance with this Agreement. Sellers shall have materially
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.

Section 7.3 Documents to be Delivered. At or prior to Closing, Purchaser shall
have received from Sellers:

(i) a certificate of each Seller, dated as of the Closing, certifying in such
detail as Purchaser may reasonably request that the conditions specified in
Sections 7.1 and 7.2 hereof have been fulfilled;

(ii) a bill of sale for the Assets, properly executed for transfer to Purchaser,
with all required documentation relating thereto;

(iii) the Deed, properly executed for transfer to Purchaser, and the Title
Insurance; and

(iv) certificates of the Secretary of State of the State of Alabama and the
Department of Revenue of the State of Alabama as to the existence and good
standing, respectively, of HMC as of a date reasonably acceptable to Purchaser.

Section 7.4 No Injunctions. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction prohibiting or imposing any condition on the consummation
of any of the transactions contemplated hereby.

Section 7.5 Change of Ownership Approval from SHPDA, License and CHOW
Application. Purchaser shall have received all reasonably necessary governmental
authorizations in accordance with customary practice to permit the operation of
the Hospital by the Seller with the existing certificate of need, license and
hospital services.

Section 7.6 Real Estate Investment Trust. Sellers shall have obtained title in
fee simple, free and clear of any encumbrances, except for any subleases, to any
of the Assets described in Exhibit A which is or has been held by Healthcare
Realty Trust. At the Closing, Purchaser shall assume all obligations with
respect to any leases or subleases with respect to any such property.

Section 7.7 Absence of Certain Developments. Between the date hereof and the
Closing, (i) there has been no action of eminent domain with respect to the Real
Property; and

 

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(ii) except as contemplated in Section 5.3 herein, there have been no
governmental (federal, state or local) restrictions to prevent the Hospital from
operating as an acute care hospital.

ARTICLE VIII

CONDITIONS TO THE OBLIGATIONS OF SELLERS

All obligations of Sellers under this Agreement are subject to the fulfillment
or satisfaction, prior to or at the Closing, of each of the following conditions
precedent:

Section 8.1 Representations and Warranties True. The representations and
warranties of Purchaser contained in this Agreement shall be materially true and
accurate in all respects as of the Closing. Notwithstanding the foregoing,
Purchaser shall be permitted, immediately prior to Closing, to update the
schedules to this Agreement; provider, however, any material modifications to
such schedules shall require the approval of Sellers as a condition to Closing
by Sellers.

Section 8.2 Compliance with this Agreement. Purchaser shall have materially
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.

Section 8.3 Payment of Purchase Price. At Closing, Purchaser shall deliver to
Sellers the Purchase Price by wire transfer to an account designated by Sellers.

Section 8.4 Documents to be Delivered. At or prior to Closing, Sellers shall
have received from Purchaser (i) a certificate of Purchaser, dated as of the
date of Closing, certifying in such detail as Sellers may reasonably request
that the conditions specified in Sections 8.1 and 8.2 hereof have been fulfilled
and (ii) certificates of the Secretary of State of the State of Alabama and the
Department of Revenue of the State of Alabama as to the existence and good
standing, respectively, of the Purchaser as of a date reasonably acceptable to
Sellers.

Section 8.5 No Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction prohibiting or imposing any condition on the consummation
of any of the transactions contemplated hereby.

ARTICLE IX

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

Section 9.1 Survival of Representations and Warranties. All representations and
warranties made by the parties hereto in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with the negotiation, execution and performance of this Agreement shall survive
for a period of one (1) year after the Closing.

Section 9.2 Indemnification by the Sellers. Subject to and to the extent
provided in this Article IX, Sellers hereby covenant and agree to protect,
defend and indemnify Purchaser,

 

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and to hold it harmless, against and with respect to any and all loss,
liability, damage and expense (including, without limitation, all actions,
suits, proceedings, claims, demands, assessments, judgments, costs, fines,
expenses, injunctions and penalties, and any and all legal and accounting fees
incident to any of the foregoing) (“Losses”) suffered or incurred as a result of
(i) the breach by Sellers of any covenant, term, condition or agreement
contained in this Agreement or any certificate or document delivered by Sellers
pursuant to this Agreement, (ii) any inaccuracy in a representation or warranty
by Sellers set forth herein, (iii) any claims, demands, liabilities and causes
of action in connection with any act, event, condition or occurrence relating in
any way to the Assets and/or the Sellers prior to the Closing, not specifically
assumed by Purchaser in Section 1.3 of this Agreement, (iii) any obligation for
pension or retirement payments, calculators, liabilities, demands or the like
with respect to any individual who worked (or is currently working) at or for
the Assets with respect to the period when such individual was employed by
either of the Sellers, (iv) any obligation for employee benefits accrued as of
the Closing Date (including assumed vacation, sick or ETO balances), with
respect to any individual who worked (or is currently working) at or for the
Assets with respect to the period when such individual was employed by either of
the Sellers, and/or (v) Seller’s action or omissions with respect to billing or
claims by Seller with respect to the period prior to the Closing under existing
provider contracts that may be assigned to or assumed by Purchaser. In addition,
Sellers shall protect, defend and indemnify Purchaser, and hold it harmless,
against and with respect to, for the period subsequent to the date of this
Agreement, any and all loss, liability, damage and expense (including, without
limitation, all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, fines, expenses, injunctions and penalties, and any and all
legal fees payable to Sellers’ counsel only, incident to any of the foregoing)
arising from Purchaser’s attempts to perform its obligations under, or
consummate the transaction contemplated by this Agreement or the Existing
Agreement so long as Purchaser agrees to utilize Sellers’ counsel solely with
respect to defending such matters and provided, however, Sellers shall not have
any indemnification, defense or hold harmless obligations or have reimbursement
obligations to Purchaser with respect to (x) any willful acts, malfeasance,
misfeasance or misconduct by Purchaser or Purchaser’s agents or (y) Purchaser’s
actions or inactions (other than those approved by Sellers) relating to the
Metro West Beds subsequent to the date of this Agreement. Notwithstanding the
foregoing, in the event Purchaser or Sellers’ counsel determines that Purchaser
requires separate counsel with respect to claims or actions arising from
Purchaser’s attempts to perform its obligations under, or consummate the
transaction contemplated by this Agreement or the Existing Agreement, Purchaser
shall retain such separate counsel at Purchaser’s sole expense. Purchaser shall
reimburse Sellers for any indemnification costs or expenses made to Purchaser by
Sellers that relates to Purchaser’s actions or inactions that are subsequently
judicially determined to constitute malfeasance, misfeasance or misconduct by
Purchaser or Purchaser’s agents.

Section 9.3 Indemnification by Purchaser. Subject to and to the extent provided
in this Article IX, Purchaser hereby covenants and agrees to protect, defend and
indemnify each of the Sellers and to hold them harmless, against and with
respect to any and all Losses suffered or incurred as a result of (i) the breach
by Purchaser of any covenant, term, condition or agreement contained in this
Agreement, (ii) any inaccuracy in a representation or warranty of Purchaser set
forth herein, (iii) for the period subsequent to the Closing, any claims,
demands, liabilities and causes of action in connection with any act, event,
condition or occurrence relating in any way to the Assets and/or the Purchaser
after the Closing, except for any liabilities retained by Sellers

 

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under this Agreement, (iv) any obligation subsequent to Closing with respect to
those contracts or liabilities assumed by Purchaser pursuant to Section 1.3 of
this Agreement and/or (v) Purchaser’s action or omissions with respect to
billing or claims by Purchaser with respect to the period subsequent to the
Closing under existing provider contracts that may be assigned to or assumed by
Purchaser. The parties hereto acknowledge and agree that Sellers are expressly
retaining liability for any and all pension obligations for the period prior to
Closing with respect to any current or former employees at the Hospital.

Section 9.4 Notice of Claims.

(a) Promptly after receipt by an indemnified party of written notice of the
commencement of any investigation, claim, proceeding or other action in respect
of which indemnity may be sought from the indemnitor under either Section 9.2 or
9.3 (each, an “Action”), such indemnified party shall notify the indemnitor in
writing of the commencement of such Action; but the omission to so notify the
indemnitor shall not relieve it from any liability that it may otherwise have to
such indemnified party, except to the extent that the indemnitor is materially
prejudiced or forfeits substantive rights or defenses as a result of such
failure. In connection with any Action in which the indemnitor and any
indemnified party are parties, the indemnitor shall be entitled to participate
therein, and may assume the defense thereof. Notwithstanding the assumption of
the defense of any such Action by the indemnitor, each indemnified party shall
have the right to employ separate counsel and to participate in the defense of
such Action, and the indemnitor shall bear the fees, costs and expenses of such
separate counsel to such indemnified party if: (i) the indemnitor shall have
agreed to the retention of such separate counsel, (ii) the defendants in, or
target of, any such Action include more than one indemnified party or both an
indemnified party and the indemnitor shall have concluded that representation of
such indemnified party by the same counsel would be inappropriate due to actual
or, as reasonably determined by such indemnified party’s counsel, potential
differing interests between them in the conduct of the defense of such Action,
or if there may be legal defenses available to such indemnified party that are
different from or additional to those available to the other indemnified party
or to the indemnitor, or (iii) the indemnitor shall have failed to employ
counsel reasonably satisfactory to such indemnified party within a reasonable
period of time after notice of the institution of such Action. If such
indemnified party retains separate counsel in cases other than as described in
clauses (i), (ii), or (iii) above, such counsel shall be retained at the
expenses of such indemnified party. Except as provided above, it is hereby
agreed and understood that the indemnitor shall not, in connection with any
Action in the same jurisdiction, be liable for the fees and expenses of more
than one counsel for all such indemnified parties (together with appropriate
local counsel). The party from whom indemnification is sought shall not, without
the written consent of the party seeking indemnification (which consent shall
not be unreasonably withheld), settle or compromise any claim or consent to
entry of any judgment that does not include an unconditional release of the
party seeking indemnification from all liabilities with respect to such claim.

(b) In the event one party hereunder should have a claim for indemnification
that does not involve a claim or demand being asserted by a third party, the
party seeking indemnification shall promptly send notice of such claim to the
party from whom indemnification is sought.

 

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Section 9.5 Deductible Amount. Notwithstanding any other provision of this
Agreement, Sellers shall have no liability under Article 9 until the total of
all Losses with respect to such matters exceeds $75,000 (the “Deductible
Amount”), at which time Sellers shall be responsible for aggregate Losses in
excess of the Deductible Amount. Notwithstanding any other provision of this
Agreement, Purchaser shall have no liability under Article 9 until the total of
all Losses with respect to such matters exceed the Deductible Amount, at which
time Purchaser shall be responsible for aggregate Losses in excess of the
Deductible Amount.

Section 9.6 Limitation. Notwithstanding any other provision of this Agreement,
the maximum aggregate liability of Sellers collectively under Article 9 shall be
50% of the Purchase Price. Notwithstanding any other provision of this
Agreement, the maximum aggregate liability of Purchaser under Article 9 shall be
$16,500,000.

ARTICLE X

TERMINATION

Section 10.1 Termination Events. This Agreement may, by notice given prior to or
at the Closing, be terminated:

(a) by either Purchaser or Sellers if a Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived;

(b) (i) by Purchaser if any of the conditions in Article VII has not been
satisfied as of the Closing or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Purchaser to comply with its
obligations under this Agreement) and Purchaser has not waived such condition on
or before the Closing; or (ii) by Sellers, if any of the conditions in Article
VIII has not been satisfied of the Closing or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing; or

(c) by mutual consent of Purchaser and Sellers.

Section 10.2 Effect of Termination. Each party’s right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.2, 11.6 and 6.1 will survive; provided
however, that if this Agreement is terminated by a party because of a Breach of
the Agreement by the other party or because one or more of the conditions to the
terminating party’s obligations under this Agreement is not satisfied as a
result of the other party’s failure to comply with its obligations under this
Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired.

 

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ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.1 Amendment. This Agreement may be amended only by a written
agreement signed by the parties.

Section 11.2 Expenses. Each Party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the Closing, including all fees and expenses of agents,
representations, counsel and accountants.

Section 11.3 Waiver of Compliance. Any waiver of any failure to comply with any
obligation, covenant, agreement or condition under this Agreement must be in
writing and signed by the parties. Any waiver or failure to insist upon strict
compliance with any obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.

Section 11.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be provided in writing and shall be deemed
to have been duly given if delivered by hand or sent by facsimile or certified
or registered mail, with postage prepaid:

 

  (i) If to Sellers, to:

HealthSouth Corporation

HealthSouth Medical Center, Inc.

One HealthSouth Parkway

Birmingham, Alabama 35243

Phone: (205) 967-7116

Fax:      (205) 969-4620

Attn:    Jay Grinney, Chief Executive Officer

with a copy to:

HealthSouth Corporation

HealthSouth Medical Center, Inc.

One HealthSouth Parkway

Birmingham, Alabama 35243

Phone: (205) 967-7116

Fax:      (205) 970-5913

Attn:    Greg Doody, Esq.

with a copy to:

Colin H. Luke, Esq.

Balch & Bingham LLP

1901 Sixth Avenue North, Suite 2600

Birmingham, Alabama 35203

Telephone: 205-226-8729

Telecopy: 205-226-8799

 

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  (ii) If to Purchaser, to:

THE BOARD OF TRUSTEES OF THE

UNIVERSITY OF ALABAMA

500 22nd Street South, Suite 408

Birmingham, AL 35233

Telephone: (205) 975-5412

Telecopy: (205) 975-9175

Attn: Steve Pickett, Executive Vice President

with a copy to:

UAB Health System

500 22nd Street South, Suite 408

Birmingham, AL 35233

Telephone: (205) 975-4844

Telecopy: (205) 975-0129

Attn: Kathleen Kauffman

with a copy to:

J. Hobson Presley, Jr.

Presley LLC

2801 Highway 280 South

Suite 700

Birmingham, AL 35223-2483

Telephone: (205) 423-3601

Telecopy: (205) 423-3610

or to such other person or address as a party shall notify all other parties in
writing.

Section 11.5 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of the other parties. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Notwithstanding
the foregoing, Purchaser may assign its rights and obligations under this
Agreement to UAB Health System, an Alabama nonprofit corporation, or an
Affiliate of Purchaser.

Section 11.6 Dispute Resolution.

(a) Any dispute, controversy or claim arising out of or in relation to or in
connection with: (a) this Agreement, including without limitation any dispute as
to the construction, validity, interpretation, enforceability or breach of this
Agreement; (b) the operations carried out under this Agreement; or (c) any
deadlock between the parties to this Agreement (a “Dispute”) shall be

 

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settled by binding arbitration in Birmingham, Alabama, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”).
The arbitrator shall be selected by agreement of the parties from the National
Roster in accordance with the AAA rule regarding the selection of arbitrators
or, if they cannot agree on an arbitrator within ten days after submission of
the Dispute to arbitration, then an arbitrator without any relationship to the
parties shall be selected by AAA from the National Roster.

(b) The determination reached in such arbitration shall be final and binding on
all parties hereto without any right of appeal except as provided by the Federal
Arbitration Act. The arbitrator shall not have the authority to award punitive,
exemplary, indirect or consequential damages. Each party shall be responsible
for its own attorney’s fees and the costs of arbitration shall be equally borne.

(c) Any court of competent jurisdiction may enforce any determination or award
of the arbitrator. The parties also agree that, in the event that the need for
emergency measures of protection (including preliminary injunction or temporary
restraint proceedings) arises, the AAA Optional Rules for Emergency Measures of
Protection shall apply to the proceedings.

(d) The parties acknowledge and agree that this Agreement and the transactions
contemplated hereby evidence transactions that involve a substantial nexus with
interstate commerce. THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE BREACH THEREOF, PROVIDED THAT NOTHING IN THIS AGREEMENT
SHALL PRECLUDE A PARTY FROM SEEKING TO COMPEL ARBITRATION IN A STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION.

Section 11.7 Counterparts; Facsimile. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Agreement may be executed by telefacsimile.

Section 11.8 Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.

Section 11.9 Entire Agreement. This Agreement, including the Schedules hereto,
and the Management Agreement, as well as the other documents and certificates
delivered pursuant hereto set forth the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof, and supersede all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any manager, partner,
member, employee or representative of any party hereto.

Section 11.10 Third Parties. Except as specifically set forth or referred to
herein, nothing expressed or implied herein is intended or shall be construed to
confer upon or give to any person or entity other than the parties hereto, and
their successors or permitted assigns, any rights or remedies under or by reason
of this Agreement.

 

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Section 11.11 Performance Following Closing. Nothing in this Agreement shall be
construed to limit any covenant or agreement of the parties hereto which by its
terms contemplates performance after the Closing.

Section 11.12 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Alabama without regard to conflict of interest doctrine.

ARTICLE XII

DEFINITIONS

For the purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article XII:

“Action” has the meaning set forth in Section 9.4.

“Affiliate” of a Person means any other Person that directly or indirectly
controls, is controlled by or is under common control with the Person.

“Agreement” has the meaning provided in the first sentence of this document.

“Assets” has the meaning set forth in Section 1.1.

“Assumed Liabilities” has the meaning set forth in Section 1.3.

“Beds” has the meaning of those certain 199 acute care beds located at
Metro-West.

“Berstein Condominium” means that certain condominium unit located at 1422 14th
Avenue South as further described on Exhibit C hereto.

“Breach”– a “Breach” of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term “Breach” means any such inaccuracy, breach, failure,
claim, occurrence or circumstance.

“Closing” has the meaning set forth in Section 1.6.

“Closing Date” has the meaning provided in Section 1.7.

“Contest” has the meaning set forth in Section 10.1(f).

“Deductible Amount” shall have the meaning set forth in Section 9.5.

“Deed” means the statutory warranty deed in form of Exhibit D hereto.

 

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“Digital Hospital” has the meaning set forth in Section 1.2.

“DPH License” has the meaning set forth in Section 2.19.

“Encumbrance”– any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting
transfer, receipt of income, or exercise of any other attribute of ownership.

“ERISA” – the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.

“Gamma Knife Partnership” means HEALTHSOUTH/UAB Gamma Knife L.L.C.

“HealthSouth” means HealthSouth Corporation, a Delaware corporation.

“Hospital” means HMC’s acute care hospital located at 1201 11th Avenue South in
Birmingham, Alabama.

“HMC” means HealthSouth Medical Center, Inc., an Alabama corporation.

“Knowledge”, with respect to any particular fact or other matter, means:

(a) an individual is actually aware of such fact or other matter; or

(b) an individual is or was in the possession of written information confirming
such fact or other matter.

Knowledge of Sellers will include only to the actual knowledge of any individual
who is serving as a manager, partner, director, officer, member, employee,
executor, or trustee of either such Seller.

“Losses” shall have the meaning provided in Section 9.2.

“McCoy Condominium” means that certain condominium unit located at 1422 14th
Avenue South as further described on Exhibit C hereto.

“Management Agreement” shall mean that certain Management Agreement between an
Affiliate of Purchaser and HMC, dated simultaneously herewith.

“Material Adverse Effect” means any change in, or effect on, the Hospital as
currently operated by Sellers that is or is reasonably likely to be materially
adverse to the Hospital taken as a whole or the results of operations or
financial condition of the Hospital taken as a whole, except for any such
changes or effects resulting from (i) changes in general economic, regulatory or
political conditions or changes that affect the industry in general and
(ii) this Agreement or the transactions contemplated hereby or the announcement
hereof.

“MetroWest Beds” shall mean the 199 beds transferred to Purchaser and formerly
located at the HealthSouth Metro-West Hospital in Fairfield, Alabama.

 

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“Party” shall mean each of the Sellers and Purchaser individually, collectively
the “Parties.”

“Permitted Encumbrances” means (i) liens for taxes and assessments not yet due
and payable and (ii) encumbrances created by Purchaser.

“Person” means any individual, corporation or partnership, limited liability
company, limited partnership, association or other entity of any kind.

“Pita Stop Property” means that property described on Exhibit B hereto.

“Provider Numbers” has the meaning set forth in Section 2.17.

“Purchase Price” has the meaning set forth in Section 1.4.

“Purchaser” means The Board of Trustees of The University of Alabama.

“Real Property” means that certain real property on which the Hospital is
located as more particularly described on Exhibit A hereto.

“Sellers” means HealthSouth and HMC collectively.

“SHPDA” means the Alabama State Health Planning and Development Agency.

“Title Policy” shall mean the title policy issued in favor of Purchaser by
Alabama Title Co., Inc. with respect to the Real Property in the form of Exhibit
E.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first set forth above.

 

    PURCHASER: ATTEST     THE BOARD OF TRUSTEES OF THE     UNIVERSITY OF ALABAMA
/s/ Kathleen Kauffman       /s/ Steve Pickett       By:   Steve Pickett      
Its:   EVP     SELLERS: ATTEST     HealthSouth Medical Center, Inc.    

an Alabama corporation

/s/ Colin H. Luke       /s/ Mike Snow       By:   Mike Snow       Its:   Vice
President ATTEST    

HEALTHSOUTH Corporation

    a Delaware corporation /s/ Colin H. Luke       /s/ Mike Snow       By:  
Mike Snow       Its:   Chief Operating Officer

 

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