Asset Purchase Agreement, dated July 20, 2005




 Exhibit 10.37.1 
 EXECUTION COPY 
 ASSET PURCHASE AGREEMENT 
 AMONG 
 HEALTHSOUTH CORPORATION,

 HEALTHSOUTH MEDICAL CENTER, INC. 
 AND 
 THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ALABAMA 
 July 20, 2005 








 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	  	5
	 Section 2.3
	  	Authority	  	5
	 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	  	6
	 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	  	8
	 Section 2.18
	  	Taxes	  	8
	 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	  	9
	 Section 3.4
	  	No Brokers	  	9
	 Section 3.5
	  	Due Diligence	  	9
		
	 ARTICLE IV
	  	9
		
	 CERTAIN COVENANTS OF SELLERS
	  	9
			
	 Section 4.1
	  	Satisfaction of Conditions	  	9
	 Section 4.2
	  	The MetroWest Beds	  	10
	 Section 4.3
	  	Certificate of Need	  	10
	 Section 4.4
	  	Real Estate Investment Trust	  	10
	 Section 4.5
	  	Negative Covenant	  	10
	 Section 4.6
	  	Due Diligence	  	10
	 Section 4.7
	  	Operations	  	10
	 Section 4.8
	  	Continued Operation Until Closing	  	11
		
	 ARTICLE V CERTAIN COVENANTS OF PURCHASER
	  	11
			
	 Section 5.1
	  	Satisfaction of Conditions	  	11
	 Section 5.2
	  	The MetroWest Beds	  	11
	 Section 5.3
	  	Certificate of Need	  	11
	 Section 5.4
	  	Cooperation with purchaser of Digital Hospital	  	11
		
	 ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS
	  	12
			
	 Section 6.1
	  	Public Announcements	  	12
	 Section 6.2
	  	Further Assurances	  	12
	 Section 6.3
	  	MetroWest Beds	  	12
	 Section 6.4
	  	Outpatient Center	  	12
	 Section 6.5
	  	Pita Stop Property, Bernstein Condominium Unit, McCoy Condominium Unit	  	12
	 Section 6.6
	  	Gamma Knife Partnership	  	12
		
	 ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF PURCHASER
	  	13
			
	 Section 7.1
	  	Representations and Warranties True	  	13
	 Section 7.2
	  	Compliance with this Agreement	  	13
	 Section 7.3
	  	Documents to be Delivered	  	13
	 Section 7.4
	  	No Injunctions	  	13
	 Section 7.5
	  	The MetroWest Beds	  	13
	 Section 7.6
	  	Certificate of Need	  	14
	 Section 7.7
	  	Real Estate Investment Trust	  	14
	 Section 7.8
	  	Absence of Certain Developments	  	14
	 Section 7.9
	  	Due Diligence	  	14
		
	 ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF SELLERS
	  	14
			
	 Section 8.1
	  	Representations and Warranties True	  	14

  

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	 Section 8.2
	  	Compliance with this Agreement	  	14
	 Section 8.3
	  	Payment of Purchase Price	  	15
	 Section 8.4
	  	Documents to be Delivered	  	15
	 Section 8.5
	  	No Injunction	  	15
	 Section 8.6
	  	Digital Hospital	  	15
		
	 ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
	  	15
			
	 Section 9.1
	  	Survival of Representations and Warranties	  	15
	 Section 9.2
	  	Indemnification by the Sellers	  	15
	 Section 9.3
	  	Indemnification by Purchaser	  	16
	 Section 9.4
	  	Notice of Claims	  	16
	 Section 9.5
	  	Deductible Amount	  	17
	 Section 9.6
	  	Limitation	  	17
		
	 ARTICLE X TERMINATION
	  	17
			
	 Section 10.1
	  	Termination Events	  	17
	 Section 10.2
	  	Effect of Termination	  	18
		
	 ARTICLE XI MISCELLANEOUS PROVISIONS
	  	18
			
	 Section 11.1
	  	Amendment	  	18
	 Section 11.2
	  	Expenses	  	18
	 Section 11.3
	  	Waiver of Compliance	  	18
	 Section 11.4
	  	Notices	  	19
	 Section 11.5
	  	Assignment	  	20
	 Section 11.6
	  	Dispute Resolution	  	20
	 Section 11.7
	  	Counterparts	  	21
	 Section 11.8
	  	Headings	  	21
	 Section 11.9
	  	Entire Agreement	  	21
	 Section 11.10
	  	Third Parties	  	21
	 Section 11.11
	  	Performance Following Closing	  	22
	 Section 11.12
	  	Governing Law	  	22
		
	 ARTICLE XII DEFINITIONS
	  	22

  

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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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 EXECUTION COPY 
 ASSET PURCHASE AGREEMENT 
 THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and
entered into as of July 20, 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, Sellers desires to sell, and Purchaser desires to purchase, certain assets comprising Sellers’ facilities
and assets comprising the HealthSouth Medical Center in Jefferson County, Alabama (the “Hospital”) and its related assets, including, without limitation, the real property, fixtures, furniture, equipment, improvements, and inventory
currently utilized by such Hospital (collectively with the Hospital, the “Business”); 
 WHEREAS, HMC, or its Affiliate, will
retain the certificate of need under which the Hospital operates and the 219 beds currently licensed at the Hospital; 
 WHEREAS, an
Affiliate of Purchaser will manage the Hospital pursuant to that certain Management Agreement between Purchaser and HMC, dated simultaneously herewith (the “Management Agreement”); 
 WHEREAS, as a condition to Closing, Purchaser must obtain a certificate of need to offer, subsequent to Closing, at the Hospital, the same services as
those currently offered at Purchaser’s hospital in Birmingham, Alabama; and 
 WHEREAS, in contemplation of the execution of this
Agreement and subject to the terms hereinafter set forth, Sellers have transferred to Purchaser, the ownership of 199 licensed beds located at HealthSouth Metro-West Hospital located in Fairfield, Alabama (the “MetroWest Beds”).

 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 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 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 

  

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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); and 
 (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, equipment, improvements, vehicles, patient records, financial records, personnel
files, inventory and supplies. 
 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, the certificate of need under which the Hospital currently operates, the licensed beds operated by HMC at 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 January 1, 2007 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). The Purchase Price shall be paid via bank wire
transfer at the Closing by Purchaser. 
 (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

	$415,000	  	Pita Stop Property
	$235,000	  	McCoy Condominium
	$195,000	  	Berstein Condominium

  

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 (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. 
 (iii) The Purchase Price shall be reduced to $20,000,000 if on or after June 1, 2006: (A) Sellers elect to terminate this Agreement pursuant to Section 10.1(e) of this Agreement upon ten (10) days
written notice to Purchaser; (B) Purchaser has not received both: (i) the CON for operation of the Assets and (ii) all regulatory approval for the relocation of the MetroWest Beds to the Purchaser’s campus, and (C) Purchaser
agrees to purchase the Assets without any condition related to a CON or license for operation of the Assets. In order to exercise its right to purchase the Assets at the reduced Purchase Price provided in this Section 1.4(b)(iii), Purchaser
must notify Sellers in writing within ten (10) business days of Sellers’ written notice hereunder. If Purchaser notifies Sellers that it is willing to accept these conditions for closing in exchange for the Purchase Price reduction, all
representations, covenants and warranties of Sellers under this Agreement with respect to operation of the Assets as a health care facility shall be of no further force and effect, and the Closing shall occur within ten (10) business days of
Purchaser’s written acceptance to Sellers and in no event later than June 30, 2006. 
 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 as soon as practicable after the satisfaction of the conditions to Closing outlined in Article VII and Article VIII hereof. 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 

  

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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. 
 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, filed with the United States Securities and Exchange Commission its
Form 10-K Annual Report for the years ended December 31, 2002 and 2003, 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. 
  

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 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 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 

  

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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 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 2.8, the employment of each employee listed on Schedule 2.8 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”); 
  

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 (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; 
 (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. 
  

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 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. Sellers shall reasonably cooperate with Purchaser with respect
to the issuance of a new provider number. 
 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. 
 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, 

  

 8 









 
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 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, except due diligence associated with (i) contracts to be executed subsequent to the date of this Agreement;
(ii) environmental matters which would result in a violation Section 2.13 and are not otherwise disclosed in Schedule 2.13 hereto or known to Purchaser as of the date of this Agreement; and (iii) matters related to the
condition of the building improvements to the Real Property not known to Purchaser as of the date of this Agreement (collectively, the “Continued Due Diligence Matters”.) Notwithstanding anything herein to the contrary, Sellers and
Purchasers have agreed to finalize, by mutual written agreement, the form of Schedule 1.5 (Allocation) and Schedule 2.5 (Exceptions to the Title to the Assets) as well as Schedule 2.14 (only with respect to Michael Yelapi, et. al. v. St.
Petersburg Surgery Center, et. al.) on or before July 31, 2005. In the event the parties cannot reach written agreement on such schedules on or before July 31, 2005, any party to this Agreement may terminate this Agreement by sending
written notice to the other parties. 
 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. 
  

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 Section 4.2 The MetroWest Beds. Sellers shall act in good faith to support Purchaser’s
efforts to obtain all regulatory approvals necessary for the relocation of the MetroWest Beds to the Purchaser’s hospital in Birmingham, Alabama. 
 Section 4.3 Certificate of Need. Sellers shall act in good faith to support Purchaser’s efforts to obtain a certificate of need in Purchaser’s name to operate the Hospital as an acute care
facility in Jefferson County, Alabama with the same services as currently offered at Purchaser’s hospital in Birmingham, Alabama (the “CON”). 
 Section 4.4 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 4.5 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 4.6 Due Diligence. Between the
date hereof and the Closing, and upon reasonable advance notice by Purchaser to Sellers, Sellers shall provide Purchaser reasonable access to HMC’s contracts, other documents, data and the building improvements to the Real Property as is
relevant to Purchaser’s investigation into the Continued Due Diligence Matters. In addition, Purchaser shall have the right to have the Assets inspected by the Purchaser at Purchaser’s sole cost and expense for purposes related to the
Continued Due Diligence Matters. 
 Section 4.7 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; 
 (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. 
  

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 Section 4.8 Continued Operation Until Closing. Sellers agree to continue operation of the
Hospital until either the Closing occurs or this Agreement is terminated; provided, however, that Sellers may cease operation of the Hospital after December 31, 2005 if Purchaser declines to enter into a written agreement with Sellers in which
Purchaser agrees to pay, each month, to Sellers the amount of any negative EBITDAM (as defined in the Management Agreement) for the period from January 1, 2006 through the Closing Date. If Purchaser and Sellers enter into a written agreement in
which Purchaser agrees to pay, each month, to Sellers the amount of any negative EBITDAM (as defined in the Management Agreement) for the period from January 1, 2006 through the Closing Date, Sellers shall continue operations of the Hospital
through the earlier of: (a) termination of such written agreement or (b) the termination of this Agreement. 
 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. 
 Section 5.2 The MetroWest Beds. Purchaser shall act in good faith and use its best efforts to secure all regulatory approvals necessary for
the relocation of the MetroWest Beds to the Purchaser’s hospital in Birmingham, Alabama as soon as possible. Notwithstanding the foregoing, Purchaser shall file its application with SHPDA for the relocation of the MetroWest beds no later than
August 15, 2005. Without the consent of the Sellers, Purchaser shall not attempt to delay or postpone any hearing relating to the MetroWest Beds. 
 Section 5.3 Certificate of Need. Purchaser shall use its good faith best efforts to successfully obtain the CON as soon as possible. Notwithstanding the foregoing, Purchaser shall file its application with
SHPDA for the CON no later than August 31, 2005. Without the consent of the Sellers, Purchaser shall not attempt to delay or postpone any hearing relating to the CON. 
 Section 5.4 Cooperation with purchaser of Digital Hospital. Purchaser agrees not to oppose or challenge, directly or indirectly, (i) 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, provided that such operation is consistent in all material respects with the
existing CON for the Digital Hospital, or (ii) Sellers’ efforts to obtain from the Alabama State Health Planning and Development Agency a declaratory ruling which preserves and confirms the beds which can be replaced and the services which
may legally be provided by the Digital Hospital as those beds and services provided by the Hospital as of the date of the issuance of the Digital Hospital’s Certificate of Need. 
  

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 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. In contemplation of the execution of this Agreement and subject to the
terms herein, Sellers have transferred the MetroWest Beds to Purchaser. In the event of the termination of this Agreement pursuant to Section 10.1 herein, Purchaser shall, at Purchaser’s sole option, (i) pay to Sellers ONE HUNDRED
THOUSAND DOLLARS AND NO/100 ($100,000) as consideration for the transfer of the MetroWest Beds within five business days of such termination or (ii) transfer the MetroWest Beds back to Sellers within five business days of such termination.

 Section 6.4 Outpatient Center. Prior to the Closing, Purchaser and HealthSouth shall negotiate in good faith for a temporary
agreement for the continued operation by HealthSouth of the outpatient center located at the Hospital, provided that such temporary use by HealthSouth does not impair Purchaser’s use of the Hospital in any material respect. 
 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 $415,000. 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 January 1, 2007 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. 
  

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 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 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 The MetroWest Beds. Purchaser shall have obtained all regulatory approval for the relocation of the
MetroWest Beds to the Purchaser’s campus. 
  

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 Section 7.6 Certificate of Need. Purchaser shall have received final agency action from SHPDA
approving the CON, and no appeal of such final agency action shall be properly and timely pending. 
 Section 7.7 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 7.8 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 (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. 
 Section 7.9 Due Diligence. Purchaser, in its continued due diligence pursuant to Section 3.5, shall not have discovered any unsatisfactory item or items with respect to the Continued Due Diligence
Matters which would result in any environmental liability to Purchaser, unknown to Purchaser as of the date of this Agreement, or structural defect at the Hospital for which Sellers are not willing to either, at Sellers’ option, to
(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; provided, however, in the event, that such additional due
diligence item (as permitted by this Section 7.9 hereof) has a value or adverse 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. 
 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. 
  

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 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. 
 Section 8.6 Digital Hospital. The CON Review Board shall have issued a declaratory ruling which preserves and confirms the beds which can be
replaced and the services which may legally be provided by the Digital Hospital are those beds and services provided by the Hospital as of the date of the issuance of the Digital Hospital’s Certificate of Need, that Sellers may shut down the
Digital Hospital and that Sellers may convey the Hospital without jeopardizing the certificate of need for the Digital Hospital. Notwithstanding the foregoing, this condition to Closing shall no longer be in effect subsequent to December 31,
2005. 
 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, 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 

  

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when such individual was employed by either of the Sellers, or (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, 
 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 under this Agreement and (iv) any obligation subsequent to Closing with respect to those contracts
or liabilities assumed by Purchaser pursuant to Section 1.3 of this Agreement. 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 

  

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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. 
 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 50% of the Purchase Price. 
 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; 
 (c) by mutual consent of Purchaser and
Sellers; 
 (d) by Purchaser (i) after December 31, 2005 if the CON has not been issued by December 31, 2005 or
(ii) after January 15, 2006 if the Closing has not occurred on or before 

  

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January 15, 2006; provided that Purchaser shall have used its best efforts to assist in the completion of the transactions contemplated by this
Agreement; 
 (e) by Sellers on or subsequent to June 1, 2006, provided that Sellers shall have used their best efforts
to assist in the completion of the transaction contemplated by this Agreement and Sellers shall have given Purchaser ten days prior written notice (which notice may be provided prior to June 1, 2006) of its intent to terminate and allowed
Purchaser to consummate the transactions contemplated by this Agreement in accordance with Section 1.4(b)(iii);or 
 (f)
by either Purchaser or Sellers if the CON is contested by any third party resulting in an administrative hearing or litigation (a “Contest”), and after good faith negotiation Purchaser and Sellers cannot reach agreement as to the
allocation of the expenses to be incurred in further efforts to obtain the CON as a direct result of such Contest. Notwithstanding the foregoing, this Agreement may not be terminated pursuant to this Section 10.1(f) if either Purchaser or
Sellers elects to bear the entire cost of such Contest. 
 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. 
 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. Notwithstanding the foregoing, in the case of a Contest, Purchaser and Seller may agree to allocate the expenses incurred as a direct result of such Contest, and either Purchaser or Seller may elect
to bear all of the expenses of such Contest. 
 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. 
  

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 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 settled by binding arbitration in Birmingham,
Alabama, in accordance with the Commercial Arbitration Rules of the American Arbitration Association 

  

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(“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. 
 “CON” has
the meaning set forth in Section 4.3. 
 “Contest” has the meaning set forth in Section 10.1(f). 
 “Deductible Amount” shall have the meaning set forth in Section 9.5. 
  

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

 “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. 
  

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 “MetroWest Beds” shall mean the 199 beds transferred to Purchaser and formerly located
at the HealthSouth Metro-West Hospital in Fairfield, Alabama. 
 “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/ Katrina Belt	 		 		 	/s/ Steve Pickett
		 		 		 	By:	 	Steve Pickett
		 		 		 	Its:	 	UAB Health System, Executive Vice President
			
		 		 	SELLERS:
			
	ATTEST	 		 	HealthSouth Medical Center, Inc.
		 		 	 an Alabama corporation

				
	/s/ Audra Szush	 		 		 	/s/ Mike Snow
		 		 		 	By:	 	Mike Snow
		 		 		 	Its:	 	Vice President
			
		 		 	HEALTHSOUTH Corporation
	ATTEST	 		 	 a Delaware corporation

				
	/s/ Audra Szush	 		 		 	/s/ Mike Snow
		 		 		 	By:	 	Mike Snow
		 		 		 	Its:	 	EVP & COO

  

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