Document:

EX-4.4 REGISTRATION RIGHTS AGREEMENT

 

EXHIBIT 4.4

Exhibit E to the

Securities Purchase Agreement

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 4, 2005,
is by and between VERSO TECHNOLOGIES, INC., a Minnesota corporation (the “Company”), and
each of the entities whose names appear on the signature pages hereof. Such entities are each
referred to herein as an “Investor” and, collectively, as the “Investors”.

     The Company has agreed, on the terms and subject to the conditions set forth in the Securities
Purchase Agreement, dated as of February 4, 2005 (the “Securities Purchase Agreement”), to
issue and sell to each Investor named therein (A) a 6% Senior Unsecured Convertible Debenture in
the form attached to the Securities Purchase Agreement (each, a “Debenture” and,
collectively, the “Debentures”) and (B) Warrants in the respective forms attached to the
Securities Purchase Agreement (each, a “Warrant” and, collectively, the
“Warrants”).

     The Debentures are convertible into shares (the “Conversion Shares”) of the Company’s
common stock, par value $0.01 per share (the “Common Stock”). The Warrants are exercisable
into shares of Common Stock (the “Warrant Shares”) in accordance with their terms.

     In order to induce each Investor to enter into the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the
“Securities Act”), and under applicable state securities laws.

     In consideration of each Investor entering into the Securities Purchase Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1. DEFINITIONS.

     For purposes of this Agreement, the following terms shall have the meanings specified:

     “Business Day” means any day other than a Saturday, a Sunday or a day on which
the Commission is closed or on which banks in the City of New York are authorized by law to
be closed.

     “Commission” means the Securities and Exchange Commission.

     “Effective Date” means the date on which the Registration Statement is declared
effective by the Commission.

     “Filing Deadline” means the thirtieth (30th) calendar day following the Closing
Date.

 

 

     “Holder” means any person owning or having the right to acquire, through
conversion of the Debentures or exercise of the Warrants or otherwise, Registrable
Securities, including initially each Investor and thereafter any permitted assignee thereof.

     “Registrable Securities” means the Conversion Shares and the Warrant Shares and
any other shares of Common Stock issuable pursuant to the terms of the Debenture or the
Warrants, and any shares of capital stock issued or issuable from time to time (with any
adjustments) in replacement of, in exchange for or otherwise in respect of the Conversion
Shares or the Warrant Shares.

     “Registration Deadline” means the ninetieth (90th) calendar day
following the Closing Date or, if the Registration Statement receives a full review by the
Commission, the one hundred and twentieth (120th) calendar day following the Closing Date.

     “Registration Period” has the meaning set forth in paragraph 2(c) below.

     “Registration Statement” means a registration statement or statements prepared
in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act
(“Rule 415”) or any successor rule providing for the offering of securities on a
continuous or delayed basis.

     Capitalized terms used herein and not otherwise defined shall have the respective meanings
specified in the Securities Purchase Agreement.

     2. REGISTRATION.

          (a) Filing of Registration Statement. On or before the Filing Deadline, the Company
shall prepare and file with the Commission a Registration Statement on Form S-3 as a “shelf”
registration statement under Rule 415 covering the resale of a number of shares of Registrable
Securities equal to one hundred and twenty five percent (125%) of the number of shares of Common
Stock issuable upon conversion of the Debentures and exercise of the Warrants in full (such number
to be determined without regard to any restriction on such conversion or exercise). Such
Registration Statement shall state, to the extent permitted by Rule 416 under the Securities Act,
that it also covers such indeterminate number of additional shares of Common Stock as may become
issuable upon the conversion of the Debentures and exercise of the Warrants in order to prevent
dilution resulting from stock splits, stock dividends or similar events.

          (b) Alternative Registration Statement. Notwithstanding the foregoing paragraph 2(a),
if on the Filing Deadline, the Company does not meet the eligibility requirements for filing a
Registration Statement on Form S-3, then in such case the Company shall instead prepare and file
with the Commission a Registration Statement meeting the foregoing requirements on Form S-1 or Form
S-2, and in such event, the Company shall re-file such Registration Statement, or file a new
Registration Statement covering at least the number of shares then registered on the existing
Registration Statement(s) (and not previously sold pursuant to an existing Registration Statement
or pursuant to Rule 144 under the Securities Act (“Rule 144”)), on Form S-3 as promptly as
practicable

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(but in no event later than thirty (30) days after the Company meets the eligibility requirements
to use Form S-3 for the resale of Registrable Securities by each Investor).

          (c) Effectiveness. The Company shall use reasonable best efforts to cause the
Registration Statement to become effective as soon as practicable following the filing thereof, but
in no event later than the Registration Deadline. The Company shall respond promptly to any and
all comments made by the staff of the Commission on with respect to the Registration Statement, and
shall submit to the Commission, within two (2) Business Days after the Company learns that no
review of the Registration Statement will be made by the staff of the Commission or that the staff
of the Commission has no further comments on the Registration Statement, as the case may be, a
request for acceleration of the effectiveness of such Registration Statement to a time and date not
later than two (2) Business Days after the submission of such request. The Company will maintain
the effectiveness of each Registration Statement filed pursuant to this Agreement until the
earliest to occur of (i) the date on which all of the Registrable Securities eligible for resale
thereunder have been publicly sold pursuant to either the Registration Statement or Rule 144, (ii)
the date on which all of the Registrable Securities remaining to be sold under such Registration
Statement (in the reasonable opinion of counsel to the Company) may be immediately sold to the
public under Rule 144(k) under the Securities Act (“Rule 144(k)”) or any successor
provision and (iii) the date that is the second (2nd) anniversary of the Effective Date
(the period beginning on the Closing Date and ending on the earliest to occur of (i), (ii) or (iii)
above being referred to herein as the “Registration Period”).

          (d) Registration Default. If (i) the Registration Statement is not filed on or before
the Filing Deadline or declared effective by the Commission on or before the Registration Deadline,
(ii) after a Registration Statement has been declared effective by the Commission, sales of
Registrable Securities (other than such Registrable Securities as are then freely saleable pursuant
to Rule 144(k)) cannot be made by a Holder under a Registration Statement for any reason not within
the exclusive control of such Holder, or (iii) an amendment or supplement to a Registration
Statement, or a new registration statement, required to be filed pursuant to the terms of paragraph
3(j) below, is not filed on or before the date required by such paragraph (each of the foregoing
clauses (i), (ii) and (iii) being referred to herein as a “Registration Default”), the
Company shall make cash payments to each Holder equal to such Holder’s pro rata share (based on the
aggregate number of Registrable Securities then held by or issuable to such Holder as of the
occurrence of a Registration Deadline) equal to one percent (1%) of the aggregate Purchase Price
paid by such Holder for such Holder’s Debenture and Warrants for each thirty (30) day period or
part thereof in which a Registration Default exists. Notwithstanding any provision of this
Agreement to the contrary, the Company shall be permitted to suspend for one or more periods
(provided that the aggregate length of such suspension shall not exceed ten (10) consecutive
Business Days or an aggregate of twenty (20) Business Days in any 365 day period) the actions
required under paragraph 2(a) of this Agreement to the extent that the Board of Directors of the
Company concludes reasonably and in good faith that the disclosure of information in the prospectus
is not in the best interest of the Company. Each such payment required to be made under this
paragraph 2(d) shall be made within five (5) Business Days following the last day of each calendar
month in which a Registration Default exists. Any such payment shall be in addition to any other
remedies available to each Holder at law or in equity, whether pursuant to the terms hereof, the
Securities Purchase Agreement, the Debentures, or otherwise.

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          (e) Allocation of Conversion Shares and Warrant Shares. The initial number of
Conversion Shares and Warrant Shares included in any Registration Statement and each increase in
the number thereof included therein shall be allocated pro rata among the Holders based on the
aggregate number of Registrable Securities issuable to each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase thereof is declared
effective by the Commission (such number to be determined using the Conversion Price or Exercise
Price, as applicable, in effect at such time and without regard to any restriction on the ability
of a Holder to convert such Holder’s Debenture or exercise such Holder’s Warrant as of such date).
In the event that a Holder sells or otherwise transfers any of such Holder’s Registrable
Securities, each transferee shall be allocated the portion of the then remaining number of
Registrable Securities included in such Registration Statement allocable to the transferor.

          (f) Registration of Other Securities. During the period beginning on the date hereof
and ending on the Effective Date, the Company shall refrain from filing any registration statement
(other than (i) a Registration Statement filed hereunder, (ii) a registration statement on Form S-8
with respect to stock option plans and agreements and stock plans currently in effect and disclosed
in the Securities Purchase Agreement or the schedules thereto, (iii) a registration statement on
Form S-4 with respect to an acquisition or other business combination involving the Company or (iv)
a registration statement filed pursuant to the terms of any registration rights listed on
Schedule 3.12 to the Securities Purchase Agreement). Except to the extent required by the
terms of any registration rights listed on Schedule 3.12 to the Securities Purchase
Agreement, the Company shall not include any securities other than Registrable Securities on any
Registration Statement filed by the Company on behalf of the Holders pursuant to the terms hereof.

     3. OBLIGATIONS OF THE COMPANY.

     In addition to performing its obligations hereunder, including without limitation those
pursuant to Section 2 above, the Company shall, with respect to each Registration Statement:

          (a) prepare and file with the Commission such amendments and supplements to such Registration
Statement and the prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities Act or to maintain the effectiveness of
such Registration Statement during the Registration Period, or as may be reasonably requested by a
Holder in order to incorporate information concerning such Holder or such Holder’s intended method
of distribution;

          (b) promptly following the Closing, secure the listing on the Principal Market of all
Registrable Securities issuable upon conversion of the Debentures and exercise of the Warrants, and
at any Holder’s request, provide such Holder with reasonable evidence thereof;

          (c) so long as a Registration Statement is effective covering the resale of the applicable
Registrable Securities owned by a Holder, furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents as such Holder may
reasonably request in order to facilitate the disposition of such Holder’s Registrable Securities;

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          (d) use commercially reasonable efforts to register or qualify the Registrable Securities
under the securities or “blue sky” laws of such jurisdictions within the United States as shall be
reasonably requested from time to time by a Holder, and do any and all other acts or things which
may reasonably be necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided that the Company
shall not be required in connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such jurisdiction;

          (e) notify each Holder immediately after becoming aware of the occurrence of any event (but
shall not, without the prior written consent of such Holder, disclose to such Holder any facts or
circumstances constituting material non-public information) as a result of which the prospectus
included in such Registration Statement, as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing, and as promptly
as practicable prepare and file with the Commission and furnish to each Holder a reasonable number
of copies of a supplement or an amendment to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;

          (f) use commercially reasonable efforts to prevent the issuance of any stop order or other
order suspending the effectiveness of such Registration Statement and, if such an order is issued,
to use commercially reasonable efforts obtain the withdrawal thereof at the earliest possible time
and to notify each Holder in writing of the issuance of such order and the resolution thereof;

          (g) furnish to each Holder, on the date that such Registration Statement, or any successor
registration statement, becomes effective, a letter, dated such date, signed by an officer of or
counsel to the Company and addressed to such Holder, confirming such effectiveness and, to the
knowledge of such counsel, the absence of any stop order;

          (h) provide to each Holder and its representatives the reasonable opportunity to conduct a
reasonable inquiry of the Company’s financial and other records during normal business hours and
make available during normal business hours and with reasonable advance notice its officers,
directors and employees for questions regarding information which such Holder may reasonably
request in order to fulfill any due diligence obligation on its part;

          (i) permit counsel for each Holder to review such Registration Statement and all amendments
and supplements thereto, and any comments made by the staff of the Commission concerning such
Holder and/or the transactions contemplated by the Transaction Documents and the Company’s
responses thereto, within a reasonable period of time prior to the filing thereof with the
Commission (or, in the case of comments made by the staff of the Commission, within a reasonable
period of time following the receipt thereof by the Company); and

          (j) in the event that, at any time, the number of shares available under the Registration
Statement is insufficient to cover one hundred and twenty five percent (125%) of the Registrable
Securities issuable under the Debentures and Warrants (such number to be determined

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using the Conversion Price or Exercise Price, as applicable, in effect at such time and without
regard to any restriction on the ability of any Holder to convert such Holder’s Debenture or
exercise such Holder’s Warrant) the Company shall promptly amend such Registration Statement or
file a new registration statement, in any event as soon as practicable, but not later than the
tenth (10th) day following notice from a Holder of the occurrence of such event, so that
such Registration Statement or such new registration statement, or both, covers no less than one
hundred and ten percent (110%) of the Registrable Securities eligible for resale thereunder (such
number to be determined using the Conversion Price or Exercise Price, as applicable, in effect at
the time of such amendment or filing and without regard to any restriction on the ability of any
Holder to convert such Holder’s Debenture or exercise such Holder’s Warrant). The Company shall
use commercially reasonable efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. Any Registration Statement
filed pursuant to this paragraph 3(j) shall state that, to the extent permitted by Rule 416 under
the Securities Act, such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Debenture and exercise of the
Warrants in order to prevent dilution resulting from stock splits, stock dividends or similar
events. Unless and until such amendment or new Registration Statement becomes effective, each
Holder shall have the rights described in paragraph 2(d) above.

     4. OBLIGATIONS OF EACH HOLDER.

     In connection with the registration of Registrable Securities pursuant to a Registration
Statement, each Holder shall:

          (a) timely furnish to the Company (i) a completed Shareholder Questionnaire and (ii) such
information in writing regarding itself and the intended method of disposition of such Registrable
Securities as the Company shall reasonably request in order to effect the registration thereof;

          (b) upon receipt of any notice from the Company of the happening of any event of the kind
described in paragraphs 3(e) or 3(f), immediately discontinue any sale or other disposition of such
Registrable Securities pursuant to such Registration Statement until the filing of an amendment or
supplement as described in paragraph 3(e) or withdrawal of the stop order referred to in paragraph
3(f), and use commercially reasonable efforts to maintain the confidentiality of such notice and
its contents;

          (c) to the extent required by applicable law, deliver a prospectus to the purchaser of such
Registrable Securities;

          (d) notify the Company when it has sold all of the Registrable Securities held by it; and

          (e) notify the Company in the event that any information supplied by such Holder in writing
for inclusion in such Registration Statement or related prospectus is untrue or omits to state a
material fact required to be stated therein or necessary to make such information not misleading in
light of the circumstances then existing; immediately discontinue any sale or other disposition of

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such Registrable Securities pursuant to such Registration Statement until the filing of an
amendment or supplement to such prospectus as may be necessary so that such prospectus does not
contain an untrue statement of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the circumstances
then existing; and use commercially reasonable efforts to assist the Company as may be appropriate
to make such amendment or supplement effective for such purpose.

     5. INDEMNIFICATION.

     In the event that any Registrable Securities are included in a Registration Statement under
this Agreement:

          (a) To the extent permitted by law, the Company shall indemnify and hold harmless each Holder,
the officers, directors, employees, agents and representatives of such Holder, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several) (collectively,
including reasonable legal expenses or other expenses reasonably incurred in connection with
investigating or defending same, “Losses”), insofar as any such Losses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement under which such Registrable Securities were registered, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto, or (ii) the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Subject to the provisions of paragraph 5(c) below, the
Company will reimburse such Holder, and each such officer, director, employee, agent,
representative or controlling person, for any reasonable legal expenses or other out-of-pocket
expenses as reasonably incurred by any such entity or person in connection with investigating or
defending any Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid
in settlement of any Loss if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be obligated to indemnify any
person for any Loss to the extent that such Loss arises out of or is based upon (i) any disclosure
or any omission or alleged omission (to state a material fact required to be stated therein or
necessary to make statements therein not misleading) that is based upon or in conformity with
written information furnished (or not furnished, in the case of an omission) by such person
expressly for use in such Registration Statement or (ii) a failure of such person to deliver or
cause to be delivered the final prospectus contained in the Registration Statement and made
available by the Company, if such delivery is required by applicable law.

          (b) To the extent permitted by law, each Holder who is named in such Registration Statement as
a selling shareholder, acting severally and not jointly, shall indemnify and hold harmless the
Company, the officers, directors, employees, agents and representatives of the Company, and each
person, if any, who controls the Company within the meaning of the Securities Act or the Exchange
Act, against any Losses to the extent (and only to the extent) that any such Losses arise out of or
are based upon (i) any disclosure or any omission or alleged omission (to state a material fact
required to be stated therein or necessary to make statements therein not misleading) that is based
upon or in conformity with written information furnished (or not furnished, in the case

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of an omission) by such person expressly for use in such Registration Statement, or (ii) a failure
of such Holder to deliver or cause to be delivered the final prospectus contained in the
Registration Statement and made available by the Company, if such delivery is required under
applicable law . Subject to the provisions of paragraph 5(c) below, such Holder will reimburse any
legal or other expenses as reasonably incurred by the Company and any such officer, director,
employee, agent, representative, or controlling person, in connection with investigating or
defending any such Loss; provided, however, that the foregoing indemnity shall not apply to amounts
paid in settlement of any such Loss if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); and provided, further, that, in no event
shall any indemnity under this paragraph 5(b) exceed the net proceeds resulting from the sale of
the Registrable Securities sold by such Holder under such Registration Statement.

          (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 5,
promptly deliver to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the defense thereof with
counsel selected by the indemnifying party and reasonably acceptable to the indemnified party;
provided, however, that an indemnified party shall have the right to retain its own counsel, with
the reasonably incurred fees and expenses of one such counsel for all indemnified parties to be
paid by the indemnifying party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate under applicable standards of professional conduct
due to actual or potential conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the delivery of notice of any such action, to the
extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 5 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this Section 5 or with
respect to any other action unless the indemnifying party is materially prejudiced as a result of
not receiving such notice.

          (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 5 is
unavailable or insufficient to hold harmless an indemnified party for any reason, the Company and
each Holder agree, severally and not jointly, to contribute to the aggregate Losses to which the
Company or such Holder may be subject in such proportion as is appropriate to reflect the relative
fault of the Company and such Holder in connection with the statements or omissions which resulted
in such Losses; provided, however, that in no case shall such Holder be responsible for any amount
in excess of the net proceeds resulting from the sale of the Registrable Securities sold by it
under the Registration Statement. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the Company or by such
Holder. The Company and each Holder agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Section 5, each person who controls a
Holder

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within the meaning of either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of such Holder shall have the same rights to contribution as such
Holder, and each person who controls the Company within the meaning of either the Securities Act or
the Exchange Act and each officer, director, employee, agent or representative of the Company shall
have the same rights to contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).

          (e) The obligations of the Company and each Holder under this Section 5 shall survive the
conversion of the Debenture and exercise of the Warrants in full, the completion of any offering or
sale of Registrable Securities pursuant to a Registration Statement under this Agreement, or
otherwise.

     6. REPORTS.

          With a view to making available to each Holder the benefits of Rule 144 and any other similar
rule or regulation of the Commission that may at any time permit such Holder to sell securities of
the Company to the public without registration, the Company agrees to:

          (a) make and keep public information available, as those terms are understood and defined in
Rule 144;

          (b) file with the Commission in a timely manner all reports and other documents required of
the Company under the Exchange Act; and

          (c) furnish to such Holder, so long as such Holder owns any Registrable Securities, promptly
upon written request (i) a written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144 and the Exchange Act, (ii) to the extent not publicly available
through the Commission’s EDGAR database, a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company with the Commission, and
(iii) such other information as may be reasonably requested by such Holder in connection with such
Holder’s compliance with any rule or regulation of the Commission which permits the selling of any
such securities without registration.

     7. MISCELLANEOUS.

          (a) Expenses of Registration. Except as otherwise provided in the Securities Purchase
Agreement, all reasonable expenses, other than underwriting discounts and commissions and fees and
expenses of counsel and other advisors to each Holder, incurred in connection with the
registrations, filings or qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers’ and accounting fees, the fees and
disbursements of counsel for the Company, and the fees and disbursements incurred in connection
with the opinion and letter described in paragraph 3(g) hereof, shall be borne by the Company.

          (b) Amendment; Waiver. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended or waived except pursuant to a written instrument executed by
the Company and the Holders of at least a majority of the Registrable Securities into

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which all of the Debenture and Warrants then outstanding are convertible or exercisable (without
regard to any limitation on such conversion or exercise). Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder, each future Holder and the
Company. The failure of any party to exercise any right or remedy under this Agreement or
otherwise, or the delay by any party in exercising such right or remedy, shall not operate as a
waiver thereof.

(c) Notices. Any notice, demand or request required or permitted to be given by the
Company or a Holder pursuant to the terms of this Agreement shall be in writing and shall be deemed
delivered (i) when delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to
be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to
a reputable overnight courier and (iii) on the Business Day actually received if deposited in the
U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed as
follows:

If to the Company:

Verso Technologies, Inc. 

400 Galleria Parkway, Suite 300

Atlanta, GA 30339

Attn: Chief Financial Officer

Tel:(678) 589-3500

Fax: (678) 589-3780

with a copy (which shall not constitute notice) to:

Rogers & Hardin LLP

2700 International Tower

229 Peachtree Street NE

Atlanta, GA 30303

Attn:   Robert C. Hussle, Esq.

Tel:   (404) 522-4700

Fax:   (404) 525-2224

and if to a Holder, to such address as shall be designated by such Holder in writing to the
Company.

          (d) Assignment. Upon the transfer of any Debenture, Warrants or Registrable
Securities by a Holder, the rights of such Holder hereunder with respect to such securities so
transferred shall be assigned automatically to the transferee thereof, and such transferee shall
thereupon be deemed to be a “Holder” for purposes of this Agreement, as long as: (i) the Company
is, within a reasonable period of time following such transfer, furnished with written notice of
the name and address of such transferee, (ii) the transferee agrees in writing with the Company to
be bound by all of the provisions hereof, and (iii) such transfer is made in accordance with the
applicable requirements of the Securities Purchase Agreement, the Debentures or the Warrants, as
applicable.

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          (e) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, and all of which together shall be deemed one and the same instrument. This
Agreement, once executed by a party, may be delivered to any other party hereto by facsimile
transmission.

          (f) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed entirely
within the State of New York.

          (g) Holder of Record. A person is deemed to be a Holder whenever such person owns or
is deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the record owner of such Registrable Securities.

          (h) Entire Agreement. This Agreement and the other Transaction Documents constitute
the entire agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the other Transaction Documents
supersede all prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

          (i) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

          (j) Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.

[Signature Pages to Follow]

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     IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the
date first-above written.

	 	 	 	 
	VERSO TECHNOLOGIES, INC.

 	 
	 	By:   	/s/ Juliet M. Reising      	 
	 	 	Name: Juliet M. Reising	 	 
	 	 	Title: EVP and CFO	 	 
	 

SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

By:  Satellite Asset Management, L.P., its Manager 

     By:                                                                                 

 

 

     IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the
date first-above written.

	 	 	 	 
	VERSO TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Juliet M. Reising

	 
	 	 	Name:  Juliet M. Reising	 	 
	 	 	Title:  EVP & CFO	 	 
	 

                                                                                

    Investor Name

By:                                                             , its Manager 

	 	 	 	 	 
	 	 	 
	 	By:  	                  __________________________
 	 
	 	 	Name:  	 	 
	 	 	Title:EX-10.1

 

AGREEMENT FOR PURCHASE AND SALE

     THIS AGREEMENT FOR PURCHASE AND SALE (“Agreement”) is made and entered into this 4th day of
November, 2004 (the “Effective Date”) by and between THE HEART HOSPITAL OF MILWAUKEE, LLC, a
Delaware limited liability company (“Seller”), MedCath Corporation, a Delaware corporation
(collectively “MedCath”) solely for purposes of fulfilling its obligations under Section 17.A
below and COLUMBIA ST. MARY’S, INC., a Wisconsin nonstock, not-for-profit corporation
(“Purchaser”).

RECITALS

     A. Seller owns and operates The Heart Hospital of Milwaukee (the “Hospital”) and is the
owner in fee simple of the real estate and the improvements located at 375 West River Woods Parkway
in the City of Glendale, County of Milwaukee, Wisconsin, and

     B. Seller desires to sell to Purchaser the Hospital, which shall include, but not be limited
to the Property (as hereinafter defined) and certain assets related to the Hospital and Purchaser
desires to purchase the Property and certain assets related to the Hospital from Seller, pursuant
to the terms and conditions of this Agreement.

     NOW, THEREFORE, for and in consideration of the covenants and agreements herein contained.
Purchaser and Seller hereby agree as follows:

1. Purchase and
Sale.

     On the Closing Date (as hereinafter defined), Purchaser shall purchase from Seller, and
Seller shall sell, convey, assign and/or transfer to Purchaser, good, indefeasible and marketable
title in and to the following real property and good and valid title to the following personal
property:

     A. Real Property and Improvements. Subject to Section 1.D below, all of the real
estate and improvements owned by Seller and located at or adjacent to the address known as 375 West
River Woods Parkway, City of Glendale, County of Milwaukee, Wisconsin (the “Property”) which shall
include, but not be limited to the real estate described on attached
Exhibit A- The Property shall
include but not be limited to: (a) any and all buildings, structures and other improvements and
fixtures situated on or attached to all or any portion of the Property; (b) all easements
appurtenant to the Property and other easements, grants of right, licenses, privileges or other
agreements for the benefit of, belonging to or appurtenant to the Property whether or not situated
on the Property; and (c) all right, title and interest of Seller in and to any roads, access
points, streets and ways, public or private, open or proposed, in front of or adjoining all or any
part of the Property and serving the Property. Seller has provided to Purchaser any survey of the
Property in Seller’s possession prior to the Effective Date.

 

 

     B. Hospital
Assets. Subject to Section 1.C below, the following assets owned by
Seller and utilized by Seller to operate the Hospital as of the Effective Date (the “Assets”):
(a) all medical equipment utilized by the Hospital to treat and render medical services to
patients;
(b) all computer hardware and software which is an integral part of the medical equipment, non-
medical equipment and all building mechanical and security systems which is necessary to operate
such medical equipment, non-medical equipment and building mechanical and security systems; (c) all
furniture, fixtures and non-medical equipment; (d) inventory of the Hospital, which shall include,
but not be limited to pharmaceuticals, surgical instruments, medical supplies, office supplies;
textbooks and manuals related to the medical equipment, non-medical equipment and all building
mechanical and security systems; (e) fork lifts and other machinery; (f) all Intellectual Property
(as hereinafter defined), including without limitation all rights to the name, “The Heart Hospital
of Milwaukee” and any and all derivations thereof; (g) Seller’s phone and facsimile numbers; (h)
architectural drawings, surveys and “as built” drawings related to the Property; (i) to the extent
legally assignable, all warranties benefiting the Hospital including but not limited to
construction, architectural, mechanical, electrical and plumbing systems within the building and
equipment warranties; (j) assets listed on the hard asset ledger provided to Purchaser and dated
September 30, 2004; (k) Seller goodwill; and (1) any other tangible assets owned by Seller
(including but not limited to motor vehicles, if any) and utilized to operate the Hospital as of
the Effective Date.

     For purposes of this Agreement, “Intellectual Property” shall mean and include: (a)
trademarks, service marks, logos, trade names and corporate names and registrations and
applications for registration thereof; (b) copyrights and registrations and applications for
registration thereof; (c) mask works and registrations and applications for registration thereof;
(d) internet websites, internet domain names and e-mail addresses exclusively relating to the
Hospital; (e) other proprietary rights relating to any of the foregoing (including without
limitation remedies against infringements thereof and rights of protection of interest therein
under the laws of all jurisdictions); and (f) copies and tangible embodiments thereof, together
with any developments or enhancements thereof.

     C. Excluded
Assets. Notwithstanding anything to the contrary contained in this
Agreement, the Assets shall not include any cash; cash equivalents; marketable securities;
intercompany receivables; accounts receivable; minute or corporate record books relating to Seller;
business records unless specified in Section l.B above; insurance policies of Seller; assets of any
employee health or benefit plan; any vendor, service or other contract to which Seller is a party
unless listed within the Assumed Liabilities (as hereinafter defined); all computer hardware and
software not identified as “Assets” in Section l.B above, patient records, all manuals or
information relating to methods of doing business, clinical protocols, procedures and policies
which have been developed for use by MedCath Incorporated for use in substantially all of its
affiliated hospitals and all other intangible assets of Seller.

     D. Conveyance
of Additional Medical Office Building Property. Notwithstanding
anything herein to the contrary. Purchaser acknowledges that, prior to Closing, Seller will convey
to Glendale Medical Development Partners, LLC, as the owner of the parcel adjacent to the Hospital
upon which an office building is being constructed, an approximately three (3) foot strip of land
upon which the office building is encroaching (the “Encroachment Parcel”).

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Purchaser represents and covenants that such conveyance will not adversely affect the Property or
its use and occupancy and will be in compliance with all laws, rules, regulations and ordinances
and shall not breach or violate any existing agreement with or relating in any way to the City of
Glendale, the Community Development Authority of the City of Glendale or Glendale Medical
Development Partners, LLC. In connection therewith, Purchaser also acknowledges that Seller and
Glendale Medical Development Partners, LLC will, prior to Closing: (i) enter into any necessary
amendments, if any, to existing agreements so that such conveyance does not violate said
agreements including but not limited to that certain Reciprocal Easement and Protective Covenant
Agreement and (ii) deliver to Purchaser all documents relating to Seller’s conveyance of the
Encroachment Parcel to Glendale Medical Development Partners, LLC.

2. Exclusion of
Liabilities and Obligations.

     Except for Assumed Liabilities (as defined herein), Purchaser does not assume, and shall not
be obligated to pay, perform or discharge any taxes, debts, liabilities or any other obligations of
Seller or its Members, partners, officers or employees of any kind or nature, whether actual,
contingent or approved, known or unknown as of the Closing Date (the “Excluded Liabilities”),
including, without limitation the following: (a) obligations relating to environmental liabilities
relating to the Property or the Assets which resulted from actions or omissions prior to Closing;
(b) Seller’s workers’ compensation account or premiums, employee compensation, pension, profit
sharing, deferred compensation or other qualified or non-qualified benefit programs (including
Seller’s group health insurance plan); (c) liabilities for current or deferred income taxes, taxes
in any way related to the Property, the Hospital, Seller’s personal property or the Assets relating
to periods through Closing; (d) any contract liabilities or obligations or claims not expressly
included within the Assumed Liabilities, including by way of example, professional service
agreements, medical director agreements, written employment contracts and written agreements with
the City of Glendale or any division of said municipality (i.e., Community Development Authority),
except for those certain ongoing obligations of Seller under the Development Agreement (as defined
in Section 12.F below) which Purchaser shall be obligated to assume (the “Development Agreement
Obligations”); (e) liabilities for medical malpractice or other claims related to tortious,
reckless or intentional acts claimed in any way against the Hospital or any of its employees,
staff, owner’s, members, partners, agents, contractors, vendors, patients or guests which resulted
from actions or omissions prior to Closing; (f) utility charges through the Closing Date; (g) any
liabilities arising under any payor contracts or programs, including without limitation, the
Medicare and Medicaid programs, including recapture or recoupment of previously paid or reimbursed
expenses and liabilities for false claims; (h) obligations and liabilities arising from Seller
ceasing operations, including without limitation, liability under state or federal plant closing
laws; and (i) accounts payable of any kind unless included within the Assumed Liabilities.

3. Assumed
Liabilities.

     In addition to the Purchase Price (as hereinafter defined) and as further consideration
provided by Purchaser for the transactions contemplated within this Agreement, Purchaser agrees to
assume the liabilities set forth below which shall be referred to as the “Assumed Liabilities”:

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     A. Leasehold obligations of Seller and the Members of Seller, to Glendale Medical Development
Partners, LLC, as office tenants for the office building being constructed by Glendale Medical
Development Partners, LLC, on the parcel adjacent to the Hospital (the “MOB Leases”); provided such
leasehold liabilities are (i) binding on Seller and/or its Members as of the Effective Date,
without contingency; (ii) transferred and assigned to Purchaser in a form reasonably acceptable to
Purchaser; and (iii) are listed on attached Exhibit B.

     B. Leasehold liabilities of Seller, for furniture, fixtures and medical/non-medical equipment
(excluding computers) utilized by Seller to operate the Hospital (the “Equipment Leases”) provided
such leasehold liabilities are (i) binding on Seller as of the Effective Date, without contingency;
(ii) transferred and assigned to Purchaser in a form reasonably acceptable to Purchaser; and (iii)
are listed on attached Exhibit B.

     C. Reciprocal Easement and Protective Covenant Agreement dated March 3, 2004 between Seller
and Glendale Medical Development Partners, LLC.

     D. The Development Agreement Obligations of Seller.

     E. Seller shall be responsible for obtaining all necessary third-party consents, if any (the
“Consents”) for the transfer of the Assumed Liabilities to Purchaser.

4. Purchase
Price.

     A. The aggregate purchase price for the Property and the Assets shall be $42,500,000 (the
“Purchase Price”). The Purchase Price shall be payable to Seller at Closing by wire transfer or
other funds acceptable to Seller.

     B. No later than fifteen (15) business days after the Effective Date, Seller shall deliver a
written proposal to Purchaser allocating the Purchase Price, subject to Purchaser’s approval which
shall not be unreasonably withheld, conditioned or delayed.

5. Purchaser’s Inspection of Property.

     A. Access to the Property. Commencing on the Effective Date and continuing
through Closing (the “Access Period”), Purchaser, its representatives, agents and contractors
shall, at all reasonable times, have the privilege of going upon the Property, as needed, to
inspect, examine and test the Property and the Assets, including, but not limited to conducting
investigations of the physical status of the Property and the engineering of the Property. This
privilege shall also include, but not be limited to, the right to obtain any relevant information
necessary to determine subsurface and topographic environmental conditions (including Phase I and
Phase II testing if necessary), soil tests, asbestos analysis and mold sampling, all of which
tests, studies and reviews shall be performed at Purchaser’s sole cost and expense. Any damage to
the Property resulting from Purchaser’s inspections or testing of the Property, including
disturbance of the surface or subsurface soils of the land, shall be restored, at Purchaser’s sole
cost and expense, to substantially the condition existing as of the Effective Date.

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     B
Seller to Provide Documents. Seller represents and warrants that it has
provided to Purchaser, prior to the date hereof, copies of any and all documents that are material
to the ownership and/or operation of the Property and the Assets, in Seller’s possession, or in
the possession of third parties but accessible by Seller, which shall include, but not be limited
to the following: appraisals, environmental reports, surveys, soil condition reports, as-built
drawings, engineering and/or architectural drawings of the improvements and mechanical, electrical
or plumbing systems on the Property and all documents and/or leases that are material to the
Assumed Liabilities including, but not limited to, the MOB Leases and the Equipment Leases. If the
transaction contemplated within this Agreement does not close, Purchaser shall return all
documents to Seller within five (5) business days from the date this Agreement is terminated.

6. Title.

     Purchaser has obtained a preliminary title commitment for the Property issued by a title
company licensed to issue title insurance in the State of Wisconsin (the “Title Company”). At
Closing, Seller shall convey and transfer to Purchaser good, indefeasible, fee simple and
marketable title to the Property free and clear of all liens and encumbrances except municipal
zoning ordinances, recorded building and use restrictions and covenants and general taxes levied
in the year of Closing (the “Permitted Title Exceptions”). Such conveyance and transfer by Seller
to Purchaser shall also be sufficient to enable the Title Company to issue its extended coverage
ALTA Owner’s Policy of Title Insurance with the standard exceptions therein deleted (the “Title
Policy”) in the amount of the Purchase Price allocated to the Property, subject only to the
Permitted Title Exceptions. Seller agrees not to further alter or encumber in any way, title to
the Property or Assets after the Effective Date.

7. Closing.

     The closing of the purchase and sale contemplated in this Agreement shall take place on a
date determined by Seller which is prior to December 15, 2004, but in no event shall the closing
be earlier than two (2) days after Seller has ceased operations (the “Closing Date” or “Closing”).
The Closing shall take place at the offices of Purchaser or at such other time, such other place,
or on such other date as may be mutually agreed upon by the parties.

     A. Deliverables. At Closing. Seller shall deliver to Purchaser all of Seller’s
Deliverables required of Seller as set forth in Section 9, below, and Purchaser shall deliver to
Seller the Purchase Price.

     B. Possession. Seller shall deliver possession of the Property and Assets to
Purchaser, at Closing, free and clear of any and all encumbrances except for the Assumed
Liabilities and the Permitted Title Exceptions.

     C. Transfer
Taxes. Seller shall pay any transfer tax or any like or similar
transfer tax or imposition due upon the transfer of the Property or the Assets.

     D. Seller’s
Closing Costs. Seller shall pay the costs of any cure of title
defects required of Seller hereunder, the cost of the title examination, title endorsements and
premium

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insuring Purchaser’s fee simple interest in the Property, and the fees and expenses of
Seller’s
attorneys.

     E. Purchaser’s
Closing_Costs. Purchaser shall pay the recording costs, costs of any
investigations, studies and appraisals conducted by Purchaser, and the fees and expenses of
Purchaser’s attorneys.

     F. Closing
Fees. Seller shall pay the fees charged by the Title Company in
connection with closing and any escrow services which may be provided by the Title Company,

8. Adjustments.

     The following items shall be credited, debited and otherwise adjusted through the
Closing Date and the resulting calculations shall be an adjustment to the Purchase Price, payable
at Closing, unless otherwise so provided.

     A. Taxes. All (i) ad valorem and real estate taxes with respect to the Property and
(ii) all personal property taxes related to the Assets, accrued or payable for the current year,
shall be prorated as of the Closing Date with Seller receiving a credit for any such taxes paid in
advance for any period after the Closing Date or with Purchaser receiving a credit for the period
prior to and including the Closing Date for which such taxes have not been paid by Seller. Seller
shall pay all assessments contemplated with respect to or levied upon the Property prior to
Closing. In the event that tax bills for the current year’s taxes are not available on the Closing
Date, taxes shall be prorated based upon the tax bills for the previous year and increased or
decreased based upon any known increase or decrease in the assessed valuation or the tax rate.
Seller and Purchaser hereby agree that the parties shall, if necessary, re-prorate the taxes when
actual tax bills for the current year are available after the Closing.

     B. Utility
Charges. Any utility charges that have been billed prior to the Closing
Date shall be paid by Seller before Closing; all such charges that have accrued but are not billed
prior to the Closing Date, shall be charged to Seller, as accrued through the Closing Date, as a
credit against the Purchase Price.

     C. Other
Liens and Encumbrances. On or before the Closing Date, Seller shall cause any
and all assessments, liens, and encumbrances affecting the Property and Assets, which are not
Permitted Title Exceptions, including without limitation, any mechanic’s lien, security interest,
mortgage or deed of trust, to be satisfied and released. The proceeds due at Closing may be applied
by Purchaser or Seller to satisfy or pay any assessments, liens, encumbrances, interests or other
charges affecting the Property, which are to be paid, satisfied or released pursuant to this
Agreement,

9. Conveyances and Deliveries at Closing.

     On the Closing Date, Seller shall execute and deliver or cause to be delivered to
Purchaser the following, which shall be referred to as “Seller’s Deliverables”;

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     A. Bill of Sale. A bill of sale transferring and conveying to Purchaser good title to
the Assets, free and clear of all liens, security interests and exceptions of any kind and nature
whatsoever,

     B. Assignment and Assumption of Assumed Liabilities. An assignment and
assumption of all rights and obligations arising from all Assumed Liabilities assumed by and
assigned to Purchaser by Seller, in a form reasonably acceptable to Purchaser and in compliance
with Section 3, above. Seller shall also deliver all necessary third-party consents for Purchaser
to assume the Assumed Liabilities.

     C. Special Warranty Deed. A Special Warranty Deed transferring and conveying to
Purchaser marketable fee simple title to the Property, free and clear of all liens and
encumbrances, except only the Permitted Title Exceptions.

     D. Non-Foreign Person Affidavit. An affidavit from Seller in form reasonably
satisfactory to Purchaser, certifying that Seller is not a foreign person or entity or non-resident
alien under Section 1445 of the Internal Revenue Code of 1986, as amended.

     E. Title Commitment. The Title Policy (or a final markup of the title insurance
commitment accepted by Purchaser) at the Closing.

     F. Affidavit of Title. Such affidavits (including but not limited to an owner’s
affidavit of liens and possession), gap indemnity agreements, and other evidence of title from
Seller, as may be required by the Title Company, on or in forms customarily used by the Title
Company, in order to enable the Title Company to issue the Title Policy subject only to the
Permitted Title Exceptions, without the standard exceptions and without exception
for mechanics or materialmen’s liens, other statutory liens, or for the rights of parties in
possession, and with such endorsements or affirmative coverage as Purchaser shall reasonably
require.

     G. Lien Waivers. Fully executed lien waivers for all materials and labor supplied to
Seller for work performed at the Property within twelve (12) months of the Closing.

     H. Closing Statement. A closing statement accurately setting forth the prorations and
adjustments to the Purchase Price as required by this Agreement and such disbursements from the
sale proceeds as shall be necessary to pay such costs, and satisfy such liens, taxes, assessments
and other encumbrances as required by this Agreement.

     I. Certificate. A statement certifying that (a) all obligations, agreements,
promises, and covenants to be performed by Seller under this Agreement have been duly performed;
and (b) the warranties, representations and covenants by Seller made pursuant to this Agreement
are still true as of the Closing Date.

     J. Assignment of Warranties. To the extent warranties are assignable, an assignment of
warranties for the Property shall be included in the Bill of Sale, which shall include but not be
limited to, any warranties related to the construction of the improvements on the Property,
transferring and assigning to Purchaser all right, title, claim and interest in and to

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any warranties or guarantees concerning the Property which have not by their terms expired,
together with the originals of any agreements or certificates evidencing the same.

     K. Noncompetition Agreements. Noncompetition Agreements from the members of Seller
(and including MedCath ) to the extent required by Purchaser and in form attached hereto as
Exhibit C.

     L. Lease Termination Agreement. A lease termination agreement for the lease between
Seller and Wilson Heart Care Associates, Ltd. dated April 30, 2004.

     M. Certificate of Compliance. A Certificate of Compliance issued by the City of
Glendale pursuant to all applicable ordinances.

     N. Assignment of Rights and Privileges Under Declaration. An assignment of Seller’s
rights and privileges under the Declaration of Restrictive Covenants of the Community Development
Authority of the City of Glendale dated the 10th day of May, 2004, and recorded as
Document No. 8280600.

10. Seller’s Representations, Warranties and Covenants.

     Seller, as of the date of execution of this Agreement by Seller, represents, warrants and
covenants to and with Purchaser as follows (for purposes of this Section 10, the term “Seller’s
Knowledge” or “Knowledge” means knowledge that the following individuals actually knew or should
have known: the President or the Vice Presidents of the Hospital or the President or any Vice
President of MedCath Incorporated or MedCath Corporation):

     A. Title to Property and Assets. Seller is the owner of good, fee simple, indefeasible
and marketable title to the Property and good and valid title to the Assets, free and clear of all
liens, claims, encumbrances and restrictions of any kind and nature, except for the Permitted Title
Exceptions. As of the Closing, except for the Assumed Liabilities, there are no leases, licenses,
option agreements, rights of first refusal or purchase agreements affecting the Property or the
Assets, or any parties having any right to possession of the Property or the Assets, and there are
no other parties in possession of the Property or the Assets other than Seller.

     B. Compliance of Property With Zoning and Other Laws. To Seller’s Knowledge, the
Property and the Assets, including without limitation all improvements thereon, conform to and
comply with all applicable zoning, building code and applicable law and ordinances and regulations
for operation as a hospital where the failure to so comply would have a material adverse effect on
the Property or the Assets and Seller has not received any written notification from any
governmental or public authority that the Property or the Assets violate any existing laws or that
any work is required to be done upon or in connection with the Property or the Assets to comply
with any applicable law.

     C. Environmental Matters. Seller has not used, nor authorized, nor knowingly
allowed the use of the Property or the Assets, and to Seller’s Knowledge, and except as disclosed
in any environmental reports delivered to Purchaser or obtained by Purchaser, the Property or the
Assets have never been used for the generating, handling, treatment, storage, disposal or release

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of any hazardous substance, hazardous material, hazardous waste, solid waste, toxic substance,
petroleum or petroleum products, asbestos, radioactive materials, lead-based paint or other words
of similar import (herein collectively referred to as “Hazardous Substances”) referred to or
defined as such under any applicable local, state or federal law, statute, ordinance, requirement
or regulation relating to public health and safety, the protection of the environment or the
discharge of solid, liquid or gaseous waste into the environment or the placement of structures or
materials into any waters or otherwise affecting the environment (hereinafter collectively referred
to as “Environmental Laws”), except for Hazardous Substances used, stored or disposed of in the
ordinary course of Seller’s business in compliance with applicable Environmental Laws. Seller has
not used, nor authorized, nor Knowingly allowed the use of the Property or the Assets, and, to
Seller’s Knowledge and except as disclosed in any environmental reports delivered to Purchaser or
environmental reports obtained by Purchaser, the Property or the Assets have never been used, in
any manner other than in material compliance with all Environmental Laws. In addition, Seller
represents and warrants the following with respect to the period of time during which Seller has
owned the Property:

     (i) Seller has received no written notice and to Seller’s Knowledge, there are no
claims, actions, suits, proceedings or investigations related to Hazardous Substances
pending or threatened against Seller with respect to the ownership, use, condition, or
operation of the Property or the Assets, in any court or before or by any federal, state or
other governmental or quasi-governmental agency or private arbitration tribunal (hereinafter
collectively referred to as “Environmental Litigation”);

     (ii) To Seller’s Knowledge, no release, discharge, spillage or disposal not in
compliance with Environmental Laws of any Hazardous Substance (i) has occurred (except for
releases, discharges, spillage or disposal which have been investigated, removed or
remediated to the extent required by applicable Environmental Law, or (ii) is occurring at
the Property;

     (iii) To Seller’s Knowledge and except as may be disclosed in any environmental
reports delivered to Purchaser, no soil or water in or under or adjacent to the Property is
contaminated by any Hazardous Substance, in any manner or degree requiring further
investigation, removal or remediation under applicable Environmental
Laws;

     (iv) All waste originating at or from the Property or the Assets containing any
Hazardous Substance generated, used, handled, stored, treated or disposed of (directly or
indirectly) by Seller and any of Seller’s current or former affiliates and by Seller’s
contractors has been disposed of in compliance with all applicable Environmental Laws;

     (v) To Seller’s Knowledge and except as may be disclosed in any environmental reports
delivered to Purchaser or obtained by Purchaser, the Property has never been used as a
landfill, dump, service station or dry cleaning facility.

     D. Ownership and Condition of Assets. Seller has no Knowledge of any material problems
or defects in any of the Assets or the Property. Commencing on the Effective Date and continuing
through Closing, Seller shall maintain and utilize all inventory for operation of the

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Hospital at substantially the same levels as in the ordinary course of the Hospital’s business.
Seller shall not sell, transfer or use Seller’s supplies, consumables, pharmaceuticals and other
inventory outside of its ordinary course of business, or otherwise cause the value of Seller’s
supplies, consumables, pharmaceuticals and other inventory to substantially decrease from the
value as stated on the year to date August 2004 financial statement previously given to Purchaser
by Seller, without the written consent of Purchaser.

     E. Employee Benefit Plans. The phrase, “Employee Benefit Plans,” shall be defined as
all employee benefit plans, programs, written agreements or handbooks (including, without
limitation, those providing any bonus, deferred compensation, excess benefits, profit sharing,
pension, thrift, savings, salary continuation, severance, retirement, supplemental retirement,
short- or long-term disability, dental, vision care, hospitalization, major medical, life
insurance, accident insurance, vacation, holiday and/or sick leave pay, tuition reimbursement,
executive perquisite or other employee benefits) under which or to which Seller contributes to or
for the benefit of present and former members, employees, consultants and other agents of Seller or
has so contributed at any time. All of the Employee Benefit Plans in all material respects have
been, and up to the Closing Date will continue to be, in compliance, both with respect to plan
operation and documentation, with ERISA, COBRA, the Internal Revenue Code, as amended, the
Americans with Disabilities Act, as amended, the Health Insurance Portability
and Accountability Act of 1996, as amended, the Equal Pay Act of 1963, as amended, the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as
amended, all other federal or state laws regulating employment and employee benefits, and all
regulations and rulings issued by government agencies responsible for the administration or
enforcement of one or more of those laws. To Seller’s Knowledge, no Employee Benefit Plan, nor
any trust created thereunder, nor any trustee or administrator thereof, nor any other
“disqualified person” or “party in interest,” has engaged in a “prohibited transaction” within the
meaning of Section 406 of ERISA or Section 4975 of the Code. Neither Seller nor any other
fiduciary of an Employee Benefit Plan has breached any duty owed by Seller or the fiduciary to the
participants and beneficiaries of the Employee Benefit Plan. There are no actions, suits or
claims pending or, to Seller’s Knowledge, threatened (other than normal claims for benefits)
against any Employee Benefit Plan or the assets thereof.

     F. Authority. Seller and MedCath have the full power and authority to enter into and
perform their obligations under the terms of this Agreement and this Agreement is the valid and
legally binding obligation of Seller and MedCath, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar
law or general principles of equity.

     G. Compliance with Laws and Contracts. From the Effective Date through Closing,
Seller shall continue to comply in all material respects with all laws, ordinances, regulations and
orders relating to the Property and the Assets (including, without limitation, the Environmental
Laws) and Seller shall further comply in all material respects with the requirements of all liens
and encumbrances, agreements and other contractual arrangements to which the Property, Seller or
the Assets are subject and make all payments required to be paid thereunder.

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     H. Notice of Revision of Representations Due to Discovery of New Facts. Seller shall
notify Purchaser promptly if, prior to the Closing Date, Seller becomes aware of the existence of
any fact, transaction, event or occurrence which has made or could reasonably be expected to make
any of the warranties and representations of Seller under this Agreement not true with the same
force and effect as if made on or as of the date hereof.

     I. Agreements Regarding Property. From the Effective Date through Closing, except
pursuant to this Agreement and as contemplated in Section 1.D above, Seller shall not (a) transfer
any interest in the Property or the Assets, (b) create any easements, liens, mortgages or
encumbrances affecting the Property or Assets, (c) enter into any development or other agreements
affecting the Property, or enter into any leases relating to the Property or the Assets, (d) enter
into any service, supply, maintenance or other contracts pertaining to the Property or Assets that
cannot be canceled without penalty at or before Closing (except as consented to in writing by
Purchaser) or (e) permit any changes to the zoning classification of the Property (except as
consented to in writing by Purchaser).

     J. Notice and Defense of Actions. From the Effective Date through Closing, Seller
shall promptly deliver to Purchaser notice of, and if the same could reasonably be expected to
adversely affect the Property, shall defend, at Seller’s sole expense, all actions, suits, claims,
demands and other proceedings or matters affecting the Property, or the use, possession or
occupancy thereof.

     K. Maintenance of Property. From the Effective Date through Closing, Seller shall
keep and maintain all improvements located on the Property and the Assets in substantially the
same condition as the Property and Assets were on the Effective Date and in compliance with all
applicable laws. Except as required above to keep and maintain the Property or the Assets, Seller
shall make no material changes, alterations or improvements to the Property or the Assets.

     L. Exclusive Dealing. In consideration of the substantial time and expense to be
incurred by Seller and Purchaser in investigating the transaction contemplated within this
Agreement, Seller agrees that, as of the Effective Date until the Closing or earlier termination of
this Agreement, Seller will not, directly or indirectly, through any member, officer, director,
agent or otherwise, solicit or initiate, discuss or negotiate, or encourage submission of proposals
or offers from any entity or individual other than Purchaser, relating to the sale or other
disposition of the Hospital, the Property or the Assets. Seller agrees that the obligations created
under this Section 10.L can be enforced by Purchaser through remedies at law or in equity,
including injunctive relief, in which case Seller will pay all costs incurred by Purchaser if
Purchaser is successful in seeking such relief, including, but not limited to. reasonable
attorneys’ fees incurred by Purchaser,

     All of the representations, warranties and covenants of Seller set forth above or elsewhere
in this Agreement shall survive Closing, subject to Section 17, below. From and after the
Effective Date, Seller shall not take any action, or fail to take any action, which would result
in a breach of any warranty, representation or covenant contained in this Agreement or result in
Seller’s inability to reaffirm any warranty, representation or covenant at Closing, as required
hereunder.

11

 

11. Purchaser’s Representations and Warranties and Covenants.

     A. Purchaser, as of the date of the execution of this Agreement by Purchaser,
represents and warrants to Seller as follows:

     (i) Purchaser is a non-stock, not-for-profit corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin. Purchaser has the
full power and authority to enter into this Agreement, and this Agreement is the valid and
legally binding obligation of Purchaser, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or
similar law or general principles of equity.

     (ii) No consent, authorization, or approval of, or filing with or notice to, any
governmental authority or third-party is required as a condition to Purchaser’s execution,
delivery or performance of this Agreement. The execution, delivery and performance of this
Agreement by Purchaser will not conflict with, give rise to a right of termination of,
contravene or constitute a default under, or be an event, which with the giving of notice or
passage of time or both, will become a default under, or result in the creation of any lien
on Purchaser or any of its assets pursuant to any of the terms, conditions or provisions of
any law, statute, rule, regulation, order, judgment or decree to which Purchaser is subject,
the articles of incorporation or bylaws (or other governing organizational instruments) of
Purchaser or under any indenture, mortgage, lease, loan agreement or other agreement or
instrument binding upon Purchaser. No order, action, suit or proceeding is pending or
threatened against Purchaser that (a) questions the validity or legality of this Agreement
or the transactions contemplated hereby or (b) seeks to prevent the consummation of the
transactions contemplated by this Agreement.

     (iii) Purchaser has sufficient funds immediately available to consummate the
transactions contemplated by this Agreement.

     B. Seller’s Employees and Emergency Room Physicians.

     (i) Seller shall be responsible for and shall satisfy all of its obligations to the
employees of the Hospital (the “Seller Employees”) with respect to the period of their
respective employment by Seller (including, without limitation, COBRA obligations and
obligations under Wisconsin health care continuation of benefits laws).

     (ii) Immediately after the Effective Date, Purchaser and/or Purchaser’s emergency room
provider will commence a process to interview, consistent with Purchaser or Purchaser’s
emergency room provider’s current hiring practices, policies and procedures, the six (6)
emergency room physicians who provide emergency room services to Seller. Purchaser will use
reasonable efforts and Purchaser will cause its emergency room provider to use reasonable
efforts to hire or otherwise contract with the six (6) emergency room physicians who
provide emergency room services to Seller.

12

 

12. Conditions Precedent to Obligations of Purchaser.

     The obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing, of each and every one of
the following conditions, all or any of which may be waived, in whole or in part, by Purchaser for
purposes of consummating such transactions, but without prejudice to any other right or remedy
which Purchaser may have hereunder as a result of any misrepresentations by, or breach of any
covenant or warranty of, Seller or the Members, employees or officers of Seller contained in this
Agreement or any other certificate or instrument furnished by Seller:

     A. Third-Party Consents. Purchaser shall receive the Consents.

     B. Representations True at Closing. The representations and warranties made by
Seller shall be true and correct in all material respects through Closing, with the same force and
effect as though such representations and warranties had been made on and as of the Closing (except
for changes contemplated by this Agreement which do not singly or in the aggregate have a material
adverse effect on the Property or the Assets).

     C. Covenants of Seller. Seller shall have duly performed all of the covenants, acts
and undertakings to be performed by it on or prior to the Closing.

     D. Seller Deliveries. Seller shall have delivered to Purchaser all of Seller’s
Deliverables and all other documents required pursuant to this Agreement.

     E. Cease Hospital Operations. Seller shall cease all business and health care
operations conducted by Seller at least two (2) days before Closing, but may conduct normal
wind-down activities. Purchaser shall have access to the Property and the Assets after Seller’s
business operations have ceased but at least two (2) days prior to Closing for the purpose of
conducting inspections to determine that the Property and Assets are in the condition represented
and as required to be transferred to Purchaser under this Agreement. All costs, responsibilities
and obligations relating to ceasing the business operations of Seller, including without
limitation, all responsibilities under any federal, state or local plant closing law, shall be the
responsibility of Seller.

     F. City Of Glendale Development Agreement. Subject to the terms below,
Purchaser intends to seek to cause the City of Glendale to release Purchaser from any use
restriction associated with the Property contained in any document that limits the use of the
Property as a cardiac hospital, including but not limited to the Declaration of Restrictive
Covenants of the Community Development Authority of the City of Glendale (the “Declaration”) and
that certain Development Agreement between Seller and the City of Glendale, dated May 10, 2002 (the
“Development Agreement”) and Seller agrees to cooperate as reasonably requested. Assuming Seller
has fulfilled its obligation to cooperate as set forth above, Purchaser may not fail to close nor
terminate this Agreement solely because it has not obtained the release from the City of Glendale
described in this Section 12.F.

     Purchaser agrees it will not attempt to claim property tax exemption relating to the Assets
and Property as long as the Development Agreement survives and, if requested by the City of

13

 

Glendale or the Community Development Authority of the City of Glendale, Purchaser will
confirm thereto Purchaser’s obligation to pay such property taxes. If, prior to Closing, as a
result of pursuing the objectives identified in the paragraph above, the City of Glendale requires
Purchaser to agree to, or indicates that it intends to impose, an increase in the assessed value
of the Property or the personal property component of the Assets which are above those amounts for
such values as provided in the Development Agreement, then Seller and Purchaser shall be
responsible to pay the following percentages of any increase in the amount of taxes owed for the
years identified in the paragraph below:

	 	 	 	 	 	 	 	 	 
	 
	 	Increase in Taxes	 	 	CSM Percentage	 	 	HHM Percentage	 
	 	0% - 10%
	 	 	100%	 	 	0%	 
	 	10% - 20%
	 	 	90%	 	 	10%	 
	 	20% - 30%
	 	 	80%	 	 	20%	 
	 	30% - 40%
	 	 	70%	 	 	30%	 
	 	40% - 50%
	 	 	60%	 	 	40%	 
	 	50% - 60%
	 	 	50%	 	 	50%	 
	 	60% - 70%
	 	 	40%	 	 	60%	 
	 	70% - 80%
	 	 	30%	 	 	70%	 
	 	80% - 90%
	 	 	20%	 	 	80%	 
	 	90% - 100%
	 	 	10%	 	 	90%	 
	 

The cost, if any, to be borne by Seller, will be measured as the present value of the
incremental annual costs of taxes due under the Development Agreement for tax years 2005 through
2011, discounted to a present value at a discount rate of 10%. Any such cost due by Seller will be
an adjustment to the Purchase Price.

Seller, in its sole discretion, may determine not to close this transaction if the cost to Seller,
based upon the cost sharing agreement set forth in this Section 12.F results in Seller being
liable to pay $2,500,000 or more.

13. Notices.

     All notices, consents, approvals and other communications which may be or are required to be
given by either Seller or Purchaser under this Agreement shall be properly given if made in writing
and sent by (a) hand delivery; or (b) certified mail, return receipt requested; or (c) facsimile or
telecopier, provided a confirming copy thereof is thereafter sent in accordance with (a), (b) or
(c), or (d) nationally recognized overnight delivery service for next business day delivery (such
as U.S. Express Mail, Federal Express, UPS or Airborne Express), with all postage, delivery and
other charges paid by the sender and addressed to Purchaser or Seller, as applicable, as follows,
or at such other address as each may request in advance in writing. Such notices delivered (i) by
hand shall be deemed received upon actual delivery, (ii) by overnight delivery service shall be
deemed received on the next business day, (iii) by facsimile or telecopier, on the date the sender
receives either electronic or verbal or other acknowledgement of receipt (without regard to the
date, if any, that the confirming copy is actually received), and (iv) if mailed, shall be deemed
received upon the earlier of actual receipt or two (2) business

14

 

days after mailing. Refusal of delivery shall be deemed effective delivery on the date said
delivery was attempted. Said notice addresses are as follows:

	 	 	 
	If to Seller:	 	If to Purchaser:
	 
	 	 
	c/o Charles Slaton
	 	Amy L. Marquardt, Esq.
	Chief Operating Officer
	 	Columbia St. Maryu's, Inc.
	MedCath Incorporated
	 	Vice President Legal & Corporate
	10720 Sikes Place
	 	Responsibility Officer
	Suite 300
	 	4425 North Port Washington Road
	Charlotte, NC 28277
	 	Glendale, WI 53212
	Telephone: 704-708-6600
	 	Telephone: 414-326-1734
	Facsimile: 704-708-5035
	 	Facsimile: 414-326-1739

With a copy to:

Philip D. Song 

General Counsel 

MedCath Incorporated

10720 Sikes Place 

Suite 300 Charlotte, NC 28277

Telephone: 704-708-6600

Facsimile: 704-708-5035

And a copy to:

Hal Levinson

Moore & Van Allen PLLC

100 North Tryon Street. Suite 4700

Charlotte, North Carolina 28202-4003

Telephone: 704-331-1050

Facsimile: 704-378-2050

14. Condemnation: Casualty.

     In the event that prior to the Closing Date (a) there shall be instituted against any
material portion of the Property or material access thereto any proceeding in condemnation, eminent
domain or any written request for a conveyance in lieu thereof, or should Seller receive notice
that such proceedings are threatened or have been commenced against the Property (hereinafter
collectively referred to as “Condemnation Proceedings”) or (b) there shall occur any fire, casualty
or damage substantially affecting the physical condition of the Property or the Assets or any
portion thereof (hereafter collectively a “Casualty”), then Seller shall give Purchaser immediate
notice thereof and Purchaser shall have the right to terminate this Agreement by written notice to
Seller within ten (10) days after Purchaser receives notice of such Condemnation Proceedings or
Casualty and this Agreement shall be null and void and neither

15

 

party hereto shall have any further rights, obligations or liabilities hereunder except as
otherwise specifically provided in this Agreement to survive any termination or expiration hereof.
In the event that Purchaser shall not elect to terminate this Agreement pursuant to this Section
14, Purchaser shall be obligated to close the purchase and sale contemplated hereby less the
portion of the Property so taken or subject to said Condemnation Proceedings or subject to the
damage caused by the Casualty without adjustment of the Purchase Price and Seller shall assign or
pay to Purchaser at Closing all of Seller’s right, title and interest in any condemnation award or
insurance proceeds payable on account of such Condemnation Proceedings or Casualty or pay to
Purchaser all such awards or proceeds previously paid and Seller shall have no obligation to
repair or restore the Property. The Closing Date shall be extended, if necessary, to permit ten
(10) days for Purchaser to make Purchaser’s election as set forth above.

15. Brokers.

     Seller and Purchaser hereby warrant and represent to the other that such party has not
employed (expressly or implied) any investment banker, agent, broker or finder and has made no
agreement (express or implied) to pay any agent’s or broker’s commissions or finder’s fees in
connection with the Property or the transactions contemplated by this Agreement, except Seller’s
agreement with Cain Brothers, all fees under which shall be the responsibility of Seller. Seller
and Purchaser shall and do hereby indemnify and defend the other against, and hold the other
harmless of and from any and all claims, demands and liabilities for any breach of the foregoing
representation and warranty and for any commission or fee payable to or claimed by any agent,
broker or finder by the indemnifying party or with whom the indemnifying party made or is alleged
to have made an agreement (express or implied) to pay any agent’s, broker’s commission or a
finder’s fee. This Section 15 shall survive any termination or expiration hereof prior to Closing.

16. Default.

     A. Purchaser
Default. In the event that Purchaser defaults in the observance or
performance of its material covenants and obligations hereunder, after written notice by Seller to
Purchaser of such default and Purchaser’s failure to cure or commence the cure thereof within
fifteen (15) days after receipt of such notice. Seller, at Seller’s option and election, shall be
entitled to pursue any or all rights or remedies as may be provided hereunder and at law, in equity
or otherwise, including without limitation to terminate this Agreement, to sue Purchaser for
specific performance of this Agreement, or to pursue an action for damages resulting from
Purchaser’s breach hereunder.

     B. Seller
Default. In the event that Seller defaults in the observance or performance
of its material covenants and obligations hereunder, after written notice by Purchaser to Seller of
such default and Seller’s failure to cure or commence the cure thereof within fifteen (15) days
after receipt of such notice, Purchaser, at Purchaser’s option and election, shall be entitled to
pursue any or all rights or remedies as may be provided hereunder and at law, in equity or
otherwise, including without limitation to terminate this Agreement, to sue Seller for specific
performance of this Agreement, or to pursue an action for damages resulting from Seller’s breach
hereunder.

16

 

17. Seller’s Indemnification of Purchaser.

     A. Seller’s Indemnification. Seller shall defend and hold Purchaser harmless
from and against any and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties and reasonable attorneys’
fees, that Purchaser shall incur or suffer, which arise or result from any inaccuracy or breach of
any of the representations or warranties of Seller, or any failure by Seller to perform any of the
covenants or agreements in this Agreement or other instrument furnished or to be furnished by
Seller under this Agreement or resulting from or arising out of the ownership or operation of the
Property or the Assets prior to Closing (including but not limited to any agreements with the City
of Glendale but subject to the terms of this Agreement). In addition, Seller will indemnify and
hold harmless Purchaser and will reimburse Purchaser for any cost, liabilities, damages,
penalties, attorneys’ fees, and costs arising from or in connection with state or federal plant
closing laws in regard to any of Seller’s Employees. Purchaser shall promptly notify Seller of the
existence of any claim, demand or other matter to which Seller’s indemnification would apply, and
shall give Seller a reasonable opportunity to defend the same at its own expense and with counsel
of its own selection; provided, however, Purchaser shall at all times have the right to
participate in any such defense at its own expense. If Seller shall, within a reasonable time
after such notice, fail to defend, Purchaser shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable business judgment),
the claim or other matter on behalf, for the account, and at the risk, of Seller. Notwithstanding
anything herein to the contrary, in no event shall the aggregate indemnity obligation of Seller
for breaches of representations or warranties in this Agreement exceed the Purchase Price.

     MedCath shall be jointly and severally liable for Seller’s indemnification obligations as set
forth in this Section 17.A up to the following amount: Two Million Dollars ($2,000,000) for the
period from the Closing through the first twelve (12) months after the Closing (including for any
claims pending at the end of such twelve-month period), which maximum amount shall be reduced to
One Million Dollars ($1,000,000.00) for the period from the thirteenth (13th) month through the
(24th) month after Closing (including for any claims pending at the end of such twelve-month
period). Notwithstanding the foregoing, in no event shall MedCath’s aggregate liability under this
Section 17.A exceed Two Million Dollars ($2,000,000.00).

     No amount of indemnity shall be payable by Seller in the case of claims by Purchaser for any
breach of a representation or warranty, until and only to the extent that Purchaser has suffered or
incurred actual losses resulting from such breaches aggregating in
excess of $100,000, whereupon
Purchaser shall be entitled to claim indemnification only for the amount in excess of $100,000,
subject to the other limitations set forth herein.

     The representations and warranties of each of the parties set forth in this Agreement shall
survive the Closing and continue until the date that is twenty-four (24) months after the Closing
Date, at which time they shall expire and be of no further force and effect; provided that the
representations and warranties of Seller regarding ownership of the Property and the Assets and
authority to enter into this Agreement set forth in Sections 10.A and 10.F, respectively, shall
survive indefinitely, and the representations and warranties regarding environmental matters set
forth in Section 10.C shall survive until the third anniversary of the Closing Date at which time

17

 

they shall expire and be of no further force and effect. Notwithstanding the foregoing, any claim
that is asserted in writing prior to the applicable survival end date shall survive until such
claim is finally resolved and satisfied.

     B. Purchaser’s
Indemnification. Purchaser shall indemnify, defend and hold Seller
harmless from and against any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest, penalties and reasonable
attorneys’ fees, which Seller shall incur or suffer, which arise, result from or relate to (i) any
inaccuracy of, breach of, or failure by Purchaser to perform any of its representations,
warranties, covenants or agreements in this Agreement, or (ii) the ownership or use of the
Property or Assets after the Closing. Seller shall promptly notify Purchaser of the existence of
any claim, demand or other matter to which Purchaser’s indemnification obligations would apply,
and shall give Purchaser a reasonable opportunity to defend the same at its own expense and with
counsel of its own selection; provided, however, Seller shall at all times have the right to fully
participate in any such defense at its own expense. If Purchaser shall, within a reasonable time
after such notice, fail to defend, Seller shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising
reasonable business judgment),
the claim or other matter on behalf, for the account, and at the risk, of Purchaser.

18. General Provisions.

     A. Change
of Name. Simultaneously with Closing, Seller shall amend its Articles of
Organization to change its corporate name to a new name which is not related to or similar to or
contain the name “Heart Hospital of Milwaukee” or any derivation of the foregoing. Seller shall
make available for review duplicate originals of the Amendment to Articles of Organization
accomplishing the foregoing, together with checks for the appropriate filing and recording fees to
Purchaser at Closing. Seller shall file the Amendment to Articles of Organization with the
Secretary of State of Delaware promptly after Closing.

     B. Bulk
Sales Law. In the event this transaction is in any way governed by the Bulk
Transfers Law set forth in Chapter 406 of the Wisconsin Statutes (“Bulk Transfer Law”), Seller
assumes sole responsibility to comply with the Bulk Transfer Law and Seller agrees to indemnify and
hold Purchaser harmless from any and all loss, expense, claim, damage or liability, including all
attorneys’ fees and costs that Purchaser may incur or become subject to by reason of Seller’s
noncompliance with the Bulk Transfer Law.

     C. Agreement
Binding. This Agreement shall be binding upon each party hereto and such
party’s successors and assigns and shall inure to the benefit of each party hereto and such party’s
successors and assigns.

     D. Entire
Agreement.This Agreement and all the exhibits referenced herein and
annexed hereto contain the entire agreement of the parties hereto with respect to the matters
contained herein, and no prior agreement or understanding pertaining to any of the matters
connected with this transaction shall be effective for any purpose. Except as may be otherwise
provided herein, the agreements embodied herein may not be amended except by an agreement in
writing signed by the parties hereto.

18

 

     E. Execution
Necessary. This Agreement shall not be binding upon Seller or
Purchaser until fully executed and delivered by Seller or Purchaser, as the case may be, and no
action taken by Seller or Purchaser shall be deemed an acceptance of this Agreement until this
Agreement has been so executed by Seller and Purchaser and delivered to each party as provided
herein. In the event of delivery by facsimile, such delivery shall be binding as if an original had
been delivered and the delivering party covenants and agrees that originals will be sent that same
day by overnight delivery.

     F. Time
is of the Essence. Time is of the essence of the transaction contemplated by
this Agreement.

     G. Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of Wisconsin.

     H. Survival. The provisions of this Agreement shall survive the Closing of this
transaction subject to the limitations set forth herein, and shall survive to the extent, but only
to the extent, expressly set forth herein with respect to any termination or expiration hereof
prior to Closing.

     I. Interpretation;
Effective Date. The titles, captions and section headings are
inserted for convenience only and are in no way intended to interpret, define, limit or expand the
scope or content of this Agreement or any provision hereof. If any time period under this
Agreement ends on a day other than a Business Day (as hereinafter defined), then the time period
shall be extended until the next Business Day. The term “Business Day” shall mean Monday through
Friday excluding holidays recognized by the state government of the State in which the Property is
located. All references in this Agreement to the “Effective Date” shall be deemed to refer to the
date of acceptance of this Agreement as evidenced by the date below on which the last party to
execute this Agreement did so execute, and such date shall thereafter be inserted in the first
paragraph hereof.

     J. Waiver. Purchaser or Seller, as the case may be, reserves the right to waive, in
whole or in part, any provision hereof which is for the benefit of the party so waiving.

     K. Counterparts. This Agreement may be executed in separate counterparts, each of
which shall be deemed an original and all of which, taken as a whole, shall be deemed to be one
(1) original. This Agreement shall be deemed fully executed when each party whose signature is
required has signed and delivered at least one (1) counterpart even though no one (1) counterpart
contains the signatures of all of the parties to this Agreement.

     L. Assignment. This Agreement shall be binding upon the respective successors and
assigns of the parties. Purchaser may assign this Agreement to any party and the assignee shall be
deemed “Purchaser” for all purposes hereunder, but in the event of such assignment. Purchaser
shall not be released from any liability or obligation under this Agreement.

     M. Non-Waiver. Unless otherwise expressly provided herein, no waiver by Seller or
Purchaser of any provision hereof shall be deemed to have been made unless expressed in writing and
signed by such party. No delay or omission in the exercise of any right or remedy

19

 

accruing to Seller or Purchaser upon any breach under this Agreement shall impair such right or
remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The
waiver by Seller or Purchaser of any breach of any term, covenant or condition herein stated shall
not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any
other term, covenant or condition herein contained. Each party hereby reserves the right to waive
any provision hereof made or intended for the benefit of the waiving
party.

     N. Rights
Cumulative. All rights, powers, options or remedies afforded to Seller or
Purchaser either hereunder or by law shall be cumulative and not alternative, and the exercise of
one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed
herein or by law, unless expressly provided to the contrary herein.

     O. Exhibits. The exhibits referred to in and attached to this Agreement are
incorporated herein in full by reference.

     P. Confidentiality
and Public News Announcements. The parties hereto agree to keep
the terms of this Agreement confidential, provided that they may disclose the terms of this
Agreement to their bankers, accountants and attorneys as necessary. No announcement with respect
to this transaction shall be made by any party hereto prior to the Closing. Notwithstanding
anything in this Agreement to the contrary, MedCath Corporation and its affiliates may make any
public announcement regarding this Agreement or tile this Agreement with any governmental agency
as required by any law, rule or regulation.

[SIGNATURES ON NEXT PAGE]

20

 

     IN WITNESS WHEREOF, the undersigned have, or have caused their duly authorized officers
to, set their hands and seals hereto as of the day and year of their acceptance of this Agreement
indicated next to their signatures.

	 	 	 	 	 	 	 	 	 	 	 
	SELLER:

THE HEART HOSPITAL OF

MILWAUKEE, LLC
	 	PURCHASER:

COLUMBIA ST. MARY’S. INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By: MILWAUKEE HOSPITAL

MANAGEMENT, INC., its Manager	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Title:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Date:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MEDCATH:

MEDCATH CORPORATION	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 	 	 	 

21

 

EXHIBITS

“A” – Legal Description of Property

“B” – Assumed Liabilities

“C” – Physician and MedCath Form Non-Competition Agreements

22

 

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

Lots 1 and 2 of Certified Survey Map No. 7458, recorded on August 23, 2004, Reel 5907, as Document
No. 8848445, a division of Lots 1 and 2 of Certified Survey Map No. 7239, in the Southwest 1/4 and
Southeast 1/4 of the Northeast 1/4 of Section 5, Town 7 North, Range 22 East, in the City of
Glendale, County of Milwaukee, State of Wisconsin.

EXCEPTING THEREFROM that part of the aforedescribed premises lying within the bounds of Lot 2 of
Certified Survey Map No. 7239, being a division of Parcel 1 of Certified Survey Map No. 7103, in
the Southwest 1/4 and Southeast 1/4 of the Northeast 1/4 of Section 5, Town 7 North, Range 22 East,
in the City of Glendale, County of Milwaukee, State of Wisconsin.

Part of Tax Key No. 234-8019

ADDRESS:
375 W. River Parkway

A-1

 

 

EXHIBIT B

ASSUMED LIABILITIES

MOB LEASES

1. That certain lease between Glendale Medical Development Partners, LLC and Seller dated June
10, 2004 for approximately 5,302 rentable square feet of floor area within the Medical Office
Building.

2. That certain lease between Glendale Medical Development Partners, LLC and Seller dated June 4,
2004 for approximately 2,300 rentable square feet of floor area within the Medical Office Building.

3. That certain lease between Glendale Medical Development Partners, LLC and Seller dated June 11,
2004 for approximately 3,100 rentable square feet of floor area
within the Medical Office Building.

EQUIPMENT LEASES 

None.

B-1

 

 

EXHIBIT C

PHYSICIAN AND MEDCATH
FORM NONCOMPETITION AGREEMENTS

C-1

 

 

PHYSICIAN MEMBER NONCOMPETITION AGREEMENT

     THIS
NONCOMPETITION AGREEMENT (this “Agreement”) is made and entered into as
of the _____ day of ___, 2004, by and between  _______,
(the “Member”), and COLUMBIA ST. MARY’S, INC., a Wisconsin nonstock, not-for-profit corporation
(the “Purchaser”).

WITNESSETH:

     WHEREAS, the Member is a member of The Heart Hospital of Milwaukee, LLC, a Delaware limited
liability company (“Seller”);

     WHEREAS,
Seller owns and operates the Heart Hospital of Milwaukee (the “Hospital”) located at
375 West River Woods Parkway in the City of Glendale, County of Milwaukee, Wisconsin;

     WHEREAS, Seller desires to sell to Purchaser the Hospital and certain assets related to the
Hospital, and Purchaser desires to purchase the Hospital and such assets from Seller, pursuant to
the terms and conditions of an Agreement for Purchase and Sale by and between Purchaser and Seller
(the “Purchase Agreement”);

     WHEREAS, the Member, as a member of Seller, will derive substantial benefit from the purchase
by Purchaser of the Hospital and certain other assets of Seller; and

     WHEREAS, in connection with the purchase by Purchaser of the Hospital and certain other
assets of Seller, the Member has agreed to enter into this Agreement and to not compete with
Purchaser on the terms hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises, the covenants and conditions set forth
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Member and Purchaser hereby agree as follows:

     1. Covenant
Not to Compete. The Member agrees that he and any affiliates he controls,
may not, directly or indirectly, own all or any portion of, operate, manage, loan money to or hold
any management position with, any business, entity, person or organization, or any affiliate
thereof, that (a) owns or operates a hospital, (b) owns or operates a free-standing diagnostic or
therapeutic center, a substantial portion of whose services is for patients with cardiac diseases,
or (c) owns or operates a cardiac catheterization laboratory, within Milwaukee or Ozaukee Counties,
Wisconsin for a period of three (3) years after the closing of the transactions contemplated by the
Purchase Agreement; provided that nothing contained herein shall prevent any person from owning or
acquiring an equity interest of less than five percent (5%) in any entity whose shares are listed
on a national security exchange or regularly quoted in the over-the-counter market. Regardless of
the above, the Member may (i) serve on the medical staff, perform professional physician services
directly for patients and maintain privileges at any hospital or medical office, (ii) serve as
medical director, medical staff officer, or serve on any committee at any hospital and at any other
healthcare facility he/she chooses, and (iii) may lease, own, provide or use, at the physical
location of his/her medical practice, in diagnosing and treating his/her own patients, any medical
equipment or service used for diagnostic purposes or

C-2

 

 

other medical equipment or
service which is, within the standard of care of the Milwaukee medical
community, provided by physicians within their medical practice.

     2. Effectiveness. The provisions of this Agreement will only become effective upon the
closing of the transactions contemplated by the Purchase Agreement. In the event that such closing
does not occur, this Agreement shall be null and void and of no further force or effect.

     3. Execution
Necessary. This Agreement shall not be binding upon the Member or
Purchaser until fully executed and delivered by the Member or Purchaser, as the case may be, and no
action taken by the Member or Purchaser shall be deemed an acceptance of this Agreement until this
Agreement has been so executed by the Member and Purchaser and delivered to each party as provided
herein. In the event of delivery by facsimile, such delivery shall be binding as if an original
had been delivered and the delivering party covenants and agrees that originals will be sent that
same day by overnight delivery.

     4. Governing
Law. This Agreement shall be governed by and construed in accordance
with the internal laws (and not the law of conflicts) of the State of Wisconsin.

     5. Interpretation. The titles, captions and section headings are inserted
for convenience only and are in no way intended to interpret, define, limit or expand the scope or
content of this Agreement or any provision hereof.

     6. Counterparts. This Agreement may be executed in separate counterparts, each of
which shall be deemed an original and all of which, taken as a whole, shall be deemed to be one (1)
original. This Agreement shall be deemed fully executed when each party whose signature is required
has signed and delivered at least one (1) counterpart even though no one (1) counterpart contains
the signatures of all of the parties to this Agreement.

     7. Non-Waiver. Unless otherwise expressly provided herein, no waiver by the Member
or Purchaser of any provision hereof shall be deemed to have been made unless expressed in writing
and signed by such party. No delay or omission in the exercise of any right or remedy accruing to
the Member or Purchaser upon any breach under this Agreement shall impair such right or remedy or
be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by
the Member or Purchaser of any breach of any term, covenant or condition herein stated shall not be
deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term,
covenant or condition herein contained. Each party hereby reserves the right to waive any provision
hereof made or intended for the benefit of the waiving party.

     8. Rights
Cumulative. All rights, powers, options or remedies afforded to the
Member or Purchaser either hereunder or by law shall be cumulative and not alternative, and the
exercise of one right, power, option or remedy shall not bar other rights, powers, options or
remedies allowed herein or by law, unless expressly provided to the contrary herein.

     9. Assignment. This Agreement shall be binding upon the respective successors of the
parties. The Member may not assign his rights or delegate his obligations under this Agreement
to any other party. Purchaser may not assign its rights or delegate its obligations under this
Agreement to any other party without the prior written consent of the Member.

C-3

 

     10. Entire
Agreement. This Agreement contains the entire agreement of the parties
hereto with respect to the matters contained herein, and no prior agreement or understanding
pertaining to any of the matters connected with this transaction shall be effective for any
purpose. Except as may be otherwise provided herein, the agreements embodied herein may not be
amended except by an agreement in writing signed by the parties hereto.

     11. Notices. All notices, consents, approvals and other communications which may be
or are required to be given by either the Member or Purchaser under this Agreement shall be
properly given if made in writing and sent by (a) hand delivery; or (b) certified mail, return
receipt requested; or (c) facsimile or telecopier, provided a confirming copy thereof is thereafter
sent in accordance with (a), (b) or (c), or (d) nationally recognized overnight delivery service
for next business day delivery (such as U.S. Express Mail, Federal Express, UPS or Airborne
Express), with all postage, delivery and other charges paid by the sender and addressed to
Purchaser or the Member, as applicable, as follows, or at such other address as each may request in
advance in writing. Such notices delivered (i) by hand shall be deemed received upon actual
delivery, (ii) by overnight delivery service shall be deemed received on the next business day,
(iii) by facsimile or telecopier, on the date the sender receives either electronic or verbal or
other acknowledgement of receipt (without regard to the date, if any, that the confirming copy is
actually received), and (iv) if mailed, shall be deemed received upon the earlier of actual receipt
or two (2) business days after mailing. Refusal of delivery shall be deemed effective delivery on
the date said delivery was attempted. Said notice addresses are as follows:

	 	 	 	 	 	 	 
	If to the Member: 	If to Purchaser:
	 
	 	 	 	 	 	 
	
	Amy L. Marquardt, Esq.
	
	Columbia St. Mary’s, Inc.
	
	Vice President Legal & Corporate
	
	Responsibility Officer
	Telephone:
Facsimile:  

	

	 	 	4425 North Port Washington Road
 Glendale, WI 53212
	

	 
	 	 	Telephone: 414-326-1734
	

	 	 	 	 	 	Facsimile: 414-326-1739
	

	 	 	 	 	 	 

C-4

 

     IN WITNESS WHEREOF, the Member and Purchaser have executed this Noncompetition Agreement as of
the date first above written.

	 	 	 	 	 
	 	 	MEMBER:
	 
	 	 	 	 
	 	 	

	

	 	Name:
	

	 	 	

	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	COLUMBIA ST. MARY’S, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	

	

	 	     Name:
	

	 	 	 	

	

	 	     Title:
	

	 	 	 	

C-5

 

NONCOMPETITION AGREEMENT

     THIS
NONCOMPETITION AGREEMENT (this “Agreement”) is made and entered into
as of
the             day of November, 2004, by and between MedCath Corporation, a Delaware
corporation (“MedCath Corp.”), MedCath Incorporated, a North Carolina corporation (“MedCath
Inc.”), and COLUMBIA ST. MARY’S, INC., a Wisconsin non-stock, not-for-profit corporation (the
“Purchaser”).

WITNESSETH:

     WHEREAS, MedCath Corp. and MedCath Inc. indirectly own a majority of the membership
interests of The Heart Hospital of Milwaukee, LLC, a Delaware limited liability company
(“Seller”);

     WHEREAS,
Seller owns and operates the Heart Hospital of Milwaukee (the “Hospital”) located at
375 West River Woods Parkway in the City of Glendale, County of Milwaukee, Wisconsin; and

     WHEREAS, Seller desires to sell to Purchaser the Hospital and certain assets related to the
Hospital, and Purchaser desires to purchase the Hospital and such assets from Seller, pursuant to
the terms and conditions of an Agreement for Purchase and Sale by and between Purchaser and Seller
(the “Purchase Agreement”);

     WHEREAS, MedCath Corp. and MedCath Inc. will derive substantial benefit from the purchase by
Purchaser of the Hospital and certain other assets of Seller; and

     WHEREAS, in connection with the purchase by Purchaser of the Hospital and certain other
assets of Seller, MedCath Corp. and MedCath Inc. have agreed to enter into this Agreement and to
not compete with Purchaser on the terms hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises, the covenants and conditions set forth
herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

     1. Covenant
Not to Compete. MedCath Corp., MedCath Inc., and all of their respective
subsidiaries and controlled affiliates may not, directly or indirectly, own all or any portion of,
operate or hold any management position with any business, entity, person or organization, or any
affiliate thereof, that operates a hospital or provides any diagnostic, treatment or therapeutic
services within Milwaukee or Ozaukee Counties, Wisconsin for a period of three (3) years after the
closing of the transactions contemplated by the Purchase Agreement; provided that nothing contained
herein shall prevent MedCath Corp. or MedCath Inc. or any of their respective subsidiaries or
controlled affiliates from owning or acquiring an equity interest of less than five percent (5%) in
any entity whose shares are listed on a national security exchange or regularly quoted in the
over-the-counter market. This provision does not prohibit MedCath Corp., MedCath Inc. or any of
their respective subsidiaries or controlled affiliates from entering into any business relationship
of any type or nature regarding any healthcare facility or

C-6

 

relationship outside of Milwaukee or Ozaukee Counties with a third party that has an interest of
any type or nature in any competing facilities in Milwaukee or Ozaukee Counties, as long as
MedCath Corp., MedCath Inc. and their respective subsidiaries and controlled affiliates have no
economic interest in such competing facilities in Milwaukee or Ozaukee Counties.

     2. Effectiveness. The provisions of this Agreement will only become effective upon the
closing of the transactions contemplated by the Purchase Agreement. In the event that such closing
does not occur, this Agreement shall be null and void and of no further force or effect.

     3. Execution Necessary. This Agreement shall not be binding upon any party hereto
until fully executed and delivered by the other parties hereto, and no action taken by any party
hereto shall be deemed an acceptance of this Agreement until this Agreement has been so executed by
the other parties hereto and delivered to each party as provided herein. In the event of delivery
by facsimile, such delivery shall be binding as if an original had been delivered and the
delivering party covenants and agrees that originals will be sent that same day by overnight
delivery.

     4. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of Wisconsin.

     5. Interpretation. The titles, captions and section headings are inserted
for convenience only and are in no way intended to interpret, define, limit or expand the scope or
content of this Agreement or any provision hereof.

     6. Counterparts. This Agreement may be executed in separate counterparts, each of
which shall be deemed an original and all of which, taken as a whole, shall be deemed to be one (1)
original. This Agreement shall be deemed fully executed when each party whose signature is required
has signed and delivered at least one (1) counterpart even though no one (1) counterpart contains
the signatures of all of the parties to this Agreement.

     7. Non-Waiver. Unless otherwise expressly provided herein, no waiver by any party
hereto of any provision hereof shall be deemed to have been made unless expressed in writing and
signed by such party. No delay or omission in the exercise of any right or remedy accruing to any
party hereto upon any breach under this Agreement shall impair such right or remedy or be construed
as a waiver of any such breach theretofore or thereafter occurring. The waiver by any party hereto
of any breach of any term, covenant or condition herein stated shall not be deemed to be a waiver
of any other breach, or of a subsequent breach of the same or any other term, covenant or condition
herein contained. Each party hereby reserves the right to waive any provision hereof made or
intended for the benefit of the waiving party.

     8. Rights Cumulative. All rights, powers, options or remedies afforded to any party
hereto either hereunder or by law shall be cumulative and not alternative, and the exercise of one
right, power, option or remedy shall not bar other rights, powers, options or remedies allowed
herein or by law, unless expressly provided to the contrary herein.

C-7

 

     9. Assignment. This Agreement shall be binding upon the respective successors of the
parties. No party hereto may assign its rights or delegate its obligations under this Agreement
to any other party without the prior written consent of the other parties hereto.

     10. Entire Agreement. This Agreement contains the entire agreement of the parties
hereto with respect to the matters contained herein, and no prior agreement or understanding
pertaining to any of the matters connected with this transaction shall be effective for any
purpose. Except as may be otherwise provided herein, the agreements embodied herein may not be
amended except by an agreement in writing signed by the parties hereto.

     11. Notices. All notices, consents, approvals and other communications which may be
or are required to be given by any party under this Agreement shall be properly given if made in
writing and sent by (a) hand delivery; or (b) certified mail, return receipt requested; or (c)
facsimile or telecopier, provided a confirming copy thereof is thereafter sent in accordance with
(a), (b) or (c), or (d) nationally recognized overnight delivery service for next business day
delivery (such as U.S. Express Mail, Federal Express, UPS or Airborne Express), with all postage,
delivery and other charges paid by the sender and addressed to the applicable party as follows, or
at such other address as each may request in advance in writing. Such notices delivered (i) by
hand shall be deemed received upon actual delivery, (ii) by overnight delivery service shall be
deemed received on the next business day, (iii) by facsimile or telecopier, on the date the sender
receives either electronic or verbal or other acknowledgement of receipt (without regard to the
date, if any, that the confirming copy is actually received) and (iv) if mailed, shall be deemed
received upon the earlier of actual receipt or two (2) business days after mailing. Refusal of
delivery shall be deemed effective delivery on the date said delivery was attempted. Said notice
addresses are as follows:

	 	 	 
	If to MedCath Corp. or MedCath Inc.:

	 	If to Purchaser:
	 
	 	 
	c/o Charles Slaton

	 	Amy L. Marquardt, Esq.
	Chief Operating Officer

	 	Columbia St. Mary’s, Inc.
	MedCath Incorporated

	 	Vice President Legal & Corporate
	10720 Sikes Place

	 	Responsibility Officer
	Suite 300

	 	4425 North Port Washington Road
	Charlotte, NC 28277

	 	Glendale, WI 53212
	Telephone: 704-708-6600

	 	Telephone: 414-326-1734
	Facsimile: 704-708-5035

	 	Facsimile: 414-326-1739
	 
	 	 
	With a copy to:
	 	 
	 
	 	 
	Philip D. Song
	 	 
	General Counsel
	 	 
	MedCath Incorporated
	 	 
	10720
Sikes Place

Suite 300
	 	 
	Charlotte NC 28277
	 	 
	Telephone: 704-708-6600
	 	 
	Facsimile: 704-708-5035
	 	 

C-8

 

And a copy to:

Hal Levinson

Moore & Van Allen PLLC

100 North Tryon Street, Suite 4700

Charlotte, North Carolina 28202-4003

Telephone: 704-331-1050

Facsimile: 704-378-2050

     IN WITNESS WHEREOF, the parties have executed this Noncompetition Agreement as of the date
first above written.

	 	 	 	 	 
	 	 	MEDCATH CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	MEDCATH INCORPORATION
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	COLUMBIA ST. MARY’S, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

C-9

 

     IN WITNESS WHEREOF, the undersigned have, or have caused their duly authorized officers
to, set their hands and seals hereto as of the day and year of their acceptance of this Agreement
indicated next to their signatures.

	 	 	 	 	 
	SELLER:	 	PURCHASER:
	THE HEART HOSPITAL OF	 	COLUMBIA ST.
MARY’S, INC.
	MILWAUKEE, LLC
	 	 	 	 
	 

	 	By:	 	 /s/ Leop. Brideru
	By:
MILWAUKEE HOSPITAL

	 	 	 	

	MANAGEMENT. INC,

	 	Title:	 	Leop. Brideru President AND CEO
	its Manager

	 	Date:	 	11-4-04

	 	 	 
	By:

	 	/s/ Charles Slaton
	

	 	

	Title:

	 	Vice President
	Date:

	 	November 4 , 2004
	 
	 	 

MEDCATH:

MEDCATH CORPORATION

	 	 	 
	By:

	 	/s/ Charles Slaton
	

	 	

	Title:

	 	Executive Vice President and Chief Operating Officer
	Date:

	 	November 4 , 2004

21

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