Document:

Ex-10.3

 

Exhibit 10.3

AGREEMENT OF SALE AND PURCHASE

     THIS AGREEMENT OF SALE AND PURCHASE (the “Agreement”) is dated as of March 7, 2007, to be
effective as of the Effective Date, and is made and entered into by and between the entities that
have executed this Agreement on the signature pages hereto as sellers (individually, a “Seller” and
collectively, the “Sellers”), and EMERITUS CORPORATION, a Washington corporation, as purchaser (the
“Purchaser”). Each Seller and Purchaser are sometimes individually referred to as a “Party” and
collectively referred to as the “Parties”.

     WHEREAS, Sellers are the owners of the Facilities, the Emeritus Mortgage Loan and the Term
Mortgage Loan as provided herein; and

     WHEREAS, Sellers desire to sell and Purchaser desires to purchase the Facilities and to
terminate the Tenant Leases; and

     WHEREAS, in connection with the sale and purchase of the Facilities and the termination of the
Tenant Leases, Purchaser has agreed either to pay the unpaid amounts owed under the Emeritus
Mortgage Loan required to pay the Emeritus Mortgage Loan in full or to cause the purchase of the
Emeritus Mortgage Loan at the Closing as provided herein; and

     WHEREAS, in connection with the sale and purchase of the Facilities and the termination of the
Tenant Leases, Purchaser has agreed to pay the unpaid amounts owed under the Term Mortgage Loan
required to pay the Term Mortgage Loan in full at the Closing;

     NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00), the mutual covenants and
agreements contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

     1.1 Definitions. As used herein, the following defined terms shall have the meanings set
forth below:

     “Affiliate” shall mean any Person that directly or indirectly controls, is under common
control with, or is controlled by any other Person. For purposes of this definition, “controls”,
“under common control with” and “controlled by” shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities or otherwise.

     “Appurtenant Rights” shall mean all rights, privileges and easements appurtenant to the Land
that permissibly pass by operation of law with the conveyance by the applicable Seller of the fee
simple estate in the Land.

     “Assumed Business Agreements” shall mean all Business Agreements that (i) Purchaser agrees to
assume as provided in Section 4.3 hereof, and (ii) are assigned to Purchaser pursuant to
the General Assignment for a Facility.

 

 

     “Assumed Liabilities” shall mean the following:

     (a) all obligations of Sellers that arise or accrue under the Assumed Business Agreements
relating to a particular Facility on and after the effective date of the General Assignment for
such Facility;

     (b) all obligations under any Permit and Warranty assigned to Purchaser that arise or accrue
on or after the effective date of the General Assignment for the Facility to which such Permit and
Warranty relates;

     (c) all Property Taxes and all other obligations with respect to a Facility that accrued prior
to the Closing Date for such Facility but which are not due for payment until after the Closing
Date;

     (d) all Property Taxes and all other obligations with respect to a Facility that accrue on and
after the Closing Date; and

     (e) all obligations, liabilities, damages, losses, claims, expenses and costs relating to the
Facilities arising or accruing on or prior to the Closing Date that the Tenant under each of the
Tenant Leases was obligated, liable or responsible to pay or perform under the terms of such Tenant
Lease.

     “Bankruptcy/Dissolution Event” shall mean the occurrence of any of the following: (a) the
commencement of a case under Title 11 of the U.S. Code, as now constituted or hereafter amended, or
under any other applicable federal or state bankruptcy law or other similar law; (b) the
appointment of a trustee or receiver of any property interest; (c) an assignment for the benefit of
creditors; (d) an attachment, execution or other judicial seizure of a substantial property
interest; (e) the taking of, failure to take, or submission to any action indicating an inability
to meet financial obligations as they accrue; or (f) a dissolution or liquidation.

     “Bill of Sale” shall mean a bill of sale substantially in the form of Exhibit A hereto
by which the applicable Seller for a Facility conveys to Purchaser such Seller’s right, title and
interest, if any, in and to the Personal Property located at such Facility.

     “Business Agreement” shall mean any management agreement, service contract, contractor
agreement, construction contract or other agreement or instrument affecting all or a portion of the
Facilities or the operation thereof to which a Seller is party and that is assignable by such
Seller without the consent or approval of any other Person.

     “Business Day” shall mean any calendar day other than a Saturday, a Sunday or a day on which
national banks are not required or authorized by law to remain closed.

     “Closing” shall mean the closing of the purchase and sale of the Facilities contemplated by
this Agreement.

     “Closing Date” shall mean March 16, 2007.

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     “Code” shall mean the United States Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.

     “Deeds” shall mean special warranty deeds substantially in the form of Exhibit B
hereto, modified to reflect a special warranty deed (or the equivalent) for the applicable states
where each of the Facilities is located, by which the applicable Seller conveys the Land, the
Improvements and Appurtenant Rights comprising or relating to a Facility to Purchaser.

     “Earnest Money” shall have the meaning set forth in Section 2.1 hereof.

     “Effective Date” shall mean the latest of the dates of the execution of this Agreement by a
Seller and Purchaser as evidenced by the dates appearing under their respective signatures hereto.

     “Emeritus Mortgage Loan” shall mean the mortgage loan identified on Exhibit G-1 hereto
that encumbers one or more of the Tenant Leases.

     “Escrow Agreement” shall mean an escrow agreement substantially in the form of Exhibit
C hereto by and among Sellers, Purchaser and Title Company with respect to the terms of the
escrow of the Earnest Money.

     “Facilities” shall mean the Land, the Improvements and the Appurtenant Interests associated
therewith comprising the senior living facilities identified on Exhibit D hereto.

     “Forum” shall mean any federal, state, local or municipal court, governmental agency,
administrative body or agency, tribunal, private alternative dispute resolution system or
arbitration panel.

     “General Assignment” shall mean one of the assignments between Purchaser and the applicable
Seller, substantially in the form of Exhibit E hereto, pursuant to which the right, title
and interest of such Seller in and to the Assumed Business Agreements and the Permits and
Warranties relating to a Facility are assigned to, and obligations thereunder are assumed by,
Purchaser.

     “Government” shall mean any federal, state, local or municipal government or any department,
commission, board, bureau, agency, instrumentality, unit or taxing authority thereof.

     “Governmental Requirements” shall mean any notices, filings or pre-approvals required by a
Government in connection with the transfer of ownership of any of the Facilities.

     “HR” shall mean Healthcare Realty Trust Incorporated, a Maryland corporation and an Affiliate
of Sellers.

     “Improvements” shall mean all buildings, improvements, structures and fixtures to the extent
now, and on the Closing Date, owned by Sellers and comprising the Facilities, including
landscaping, parking lot improvements and structures, drainage facilities and all above ground and
underground utility structures and other so-called infrastructure improvements comprising a part
thereof to the extent any of the same may be owned by Sellers.

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     “Land” means the real property owned in fee simple by Sellers upon which the Facilities are
located.

     “Laws” means all federal, state and local laws, moratoria, initiatives, referenda, ordinances,
rules, regulations, standards, orders and other governmental requirements, including those relating
to the environment, health and safety, disabled or handicapped persons, and as applicable, to the
licensing of a Facility.

     “Lease Termination” shall mean a lease termination agreement, substantially in the form of
Exhibit F hereto, pursuant to which the applicable Seller and the Tenant under a Tenant
Lease agree to terminate such Tenant Lease effective as of the Closing Date.

     “Mortgage Loan Assignee” shall mean an Affiliate of Purchaser designated by Purchaser in
accordance with Section 2.3(a) hereto to purchase the Emeritus Mortgage Loan as provided
herein.

     “Mortgage Assignment” shall mean an assignment and assumption agreement, substantially in the
form of Exhibit J hereto, pursuant to which HR’s right, title and interest in and to the
Emeritus Mortgage Loan and the Mortgage Loan Documents relating thereto are assigned to, and HR’s
obligations thereunder are assumed by, the Mortgage Loan Assignee.

     “Mortgage Loan Documents” shall mean all promissory notes, mortgages, deeds of trust, loan
agreements, participation agreements and other documents evidencing or securing the Emeritus
Mortgage Loan.

     “Orders” shall mean all applicable orders, writs, judgments, decrees, rulings, consent
agreements and awards of or by any Forum or entered by consent of the party to be bound.

     “Permits and Warranties” shall mean the following, to the extent that they relate exclusively
to the Facilities and are assignable by the applicable Seller without the consent or approval of
any other Person: (i) certificates of occupancy and permits or approvals of any nature from any
Government; and (ii) guarantees, warranties and indemnities, if any, pertaining to the ownership of
the Land or the Improvements.

     “Permitted Exceptions” shall mean (a) all liens for Property Taxes that are not yet due and
payable; (b) easements, restrictions, covenants and other encumbrances of record as of the
Effective Date; (c) any state of facts that would be disclosed by an accurate survey or independent
inspection of the Facilities; (d) all applicable building and zoning ordinances, Laws, regulations
and restrictions of any Government; (e) such easements, restrictions, covenants and other
encumbrances that become matters of public record after the Effective Date and before the Closing
to the extent that such matters are waived or accepted, or deemed to be waived or accepted, by
Purchaser; and (f) the rights of residents of the Facilities.

     “Person” shall mean an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization, a Government and any other legal
entity.

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     “Personal Property” shall mean all tangible personal property of any kind located on or in the
Facilities and owned by Sellers, including, without limitation, equipment, appliances, machinery,
furniture, furnishings, signage and fixtures.

     “Property Taxes” shall mean all ad valorem, real property and personal property taxes, all
general and special private and public assessments, all other property taxes, and all similar
obligations relating to the Land and the Improvements.

     “Purchase Price” shall mean the amount of Ninety-Eight Million Nine Hundred Ninety-Eight
Thousand Eight Hundred Fourteen and No/100 Dollars ($98,998,814.00).

     “Rent” shall mean all rental payments due under the Tenant Leases prior to the Closing Date.

     “Tenant” shall mean each party named as the tenant or lessee under any Tenant Lease.

     “Tenant Lease” shall mean each of the leases, license agreements and other occupancy
agreements for the rental of a Facility identified on Exhibit H hereto, as amended,
modified or extended through the Effective Date, together with all renewals, modifications,
addenda, guarantees and other security documents relating to any and all such leases, license
agreements or other occupancy agreements.

     “Term Mortgage Loan” shall mean the mortgage loan identified on Exhibit G-2 hereto
that encumbers one or more of the Tenant Leases.

     “Title Company” shall mean Fidelity National Title Insurance Company.

     1.2 Interpretation. In this Agreement, the singular includes the plural and the plural the
singular; words importing any gender include the other gender; references to statutes, regulations
or ordinances are to be construed as including all provisions consolidating, amending or replacing
the referenced statute, regulation or ordinance; references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments to or changes in such agreements
or instruments entered into in accordance with their respective terms; references to Persons
include their permitted successors and assigns; use of the term “include” or “including” shall mean
to include or including without limitation; and references to a “Section” or “Article” shall mean a
section or article of this Agreement unless otherwise expressly stated.

ARTICLE II

PURCHASE AND SALE

     2.1 Purchase and Sale. Upon the terms and subject to the conditions set forth in this
Agreement, Sellers at the Closing shall sell, transfer and assign to Purchaser all right, title and
interest of Sellers in and to the Facilities free and clear of any mortgage, security interest,
lien, charge, claim or other encumbrance except the Permitted Exceptions, and Purchaser shall
purchase such Facilities for the Purchase Price. Prior to the Effective Date, Purchaser has
deposited with Title Company the amount of One Million Three Hundred Fourteen Thousand Two Hundred
Seventy-Two and No/100 Dollars ($1,314,272.00) as an earnest money deposit

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(the “Earnest Money”), which Title Company shall continue to hold pursuant to the Escrow Agreement. Purchaser shall be
entitled to apply the Earnest Money to the payment of the portion of the Purchase Price due from Purchaser at the
Closing. The Earnest Money is refundable only in the event that this Agreement is terminated
pursuant to Sections 9.1(a)(i), 9.1(a)(ii), 9.1(a)(iii) or 9.1(a)(iv) hereof. Except as
set forth in the immediately preceding sentence, the Earnest Money is not refundable to Purchaser
under any circumstances and shall be deemed to be consideration earned by Sellers for the execution
and delivery of this Agreement, and the forfeiture of any Earnest Money pursuant to this Agreement
shall not be deemed to be liquidated damages or otherwise to limit Seller’s remedies for a breach
or default by Purchaser under this Agreement.

     2.2 Assumption of Liabilities. Upon the terms and subject to the conditions set forth in this
Agreement, Purchaser, as of the Closing Date, shall assume all of the Assumed Liabilities.

     2.3 Purchase Price.

     (a) The Purchase Price shall be subject to adjustment only as set forth in this Section
2.3. Property Taxes, water/sewer charges, gas, electric, telephone and other utilities, and
other operating expenses relating to the Facilities are the responsibility of the Tenants under the
Tenant Leases and shall not be prorated. All unpaid Rent and any other amounts due and payable
under the Tenant Leases as of the Closing Date shall be charged to Purchaser and paid at the
Closing, and Rent for the month in which Closing occurs shall be prorated through the Closing Date.
Sellers shall retain all security deposits and other similar deposits relating to the Tenant
Leases, and Purchaser shall receive a credit for such deposits at the Closing. In addition to the
payment of the Purchase Price, Purchaser shall, at and as a condition to the Closing, be obligated
(i) to pay all unpaid amounts that are owed under the Term Mortgage Loan which are required to pay
the Term Mortgage Loan in full, and (ii) either (A) to pay all unpaid amounts that are owed under
the Emeritus Mortgage Loan which are required to pay the Emeritus Mortgage Loan in full or (B) to
cause the Mortgage Loan Assignee to purchase the Emeritus Mortgage Loan from HR for a purchase
price equal to all unpaid amounts that are owed under the Emeritus Mortgage Loan in consideration
of HR’s execution and delivery of the Mortgage Assignment to the Mortgage Loan Assignee at the
Closing. If Purchaser elects to pay the Emeritus Mortgage Loan in full at the Closing, Purchaser
must provide, not less than two (2) Business Days prior to the Closing Date, written notice to
Sellers of any such election, and, in the absence of such written notice of Purchaser’s election,
Purchaser shall cause the Mortgage Loan Assignee to purchase the Emeritus Mortgage Loan from HR at
the Closing for a purchase price equal to all unpaid amounts that are owed under the Emeritus
Mortgage Loan. Purchaser shall identify the Mortgage Loan Assignee in a written notice to Sellers
not less than three (3) Business Days prior to the Closing Date. Sellers shall cause HR to accept,
or cause the acceptance of, prepayment of the Term Mortgage Loan and, as applicable, accept the
prepayment, or complete the sale as contemplated herein, of the Emeritus Mortgage Loan irrespective
of the failure of Purchaser to satisfy any applicable prepayment notice requirements, and to
deliver a payoff letter to Purchaser at least three (3) Business Days prior to the Closing Date.

     (b) In addition to any adjustments to the Purchase Price pursuant to Section 2.3(a)
hereof, the Purchase Price shall be subject to further adjustment as set forth below:

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          (i) the Purchase Price shall be adjusted to reflect any expense paid by one Party that the
other Party has agreed to pay or share pursuant to Section 11.1 hereof or otherwise
pursuant to this Agreement; and

          (ii) for any Facility that is not purchased by Purchaser pursuant to Section 10.2
hereof, the Purchase Price shall be decreased by an amount determined in accordance with
Section 10.2 hereof.

     (c) After taking into account any adjustments to the Purchase Price as set forth above, the
Purchase Price (plus the unpaid amounts owed under the Term Mortgage Loan required to pay the Term
Mortgage Loan in full and either the unpaid amounts owed under the Emeritus Mortgage Loan required
to pay the Emeritus Mortgage Loan in full or the purchase price of the Emeritus Mortgage Loan if it
is to be purchased as provided herein) shall be paid by Purchaser (and the Mortgage Loan Assignee
as provided herein) by wire transfer of immediately available funds to an escrow account maintained
by Title Company for delivery to Sellers (and HR, as applicable) upon the consummation of the
Closing. As soon as possible after the Closing (but not later than thirty (30) days after the
Closing Date), the Parties shall reconcile the actual amount of any prorations that were estimated
as of the Closing. To the extent that a Party subsequently verifies that the actual amounts differ
from the amounts estimated and so prorated, the Parties agree to remit the correct amount of such
items to the appropriate Party as and when they are determined. The terms of this Section
2.3 shall survive the Closing.

     2.4 Deliveries at Closing.

     (a) At the Closing, Sellers shall deliver to Purchaser, or cause the delivery to Purchaser of,
the following:

          (i) A certificate of an authorized representative of each Seller, dated the Closing Date,
certifying that attached thereto is a true and complete copy of resolutions or limited partnership
documentation, as applicable, adopted by such Seller authorizing the execution, delivery and
performance of this Agreement and the documents and instruments to be executed and delivered by
such Seller pursuant hereto, and that all such resolutions or limited partnership documentation, as
applicable, are still in full force and effect and have not been amended or modified;

          (ii) A General Assignment, duly executed by the applicable Seller, assigning to Purchaser the
Permits and Warranties and Assumed Business Agreements relating to the Facilities that are sold and
transferred on the Closing Date;

          (iii) A separate Lease Termination, duly executed by the applicable Seller, for each Tenant
Lease by which such Seller agrees to the termination of such Tenant Lease as of the Closing Date;

          (iv) A separate Bill of Sale, duly executed by the applicable Seller, for each Facility
conveyed by such Seller to Purchaser;

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          (v) The Deeds, duly executed by the applicable Sellers, relating to the Facilities that are
sold and transferred on the Closing Date;

          (vi) Releases of the leasehold mortgages or deeds of trust and other instruments that secure
the repayment of the Term Mortgage Loan and the Emeritus Mortgage Loan;

          (vii) A statement executed by each Seller in form and substance acceptable under Section 1445
of the Internal Revenue Code, as amended, setting forth such Seller’s United States taxpayer
identification number and certifying that Seller is not a “foreign person” as that term is used
under Section 1445(b)(2) of the Internal Revenue Code, as amended;

          (viii) Copies of any engineering plans, drawings, specifications and blueprints in the
possession of Sellers and relating to the Improvements;

          (ix) A closing statement executed by the applicable Sellers itemizing the Purchase Price and
all adjustments thereto as provided herein;

          (x) An owner’s title affidavit substantially in the form of Exhibit I hereto duly
executed by each applicable Seller relating to the Land and Improvements that are sold and
transferred on the Closing Date and owned by such Seller; and

          (xi) In the event that the Emeritus Mortgage Loan is to be purchased by the Mortgage Loan
Assignee as permitted by this Agreement, the Mortgage Assignment duly executed by HR.

     (b) At the Closing, Purchaser shall deliver to Sellers or HR, as applicable, or cause the
delivery to Sellers or HR, as applicable of, the following:

          (i) A certificate of the Secretary or an Assistant Secretary of Purchaser, dated the Closing
Date, certifying that attached thereto is a true and complete copy of resolutions adopted by the
board of directors of Purchaser authorizing the execution, delivery and performance of this
Agreement and the documents and instruments to be executed and delivered by Purchaser pursuant
hereto, and that all such resolutions are still in full force and effect and have not been amended
or modified;

          (ii) The funds constituting the portion of the Purchase Price allocable to the Facilities that
are sold and transferred on the Closing Date, as required under Section 2.3 hereof;

          (iii) All unpaid amounts that are owed under the Term Mortgage Loan which are required to pay
the Term Mortgage Loan in full as of the Closing Date;

          (iv) All unpaid amounts that are owed under the Emeritus Mortgage Loan which are required to
pay the Emeritus Mortgage Loan in full as of the Closing Date, or, if the Emeritus Mortgage Loan is
to be purchased and sold as provided herein, the purchase price of the Emeritus Mortgage Loan equal
to all unpaid amounts under the Emeritus Mortgage Loan that would be required to pay the Emeritus
Mortgage Loan in full;

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          (v) A General Assignment, duly executed by Purchaser, by which Purchaser assumes the payment
and performance of the obligations of the applicable Seller under the Permits and Warranties and
Assumed Business Agreements assigned to Purchaser thereby and relating to a Facility that is sold
and transferred by such Seller on the Closing Date;

          (vi) A separate Lease Termination, duly executed by Purchaser, for each Tenant Lease by which
the Tenant thereunder agrees to the termination of such Tenant Lease;

          (vii) Executed waivers of the rights of first refusal under the Tenant Leases held by any
Tenants (other than Purchaser) in a form acceptable to Sellers;

          (viii) A closing statement executed by Purchaser itemizing the Purchase Price and all
adjustments thereto as provided herein;

          (ix) In the event that the Emeritus Mortgage Loan is to be purchased by the Mortgage Loan
Assignee as permitted by this Agreement, the Mortgage Assignment duly executed by the Mortgage Loan
Assignee.

     2.5 Further Assurances. From time to time after the Closing, Sellers shall, upon Purchaser’s
reasonable request and at Purchaser’s sole expense, execute, acknowledge and deliver to Purchaser
such other instruments of transfer and conveyance and shall take such other actions and execute and
deliver such other documents, certifications and further assurances as Purchaser may reasonably
require to vest more effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Facilities, or to better enable Purchaser to complete, perform and discharge the Assumed
Liabilities. Each Party shall cooperate with the other and shall execute and deliver to another
Party such other instruments and documents and take such other actions as may be reasonably
requested from time to time by another Party hereto as necessary to carry out, evidence and confirm
the intended purposes of this Agreement.

     2.6 Delivery of Possession. Possession of the Facilities sold, transferred and assigned at
the Closing shall be delivered to Purchaser effective as of the Closing Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers hereby represent and warrant to Purchaser as of the Effective Date as follows:

     3.1
Organization, Qualifications and Corporate Power. Each Seller is duly formed or
incorporated, as the case may be, and validly existing and in good standing under the laws of its
state of formation or incorporation, as the case may be, and is qualified or authorized to conduct
business in each state where the failure to be so qualified or authorized could reasonably be
expected to have a material adverse effect upon the business of Sellers taken as a whole. Sellers
have the power and authority to execute, deliver and perform the Escrow Agreement, this Agreement
and the other agreements, documents and certificates contemplated to be delivered by them pursuant
to this Agreement.

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     3.2 Authorization. The execution, delivery and performance by Sellers of this Agreement and
the instruments contemplated to be delivered by Sellers pursuant to this Agreement at the Closing
have been duly authorized by necessary corporate or partnership action, as applicable.

     3.3 Validity. This Agreement has been duly executed and delivered by Sellers and constitutes
the legal, valid and binding obligation of Sellers, enforceable in accordance with its terms,
subject to general equity principles and to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the enforcement of creditors’
rights. The Escrow Agreement and each Deed, General Assignment, Bill of Sale, Lease Termination
and other agreement, document and certificate to be executed and delivered by Sellers hereunder shall,
when so executed and delivered in accordance with this Agreement by the applicable Sellers,
constitute the legal, valid and binding obligation of the applicable Sellers enforceable in
accordance with its terms, subject to general equity principles and to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in effect affecting the
enforcement of creditors’ rights.

     3.4 Non-Contravention. The execution and delivery of this Agreement and the other agreements,
documents and certificates contemplated to be executed and delivered by Sellers pursuant to this
Agreement do not, and the consummation by Sellers of the transactions contemplated hereby and
thereby shall not, violate any provision of their respective articles of incorporation or bylaws or
partnership agreement, as the case may be.

     3.5 Litigation. No Seller is a party to or subject to any judgment, decree or order entered
in any lawsuit or proceeding brought by any Government or other party seeking to prevent the
execution of this Agreement or the consummation of the transactions contemplated hereby.

     3.6 Assets. The applicable Seller has good and marketable title to each Facility to be
conveyed by such Seller. At the Closing, each Facility shall be free and clear of any and all
mortgages, pledges, security interests, liens, charges and conditional sales agreements granted by
Sellers, except for the Permitted Exceptions and subject to execution and delivery by the Tenants
of the Lease Terminations. To Sellers’ Knowledge, the zoning classification for each of the
Facilities located in the Commonwealth of Pennsylvania is set forth in Schedule 3.6 hereto.

     3.7 No Bankruptcy or Dissolution. No Bankruptcy/Dissolution Event has occurred with respect
to any Seller.

ARTICLE IV

COVENANTS OF SELLERS

     4.1 Transfer of Permits. Sellers shall use commercially reasonable efforts to assist
Purchaser with the assumption, transfer or reissuance of any licenses, permits or approvals
required for the operation of the Facilities that do not constitute Permits and Warranties;
provided, however, that Sellers shall not incur any material cost, expense or liability in
connection with such efforts or in connection with the assumption, transfer or reissuance of any
such licenses, permits or approvals that do not constitute Permits and Warranties.

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     4.2 Cooperation. Insofar as such conditions are within their reasonable control or influence,
Sellers shall use commercially reasonable efforts to cause the conditions set forth in Section
7.2 hereof to be satisfied and to facilitate and cause the consummation of the transactions
contemplated hereby; provided, however, that no Seller shall be required to make any payment to any
party (other than reimbursement of expenses), guarantee any Business Agreement or remain liable for
the payment thereof following the Closing Date with respect to any matters arising on or after the
Closing Date, or agree to any concessions or amendments to other contracts, leases or arrangements
with such party in order to obtain any such consent or approval.

     4.3 Delivery of Documents. No later than five (5) Business Days after the Effective Date,
Sellers shall provide, or otherwise make available, to Purchaser the following, to the extent such
information and materials are in Sellers’ possession and available without immediate
disclosure of the confidential nature of this Agreement:

     (a) True copies of all Business Agreements;

     (b) True copies of any existing surveys of any of the Facilities to the extent in the
possession of Sellers; and

     (c) True copies of title commitments with respect to the Facilities, each of which has an
effective date that is not earlier than seventy-five (75) days prior to the date of this Agreement.

Purchaser shall have the right to assume any such Business Agreements relating to a Facility
pursuant to the General Assignment therefor so long as Purchaser provides written notice to Sellers
no later than three (3) Business Days prior to the Closing Date that identifies those Business
Agreements which Purchaser has elected to assume as of the Closing Date, and any Business
Agreements not so assumed by Purchaser shall be terminated by Seller at its sole cost and expense.

     4.4 No New Business Agreements. During the period commencing on the Effective Date and
continuing through the earlier of the Closing Date or the prior termination of this Agreement, no
Seller shall, without the prior written consent of Purchaser, which may be given or withheld in
Purchaser’s sole and absolute discretion, enter into or modify any Business Agreements, or any
agreements for the use and occupancy of any of the Facilities, that will survive the Closing.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser represents and warrants to Sellers as follows:

     5.1 Organization, Corporate Power and Authorization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of Washington and in
each other jurisdiction in which it is lawfully required to qualify to conduct business. Purchaser
has the corporate power and authority to execute, deliver and perform this Agreement and the other
agreements, documents and certificates contemplated to be executed and delivered

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by Purchaser
pursuant to this Agreement. If the Emeritus Mortgage Loan is to be purchased as provided in
Section 2.3(a) hereof, the Mortgage Loan Assignee shall have the legal power and authority
to execute, deliver and perform the Mortgage Loan Assignment.

     5.2 Authorization. The execution, delivery and performance by Purchaser of this Agreement and
the other agreements, documents and certificates contemplated to be executed and delivered by
Purchaser pursuant to this Agreement have been duly authorized by all corporate action required by
law. If the Emeritus Mortgage Loan is to be purchased as provided in Section 2.3(a)
hereof, the execution, delivery and performance by the Mortgage Loan Assignee of the Mortgage
Assignment shall have been duly authorized by all action required by law.

     5.3 Non-Contravention. The execution and delivery of this Agreement and the other agreements,
documents and certificates contemplated to be executed and delivered by Purchaser pursuant to this
Agreement do not, and the consummation by Purchaser of the transactions
contemplated hereby and thereby shall not, violate any provision of its articles of
incorporation or bylaws. If the Emeritus Mortgage Loan is to be purchased as provided in
Section 2.3(a) hereof, the execution and delivery of the Mortgage Assignment by the
Mortgage Loan Assignee shall not, and the consummation by the Mortgage Loan Assignee of the
transaction contemplated thereby shall not, violate any provision of the Mortgage Loan Assignee’s
articles of incorporation, bylaws, partnership agreement, operating agreement or other instrument
governing the organization or operation thereof.

     5.4 Validity. This Agreement has been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable in accordance with
its terms, subject to general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect affecting the enforcement
of creditors’ rights. The Escrow Agreement and each General Assignment, Lease Termination and
other agreement, document and certificate to be executed and delivered by Purchaser hereunder,
shall, when so executed and delivered, constitute the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms, subject to general equity principles and to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors’ rights. If the Emeritus Mortgage Loan is to be
purchased as provided in Section 2.3(a) hereof, the Mortgage Assignment to be executed and
delivered by the Mortgage Loan Assignee shall, when so executed and delivered, constitute the
legal, valid and binding obligation of the Mortgage Loan Assignee, enforceable in accordance with
its terms, subject to general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect affecting the enforcement
of creditors’ rights.

     5.5 Litigation. Purchaser is not a party to or subject to any judgment, decree or order
entered in any lawsuit or proceeding brought by any Government or other party seeking to prevent
the execution of this Agreement or the consummation of the transactions contemplated hereby.

12

 

     5.6 Tenant Leases. Purchaser and ESC IV, L.P. (d/b/a Texas-ESC IV, L.P.), a Washington
limited partnership, are the sole Tenants under the Tenant Leases. ESC IV, L.P. (d/b/a Texas-ESC
IV, L.P.), a Washington limited partnership, is a wholly-owned subsidiary of Purchaser.

     5.7 AS IS, WHERE IS. Purchaser acknowledges, represents and warrants that any information
supplied or made available by Sellers, whether written or oral or in the form of maps, surveys,
plats, environmental reports, engineering studies, inspection reports, plans, specifications or any
other information whatsoever, without exception, pertaining to the Facilities, any and all records,
rent rolls and other documents pertaining to the use or occupancy of the Facilities or any portion
thereof, the income thereof, the costs and expenses of the maintenance thereof, and any and all
other matters concerning the condition, suitability, integrity, marketability, compliance with Laws
or other attributes of the Facilities or any part thereof, has been furnished to Purchaser solely
to assist in Purchaser’s review and investigation of the Facilities. Further, Purchaser
acknowledges that, as of the Effective Date, Purchaser is in possession of the Facilities and is
familiar with the Facilities and has made all such independent investigations as Purchaser deems
necessary or appropriate concerning the Facilities. AS SUCH, THE FACILITIES ARE SOLD BY SELLERS,
AND ARE HEREBY ACCEPTED BY PURCHASER, AS IS, WHERE IS AND WITH ALL FAULTS, AND WITHOUT ANY
REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESSED OR IMPLIED, WRITTEN OR ORAL. PURCHASER HEREBY
UNCONDITIONALLY WAIVES AND EXCLUDES, AND SELLERS DISCLAIM, ALL REPRESENTATIONS AND WARRANTIES, INCLUDING ANY AND ALL
EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES AS TO: (i) THE CONDITION OF THE FACILITIES OR ANY
ASPECT THEREOF, INCLUDING ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES RELATED TO
SUITABILITY FOR HABITATION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE; (ii) THE
NATURE OR QUALITY OF CONSTRUCTION, STRUCTURAL DESIGN OR ENGINEERING OF THE IMPROVEMENTS; (iii) THE
QUALITY OF THE LABOR OR MATERIALS INCLUDED IN THE IMPROVEMENTS; (iv) THE SOIL CONDITIONS, DRAINAGE,
TOPOGRAPHICAL FEATURES OR OTHER CONDITIONS OF THE FACILITIES OR WHICH AFFECT ANY THEREOF; (v) ANY
FEATURES OR CONDITIONS AT OR WHICH AFFECT THE FACILITIES WITH RESPECT TO ANY PARTICULAR PURPOSE,
USE, DEVELOPMENTAL POTENTIAL, CASH FLOW OR OTHERWISE; (vi) ALL EXPRESS OR IMPLIED REPRESENTATIONS
OR WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF ANY OF THE
FACILITIES; (vii) ANY ENVIRONMENTAL, GEOLOGICAL, METEOROLOGICAL, STRUCTURAL OR OTHER CONDITION OR
HAZARD OR THE ABSENCE THEREOF HERETOFORE, NOW OR HEREAFTER AFFECTING IN ANY MANNER ANY OF THE
FACILITIES; (viii) CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE; (ix) PRODUCT
LIABILITY CLAIMS IN ANY MANNER RELATED TO ANY OF THE FACILITIES; AND (x) ALL OTHER EXPRESS OR
IMPLIED WARRANTIES AND REPRESENTATIONS BY SELLERS WHATSOEVER.

13

 

ARTICLE VI

COVENANTS OF PURCHASER

     6.1 Purchaser Performance. After the Closing, Purchaser shall promptly pay as they become due
and otherwise perform all obligations of Sellers under the Assumed Liabilities relating to the
Facilities and otherwise perform and fulfill all other obligations with respect to the Facilities
to the extent relating to the period on and after the Closing.

     6.2 Confidentiality. Purchaser hereby agrees that any information, documents, financial
records, architectural and construction plans or other materials provided to Purchaser pursuant to
this Agreement shall be deemed to be confidential information and shall not be disclosed to others
except (i) to Purchaser’s attorneys, accountants, investors, lenders and agents who have agreed to
treat such information, documents, financial records, architectural and construction plans and
other materials as confidential information and not to disclose any thereof to others and (ii)
insofar as any such information, documents, financial records, architectural and construction plans
or other materials are published or are a matter of public knowledge (other than as a result of the
disclosure thereof by Purchaser or any of its attorneys, accountants, investors, lenders or agents)
or is required to be disclosed by applicable Laws.

     6.3 Filings and Notices. Within seven (7) Business Days after the Effective Date, Purchaser
agrees to complete and submit such notices, filings and requests necessary to satisfy all
Governmental Requirements imposed upon Purchaser as transferee of the Facilities.

ARTICLE VII

CONDITIONS PRECEDENT

     7.1 Purchaser’s Conditions. Purchaser’s obligations under this Agreement are subject to the
satisfaction of the following conditions:

     (a) All representations and warranties of Sellers in this Agreement shall be true in all
material respects at and as of the Closing, and Sellers shall have delivered to Purchaser a
certificate to such effect dated as of the Closing Date;

     (b) Sellers shall have performed and complied in all material respects with all of their
obligations under this Agreement that are to be performed or complied with by Sellers prior to or
on the Closing Date;

     (c) No Order shall then exist that enjoins or prevents the consummation any of the
transactions contemplated hereby; and

     (d) Sellers shall have delivered or caused the delivery of the items required by Section
2.4(a) hereof.

In the event that any of the conditions set forth in this Section 7.1 are not satisfied, in
the reasonable judgment of Purchaser, prior to the Closing, Purchaser shall have the option either
(x) to waive such unsatisfied condition and proceed in accordance with the terms of this Agreement,
or (y) to terminate this Agreement.

14

 

     7.2 Sellers’ Conditions. The obligations of Sellers hereunder are subject to satisfaction of
each of the following conditions:

     (a) All representations and warranties of Purchaser in this Agreement shall be true in all
material respects at and as of the Closing Date, and Purchaser shall have delivered to Sellers a
certificate to such effect dated as of the Closing Date;

     (b) Purchaser shall have performed and complied in all material respects with its obligations
under this Agreement to close the transactions contemplated hereby on the Closing Date;

     (c) Sellers shall have obtained all consents and approvals required for Seller to sell,
transfer and assign the Facilities at the Closing;

     (d) All Governmental Requirements shall have been satisfied or obtained;

     (e) No Order shall then exist that enjoins or prevents the consummation any of the
transactions contemplated hereby; and

     (f) Purchaser shall have delivered or caused the delivery of the items required by and
performed its obligations under Section 2.4(b) hereof.

In the event that any of the conditions set forth above are not satisfied, in the reasonable
judgment of Sellers prior to the Closing, Sellers shall have the option either (x) to waive such
unsatisfied condition and proceed in accordance with the terms of this Agreement, or (y) to terminate this Agreement.

ARTICLE VIII

INDEMNIFICATION

     8.1 Purchaser’s Claims. Sellers shall indemnify, defend and hold Purchaser harmless from and
against any costs (including reasonable attorneys’ fees and court costs and costs of
investigation), losses, damages, liabilities or expenses incurred by Purchaser as a result of any
claim for brokerage, finder’s fees or other commissions relating to this Agreement or any of the
other agreements contemplated by this Agreement asserted by or on behalf of any broker or finder
claiming to have been retained by Sellers or to have rendered services on Sellers’ behalf.

     8.2 Sellers’ Claims. Purchaser shall indemnify, defend and hold Sellers harmless from and
against all costs (including reasonable attorneys’ fees and court costs and costs of
investigation), losses, damages, liabilities or expenses incurred by Sellers as a result of:

     (a) The non-fulfillment of any covenant, agreement or obligation to be performed by Purchaser
under or pursuant to this Agreement or any of the other agreements contemplated by this Agreement;

15

 

     (b) Any claim for brokerage, finder’s fees or other commissions relative to this Agreement or
any of the other agreements contemplated by this Agreement asserted by or on behalf of any broker
or finder claiming to have been retained by Purchaser or to have rendered services on Purchaser’s
behalf;

     (c) Any litigation, proceedings, controversies or claims relating to a Facility and arising
from, in connection with or incident to any occurrence on or subsequent to the Closing Date;

     (d) Any litigation, proceedings, controversies or claims arising or resulting from the
occupancy, possession or operation of the Facilities by the Tenants under the Tenant Leases; and

     (e) All obligations, liabilities, damages, losses, claims, expenses and costs relating to the
Facilities arising or accruing on or prior to the Closing Date that the Tenant under each of the
Tenant Leases is or was obligated, liable or responsible to pay or perform under the terms of such
Tenant Lease.

     8.3 Defense of Third Party Claims.

     (a) In the event of any claim by a Person not a Party to this Agreement with respect to any
matter to which Sections 8.1 or 8.2 hereof relates, the indemnified party, after not less
than thirty (30) days’ written notice to the indemnifying party containing the terms of the
proposed settlement, may make settlement of such claim, and such settlement shall be binding on the
Parties hereto for the purposes of this Section 8.3; provided, however, that, if within
such thirty (30) day period, the indemnifying party shall have requested the indemnified party to
contest any such claim at the expense of the indemnifying party, the indemnified party shall
promptly comply, and the indemnifying party shall have the right to direct the defense of such
claim or any litigation based thereon at its own expense through counsel of its own choosing. The
indemnified party also shall have the right to participate in the settlement of any such claim or
in any such litigation so long as its participation is at its own expense and with the
understanding that the indemnifying party may settle in its own discretion at its sole expense so
long as any such settlement provides for a complete release and discharge of the indemnified party
and does not impose any liabilities or obligations on the indemnified party. Any payment or
settlement made by the indemnifying party in such contest, together with the total expense thereof,
shall be binding on the indemnified party and the indemnifying party for the purposes of this
Section 8.3.

     (b) In the event that any litigation, proceeding, controversy, claim or other matter is
initiated by a third party against Purchaser or a Seller, and Purchaser or Sellers, as the case may
be, are obligated or potentially obligated to indemnify, defend and hold the other harmless under
this Article VIII, the indemnified or potentially indemnified party will reasonably
cooperate with the indemnifying or potentially indemnifying party with respect to the investigation
and defense of such litigation, proceeding, controversy or claim or other matter.

16

 

     8.4 Survival of Representations and Warranties.

     (a) The representations and warranties of Sellers contained in this Agreement or any
certificate delivered by or on behalf of Sellers pursuant to this Agreement or in connection with
the transactions contemplated herein shall survive for a period of twelve (12) months after the
Closing Date.

     (b) The representations and warranties of Purchaser contained in this Agreement or any
certificate delivered by or on behalf of Purchaser pursuant to this Agreement or in connection with
the transactions contemplated herein shall survive the consummation of the transactions
contemplated herein and shall continue in full force and effect for a period of twelve (12) months
after the earlier of the (i) the Closing Date or (ii) the prior termination of this Agreement.

     (c) Purchaser may not assert any claim against Sellers for breach of any covenant contained in
Article IV hereof and all such claims shall be deemed to be waived as of the Closing Date.

ARTICLE IX

TERMINATION

     9.1 Termination.

     (a) This Agreement may be terminated as follows:

          (i) At any time by the mutual consent of Sellers and Purchaser;

          (ii) By Purchaser because of the failure of any condition set forth in Section 7.1
hereof;

          (iii) By Purchaser if Sellers fails to comply with their obligations under this Agreement to
close the transactions contemplated hereby;

          (iv) By Sellers because of the failure of any condition set forth in Sections 7.2(c), (d)
or (e) hereof;

          (v) By Sellers because of the failure of any condition set forth in Sections 7.2(a), (b)
or (f) hereof; and

          (vi) By Sellers if Purchaser fails to comply with its obligations under this Agreement to
close the transactions contemplated hereby.

     (b) In the event of the termination of this Agreement pursuant to Section 9.1(a)
hereof because Sellers or Purchaser, as the case may be, shall have willingly failed to fulfill its
obligations hereunder, the other Party shall be entitled to pursue, exercise and enforce any and
all remedies, rights, powers and privileges available to it at law or in equity.

17

 

     (c) Section 2.3, Section 6.2, Article VIII and Sections 11.1,
11.12 and 11.15 hereof shall survive the Closing or the prior termination of this Agreement.

ARTICLE X

CASUALTY AND CONDEMNATION

     10.1 Casualty Before Closing. In the event of damage to or destruction of all or any portion
of a Facility by fire or other casualty prior to the Closing, Sellers shall assign to Purchaser at
the Closing all available casualty insurance proceeds to which Sellers are entitled under existing
insurance coverages, and this Agreement shall remain in full force and effect as to such damaged
Facility with no adjustment to the Purchase Price.

     10.2 Condemnation Before Closing. In the event of a condemnation or other exercise of the
power of eminent domain with respect to all or any portion of a Facility prior to the Closing that
permits the Tenant of such affected Facility to terminate the Tenant Lease for such affected
Facility, Purchaser shall have, as its sole and exclusive remedy, the option to exclude and
eliminate such affected Facility from the terms of this Agreement and the Purchase Price shall be
decreased by the value of such affected Facility, as reasonably determined by the applicable Seller
and Purchaser, to reflect the exclusion of such affected Facility from the terms of this Agreement;
provided, however, that this Agreement otherwise shall remain in full force and effect. As to any
Facility affected by a condemnation or other exercise of the power of eminent domain prior to the
Closing that is sold and transferred to Purchaser, the applicable Seller shall assign to Purchaser
at the Closing its right to any award resulting from such condemnation or other exercise of the
power of eminent domain and the Purchase Price shall not be adjusted. Except as described in the first sentence of this
Section 10.2, no condemnation or other exercise of the power of eminent domain with respect
to all or any portion of a Facility prior to the Closing shall affect the obligations of Purchaser
hereunder with respect to any Facility affected thereby.

ARTICLE XI

MISCELLANEOUS

     11.1 Expenses. Each Party shall pay its own legal, accounting and similar expenses incidental
to the preparation of this Agreement, the implementation of the provisions of this Agreement, and
the consummation of the transactions contemplated hereby. If Purchaser elects to obtain owner’s
title insurance policies for the Facilities, Sellers shall pay the premiums for obtaining such
owner’s title insurance policies in an aggregate amount not exceeding the Purchase Price (without
endorsements thereto or affirmative coverages thereunder). Purchaser shall pay, or reimburse
Sellers for, all costs of obtaining title policy endorsements and affirmative coverages, all
transfer, intangible, recording taxes and other fees with respect to the transfer of the
Facilities, the costs of obtaining any surveys (and updates thereof), environmental investigations,
studies, reports and all other costs of any investigation of the Facilities by Purchaser, one-half
of any escrow fee charged by the Title Company, any costs associated with the transfer of any
Permits and Warranties, the cost of obtaining other licenses, permits or approvals that do not
constitute Permits and Warranties and the costs and expenses incurred in

18

 

connection with the
satisfaction of and compliance with the Governmental Requirements. Sellers shall pay one-half of
any escrow fee charged by the Title Company.

     11.2 Contents of Agreement; Parties in Interest; etc. This Agreement sets forth the entire
understanding of the Parties with respect to the transactions contemplated hereby and constitutes a
complete statement of the terms of such transactions. This Agreement shall not be amended or
modified except by written instrument duly executed by all of the Parties. Any previous agreements
and understandings between or among the Parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement. No Party has been induced to enter into this
Agreement by any statement, representation or warranty of the other Party not set forth in this
Agreement, and no Party has relied upon any statement, representation or warranty of the other
Party not set forth in this Agreement.

     11.3 Assignment and Binding Effect. Purchaser shall not have the right to assign its rights
hereunder unless Purchaser receives the prior written consent of Sellers to any such assignment,
which consent Sellers may grant or without in their sole discretion; provided, however, that
Purchaser shall have the right to assign this Agreement to one or more wholly owned subsidiaries of
Purchaser; provided, further, however, that, regardless of any assignment by Purchaser of any of
its rights hereunder, Purchaser shall remain responsible and liable for the payment and performance
of all of its liabilities and obligations as set forth herein. Subject to the foregoing, all of
the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and permitted assigns of Sellers and Purchaser.

     11.4 Notices. All notices, requests and other communications under this Agreement shall be in
writing and shall be either (a) delivered in person, (b) delivered by a recognized delivery service
taking a receipt upon delivery or (c) sent by facsimile transmission and addressed as follows:

	 	 	 
	If intended for Sellers:

	 	c/o Healthcare Realty Trust Incorporated
	 

	 	3310 West End Avenue, Suite 700
	 

	 	Nashville, Tennessee 37203
	 

	 	Attn: General Counsel
	 

	 	Phone: (615) 269-8175
	 

	 	Facsimile: (615) 463-7739
	 
	 	 
	With a copy to:

	 	Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.
	 

	 	211 Commerce Street, Suite 1000
	 

	 	Nashville, Tennessee 37201
	 

	 	Attn: David J. White.
	 

	 	Phone: (615) 726-5776
	 

	 	Facsimile: (615) 744-5776

19

 

	 	 	 
	If intended for Purchaser:

	 	Emeritus Corporation
	 

	 	3131 Elliott Avenue, Suite 500
	 

	 	Seattle, Washington 98121
	 

	 	Attn: Eric Mendelsohn
	 

	 	Phone: (206) 301-4493
	 

	 	Facsimile: (206) 357-7388
	 
	 	 
	With a copy to:

	 	Pircher, Nichols & Meeks
	 

	 	900 North Michigan Avenue, Suite 1050
	 

	 	Chicago, Illinois 60611
	 

	 	Attn: Real Estate Notices (JDL/EF)
	 

	 	Phone: (312) 915-3112
	 

	 	Facsimile: (312) 915-3348

or at such other address, and to the attention of such other person, as a Party shall give notice
as herein provided. A notice, request and other communication shall be deemed to be duly received
if delivered in person or by a recognized delivery service, when left at the address of the
recipient, and, if sent by facsimile transmission, upon receipt by the sender of an acknowledgment
or transmission report generated by the machine from which the facsimile transmission was sent
indicating that the facsimile was sent in its entirety to the recipient’s facsimile number;
provided, however, that if a notice, request or other communication is delivered or served on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the recipient’s location,
such notice or communication shall be deemed to be duly received by the recipient at 9:00 a.m. on
the first Business Day thereafter.

     11.5 Applicable Laws. This Agreement and the transactions contemplated hereby shall be
governed by and construed in accordance with the Laws of the State of Tennessee.

     11.6 Exhibits. All Exhibits referred to herein are intended to be and hereby are specifically
made a part of this Agreement.

     11.7 Severability. Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

     11.8 Public Announcements. No Party to this Agreement shall make, or cause to be made, any
press release or public announcement with respect to this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the prior written consent
of the other Parties, and the Parties shall cooperate as to the timing and contents of any such
press release or public announcement; provided, however, that, to the extent any Party is advised
by legal counsel that it is required by Laws or the rules and regulations of any applicable
securities exchange to make such a press release or public announcement, such Party may issue such
a release or make such an announcement, the contents of which shall be reasonably satisfactory to
the other Parties.

20

 

     11.9 Construction. The Parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event that any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties
hereto and no presumption or burden of proof shall arise by virtue of the authorship of any of the
provisions of this Agreement.

     11.10 Time. Time is and shall be of the essence of this Agreement.

     11.11 Days for Performance. If the date for the performance of any obligation or notification
hereunder falls upon a day that is not a Business Day, then such date shall be read and construed
for all purposes herein to mean the next day which is a Business Day.

     11.12 Delivery of Due Diligence Materials. In the event that Purchaser shall terminate this
Agreement as permitted herein, Purchaser shall provide, or cause to be provided, to Sellers, within
five (5) Business Days after such termination and to the extent such items are in the possession of
Purchaser or its attorneys, original copies of all surveys, original copies of all environmental
reports, appraisals, studies and investigations prepared by or at the request of Purchaser with
respect to the Facilities, and copies of all other reports, searches, investigations, studies and
materials prepared by or at the request of Purchaser with respect to the Facilities, excluding any
internal memoranda and attorney work product. Upon the request of Sellers, Purchaser shall consent
to and reasonably cooperate with Sellers in any request from Sellers to any preparer of any such
surveys, reports, appraisals, searches, studies, investigations or materials to provide to Sellers
written confirmation from such preparer that is addressed to Sellers in form and substance
reasonably satisfactory to Sellers and stating that its surveys, reports, appraisals, searches,
studies, investigations or materials are certified to Sellers and Sellers are entitled to rely
thereon.

     11.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which, together upon full execution, shall constitute one
and the same instrument.

     11.14 No Recording. Purchaser shall not record this Agreement or any short form, memorandum
or notice thereof in any public or governmental office.

     11.15 Attorneys’ Fees. In the event of any litigation between the Parties under this
Agreement, including with respect to the enforcement of any right or provision herein, the
prevailing Party, in addition to those damages and other awards given such Party therein, shall be
entitled to reasonable attorneys’ fees and court costs at all trial and appellate levels.

     11.16 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAWS WHICH CANNOT BE
WAIVED, EACH OF THE PARTIES HERETO (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM WITH RESPECT TO ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR
SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE TRANSACTIONS

21

 

CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING. PURCHASER ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY SELLERS THAT THIS SECTION
11.16 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH SELLERS ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT AND ANY OTHER AGREEMENTS RELATING HERETO OR CONTEMPLATED HEREBY. ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.16 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.

22

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the
Effective Date.

	 	 	 	 	 
	 	PURCHASER:

EMERITUS CORPORATION, a

Washington corporation

 	 
	 	By:  	/s/ Eric Mendelsohn
 	 
	 	 	Title: Director of Real Estate and Legal Affairs 	 
	 

Date: March 8, 2007

	 	 	 	 	 
	 	SELLERS:

HR ACQUISITION I CORPORATION,

a Maryland corporation

 	 
	 	By:  	James C. Douglas
 	 
	 	 	Title: Vice President 	 

Date: March 7, 2007

	 	 	 	 	 
	 	HR ACQUISITION OF

PENNSYLVANIA, INC., a Pennsylvania

corporation

 	 
	 	By:  	James C. Douglas
 	 
	 	 	Title: Vice President 	 

Date: March 7, 2007

	 	 	 	 	 

23

 

	 	 	 	 	 
	 	 	 
	 

HR ACQUISITION OF SAN ANTONIO,

LTD., an Alabama limited partnership

By: HEALTHCARE ACQUISITION

     OF TEXAS, INC., an Alabama

     corporation, General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	                                                  James C. Douglas
 	 
	 	 	Title: Vice President 	 

Date: March 7, 2007

	 	 	 	 	 
	 	HRT HOLDINGS, INC., a Delaware

corporation

 	 
	 	By:  	James C. Douglas
 	 
	 	 	Title: Vice President 	 

Date: March 7, 2007

     The undersigned hereby executes this Agreement solely for the purpose of acknowledging its
waiver of any notice of prepayment requirements set forth in the Emeritus Mortgage Loan and the
Term Mortgage Loan.

	 	 	 	 	 
	 	HEALTHCARE REALTY TRUST 

INCORPORATED, a Maryland

corporation

 	 
	 	By:  	James C. Douglas
 	 
	 	 	Title: Vice President 	 

Date: March 7, 2007

24

 

EXHIBITS

	 	 	 
	Exhibits	 	Title
	A
	 	Form of Bill of Sale

	B
	 	Form of Special Warranty Deed

	C
	 	Form of Escrow Agreement

	D
	 	List of Facilities

	E
	 	Form of General Assignment

	F
	 	Form of Lease Termination

	G-1
	 	Emeritus Mortgage Loan

	G-2
	 	Term Mortgage Loan

	H
	 	List of Tenant Leases

	I
	 	Form of Title Affidavit

	J
	 	Form of Mortgage Assignment

A-1

 

Exhibit A

to Agreement of Sale and Purchase

Form of Bill of Sale

BILL OF SALE

     KNOW ALL MEN BY THESE PRESENTS that the undersigned, _______________, a
_______________
(the “Seller”), for and in consideration of the sum of One and No/100
Dollars ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, does hereby agree as follows:

     Seller hereby grants, bargains, sells, transfers, sets over and delivers to
_______________, a
_______________ (the “Buyer”), all of Seller’s right, title and
interest, if any, in and to the property described in Exhibit A hereto (the “Personal
Property”).

     SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PERSONAL PROPERTY, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY, CONDITION OR FITNESS THEREOF
FOR ANY PARTICULAR USE OR PURPOSE. BUYER AGREES THAT THE PERSONAL PROPERTY IS CONVEYED BY SELLER
AND ACCEPTED BY BUYER IN AN “AS IS, WHERE IS” CONDITION, AND SELLER SPECIFICALLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.

     Executed
as of the ___ day of _______________, 2007.

	 	 	 	 	 
	 	_______________________________________, a 

_______________________________________

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

A-1

 

	 	 	 	 	 

Exhibit A

to Bill of Sale

Personal Property

The following described property to the extent such property is located on the real property
described in Exhibit B hereto and owned by Seller: all tangible personal property,
including, without limitation, equipment, appliances, machinery, furniture, furnishings, signage
and fixtures.

A-2

 

Exhibit B

to Bill of Sale

Real Property

Description of Real Property from Special

[or Limited] Warranty Deed from Seller to Buyer

A-3

 

Exhibit B

to Agreement of Sale and Purchase

Form of Special Warranty Deed

This instrument was prepared by:

__________________________________

__________________________________

__________________________________

SPECIAL [OR LIMITED] WARRANTY DEED

     THIS
SPECIAL [OR LIMITED] WARRANTY DEED is made as of the ___ day of _______________, 2007,
from
_______________, a _______________ (the “Grantor”), to _______________, a
_______________ (the “Grantee”), with an address of _______________.

W I T N E S S E T H:

     That Grantor, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by
Grantor, has granted, bargained, sold, aliened, conveyed and confirmed, and does hereby grant,
bargain, sell, alien, convey and confirm, to Grantee, and Grantee’s successors and assigns forever,
the real property located in
_______________ and more particularly described in
Exhibit A hereto (the “Property”), subject to the following (the “Permitted
Encumbrances”): (a) all liens for ad valorem, real property and personal property taxes, all
general and special private and public assessments, all other property taxes, and all similar
obligations relating to the Property, not yet due and payable; (b) easements, restrictions,
covenants and other such encumbrances of record as of the date hereof; (c) any state of facts that
would be disclosed by an accurate survey or independent inspection of the property conveyed hereby;
(d) all applicable building and zoning ordinances, moratoria, initiatives, referenda, ordinances,
rules, regulations, standards, orders and other governmental requirements, including those relating
to the environment, health and safety, disabled or handicapped persons, and as applicable, to the
licensing of the use of the improvements on the Property, regulations and restrictions of any
federal, state, local or municipal government or any department, commission, board, bureau, agency,
instrumentality, unit or taxing authority thereof; and (e) the rights of residents and licensed
occupants of the improvements located on the Property;

     Together with all of Grantor’s right, title and interest, if any, in and to rights,
privileges, easements, servitudes, rights-of-way and appurtenances belonging or appurtenant to the
Property and all improvements on the Property.

     Notwithstanding any reference to acreage or square footage contained in the description of the
property conveyed hereby, Grantor makes no representation or warranty, express or implied, as to
the exact amount of acreage or square footage in the property conveyed hereby.

B-1

 

Grantor further makes no representation or warranty, express or implied, with respect to the
ownership of oil, gas or other minerals located on, under or within the property conveyed hereby.

     This is improved property known as _______________.

     TO HAVE AND TO HOLD the Property, together with all and singular the rights, privileges,
easements, servitudes, rights-of-way and appurtenances belonging or appurtenant to the Property,
and the rents, issues and profits thereof, and all the estate, right, title, interest, property,
claim and demand whatsoever of Grantor, in law, equity or otherwise, and all improvements on the
Property, to Grantee, and Grantee’s successors and assigns forever, subject to the Permitted
Encumbrances.

     Grantor does hereby bind itself, and its successors and assigns, to warrant and forever defend
all and singular the Property, subject to the terms of this Special [or Limited] Warranty Deed,
unto Grantee and unto Grantee’s successors and assigns, against every person whomsoever lawfully
claiming or to claim the Property or any part thereof by, through or under Grantor, but not
otherwise, subject to the Permitted Encumbrances.

     EXCEPT FOR THE SPECIAL [OR LIMITED] WARRANTY OF TITLE CONTAINED HEREIN, GRANTOR MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, IMPROVEMENTS) CONVEYED
HEREBY, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY, CONDITION OR FITNESS THEREOF FOR ANY
PARTICULAR USE OR PURPOSE OR THE ENVIRONMENTAL CONDITION OF THE PROPERTY (INCLUDING, WITHOUT
LIMITATION, IMPROVEMENTS) CONVEYED HEREBY. GRANTEE AGREES THAT THE PROPERTY (INCLUDING, WITHOUT
LIMITATION, IMPROVEMENTS) CONVEYED HEREBY IS CONVEYED BY GRANTOR AND ACCEPTED BY GRANTEE IN AN
“AS-IS, WHERE-IS” CONDITION.

B-2

 

[PENNSYLVANIA NOTICES TO BE PROVIDED AS REQUIRED:

NOTICE—THIS DOCUMENT DOES NOT SELL, CONVEY, TRANSFER, INCLUDE OR INSURE THE TITLE TO
THE COAL AND RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN,
AND THE OWNER OR OWNERS OF SUCH COAL HAVE THE COMPLETE LEGAL RIGHT TO REMOVE ALL OF SUCH
COAL AND, IN THAT CONNECTION, DAMAGE MAY RESULT TO THE SURFACE OF THE LAND AND ANY HOUSE,
BUILDING OR OTHER STRUCTURE ON OR IN SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT
ENLARGE, RESTRICT OR MODIFY ANY LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED,
EXCEPTED OR RESERVED BY THIS INSTRUMENT.

[This notice is set forth in the manner provided in 52 P.S. §1551 and is not intended as
notice of unrecorded instruments, if any.]

NOTICE  THE UNDERSIGNED, AS EVIDENCED BY THE SIGNATURE TO THIS NOTICE AND THE
ACCEPTANCE AND RECORDING OF THIS DEED, IS FULLY COGNIZANT OF THE FACT THAT THE UNDERSIGNED
MAY NOT BE OBTAINING THE RIGHT OF PROTECTION AGAINST SUBSIDENCE AS TO THE PROPERTY HEREIN
CONVEYED RESULTING FROM COAL MINING OPERATIONS AND THAT THE PURCHASED PROPERTY, HEREIN
CONVEYED, MAY BE PROTECTED FROM DAMAGE DUE TO MINE SUBSIDENCE BY A PRIVATE CONTRACT WITH THE
OWNERS OF THE ECONOMIC INTEREST IN THE COAL.

[This notice is provided to comply with 52 P.S. §1406.14.]

	 	 	 	 	 
	 	_______________________________________, a

_______________________________________

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[INSERT APPROPRIATE ACKNOWLEDGEMENT FORM]]

B-3

 

     IN WITNESS WHEREOF, Grantor has caused this Special [or Limited] Warranty Deed to be duly
executed and delivered as of the day and year first above written.

	 	 	 	 	 
	 	_______________________________________, a

_______________________________________

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[INSERT APPROPRIATE ACKNOWLEDGEMENT

FORM AND RECORDING REQUIREMENTS]

B-4

 

Exhibit A

to Special [or Limited] Warranty Deed

Description of Property from Recorded Vesting Deed(s) of Grantor

B-5

 

Exhibit C

to Agreement of Sale and Purchase

Form of Escrow Agreement

ESCROW AGREEMENT

     THIS
ESCROW AGREEMENT (the “Agreement”) is made as of the ___ day of _______________, 2007,
by and among the entities that have executed this Agreement on the signature pages hereto as
sellers (individually, a “Seller” and collectively, the “Sellers”), and EMERITUS CORPORATION, a
Washington corporation, as purchaser (the “Purchaser”), and FIDELITY NATIONAL TITLE INSURANCE
COMPANY, a California corporation (the “Escrow Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to the Agreement of Sale and Purchase, dated as of _______________, 2007, as
hereafter amended or modified by the parties thereto (the “Purchase Agreement”), by and among
Sellers and Purchaser, Sellers have agreed to sell and Purchaser has agreed to purchase certain
assets of Sellers as set forth therein; and

     WHEREAS, pursuant to the Purchase Agreement, Purchaser must deposit the Earnest Money (as
herein defined) with Escrow Agent to be held and paid in accordance with the Purchase Agreement and
this Agreement;

     NOW, THEREFORE, for and in consideration of the above and foregoing premises and the mutual
covenants and agreements set forth hereinbelow, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto,
Sellers, Purchaser and Escrow Agent hereby agree as follows:

     1. Escrow. Purchaser hereby delivers to Escrow Agent the sum of One Million Three
Hundred Fourteen Thousand Two Hundred Seventy-Two and No/100 Dollars ($1,314,272.00) (the “Earnest
Money”) to be held by Escrow Agent in accordance with the terms of the Purchase Agreement and this
Agreement. Escrow Agent shall deposit the Earnest Money in an interest-bearing account that is
maintained at depository institution reasonably acceptable to Sellers and Purchaser.

     2. Purpose of Escrow. Purchaser has deposited the Earnest Money with Escrow Agent to
comply with Purchaser’s obligations pursuant to Section 2.1 of the Purchase Agreement.

     3. Disbursement of Earnest Money. Subject to the terms of the Purchase Agreement and
this Agreement, Escrow Agent shall disburse the Earnest Money pursuant to the terms of the Purchase
Agreement, including, but not limited to, Section 2.1 of the Purchase Agreement. Within
two (2) Business Days (the term “Business Day” having the same meaning herein as in the Purchase
Agreement) after receipt of written notification from Sellers (the “Sellers’ Default Notice”) that
Purchaser has breached or defaulted under the Purchase Agreement and Sellers are entitled,

C-1

 

pursuant to the Purchase Agreement, to disbursement of the Earnest Money (or so much thereof not
previously disbursed pursuant to the terms of the Purchase Agreement), Escrow Agent shall send to
Purchaser a written notification (the “Purchaser’s Notice”) advising Purchaser that Escrow Agent
intends to disburse the Earnest Money (or so much thereof not previously disbursed pursuant to the
terms of the Purchase Agreement) to Sellers no earlier than two (2) Business Days after Purchaser’s
receipt of such written notice from Escrow Agent. Sellers also shall provide a copy of Sellers’
Default Notice to Purchaser. Escrow Agent shall be entitled to rely, for purposes of this
Agreement, upon any statement delivered by Sellers or Purchaser pursuant to this Section 3.
Escrow Agent shall disburse the Earnest Money (or so much thereof not previously disbursed
pursuant to the terms of the Purchase Agreement) no earlier than two (2) Business Days after
Purchaser’s receipt of Purchaser’s Notice, provided, however, that Purchaser has not notified
Escrow Agent that it disputes Sellers’ Default Notice. In the event of any disputes among the
parties hereto in connection with the Earnest Money or this Agreement, Escrow Agent shall refuse to
comply with the claims and demands by Sellers or Purchaser so long as the dispute shall then
continue. In so refusing, Escrow Agent shall make no delivery or other disposition of the Earnest
Money, except as permitted under Section 6(a) below, and, in so doing, Escrow Agent shall
not be or become liable in any way to any person for its failure or refusal to comply with
conflicting or adverse demands and it shall continue to refrain from acting and refuse to act until
it receives authorization as follows:

	 	(a)	 	Written authorization to act that is executed by Sellers and Purchaser; or
	 
	 	(b)	 	A certified and file-stamped copy of a court order resolving the disagreement
or directing specific action.

Upon the receipt of either such document, Escrow Agent shall promptly act according to its terms.

     4. Termination of Escrow. This Agreement shall terminate upon the disbursement of all
of the Earnest Money pursuant to the terms of the Purchase Agreement or this Agreement. Interest
that accrues on the Earnest Money shall be combined with and treated as a part of the Earnest
Money. In the event all or a portion of the Earnest Money is paid to Sellers pursuant to this
Agreement, any interest on the Earnest Money in the possession of Escrow Agent at the time such
Earnest Money is paid to Sellers shall be paid to Sellers. Interest on any portion of the Earnest
Money that is to be refunded to Purchaser pursuant to the Purchase Agreement shall be paid to
Purchaser.

     5. No Representations by Escrow Agent. Escrow Agent shall not be liable for the
performance or non-performance or delay in performance of any obligation of Sellers, Purchaser or
any other person or entity.

     6. Escrow Agent. The escrow of the Earnest Money shall be subject to the following
provisions:

     (a) Duties and Authorization. The payment of the Earnest Money to Escrow Agent
is for the accommodation of Sellers and Purchaser. The duties of Escrow Agent shall be
determined solely by the express provisions of this Agreement. Sellers and Purchaser
authorize Escrow Agent, without creating any obligation on the part of Escrow Agent, in the

C-2

 

event this Agreement or the Earnest Money become involved in litigation, to deposit the
Earnest Money with the clerk of the court in which the litigation is pending and thereupon
Escrow Agent shall be fully relieved and discharged of any further responsibility under this
Agreement. Sellers and Purchaser also authorize Escrow Agent, if it is threatened with
litigation, to interplead all interested parties in any court of competent jurisdiction and
to deposit the Earnest Money with the clerk of the court and thereupon Escrow Agent shall be
fully relieved and discharged of any further responsibility hereunder.

     (b) Liability. Escrow Agent shall not be liable for any mistake of fact or
error of judgment or any acts or omissions of any kind unless caused by its willful
misconduct or negligence. Escrow Agent shall be entitled to rely on any instrument or
signature reasonably believed by it to be genuine and may assume that any person purporting
to give any written notice or instruction in connection with this Agreement is duly
authorized to do so by the party on whose behalf such writing, notice or instruction is
given.

     (c) Indemnification of Escrow Agent. Sellers and Purchaser will jointly and
severally indemnify Escrow Agent from and hold it harmless against any loss, liability or
expense incurred without negligence or willful misconduct on the part of Escrow Agent
arising out of or in connection with the acceptance of, or the performance of its duties
under, this Agreement, as well as the costs and expenses of defending against any claim or
liability arising under this Agreement. This Section 6(c) shall survive the
termination of this Agreement.

     7. Counterparts. This Agreement may be executed in several counterparts, each of
which, when executed, shall be deemed to be an original, and all such counterparts shall together
constitute one and the same instrument.

     8. Notices. All notices required or permitted to be given hereunder shall be in
writing and shall be either (a) delivered in person, (b) delivered by a recognized delivery service
taking a receipt upon delivery or (c) sent by facsimile transmission and addressed as follows:

	 	 	 
	  To Sellers:

	 	Healthcare Realty Trust Incorporated
	 

	 	3310 West End Avenue, Suite 700
	 

	 	Nashville, Tennessee 37203
	 

	 	Attn: General Counsel
	 

	 	Facsimile: (615) 463-7739
	 
	 	 
	  with a copy to:

	 	Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.
	 

	 	211 Commerce Street, Suite 1000
	 

	 	Nashville, Tennessee 37201
	 

	 	Attn: David J. White
	 

	 	Facsimile: (615) 744-5776

C-3

 

	 	 	 
	  To Purchaser:

	 	Emeritus Corporation
	 

	 	3131 Elliott Avenue, Suite 500
	 

	 	Seattle, Washington 98121
	 

	 	Attn: Eric Mendelsohn
	 

	 	Facsimile: (206) 357-7388
	 
	 	 
	  with a copy to:

	 	Pircher, Nichols & Meeks
	 

	 	900 North Michigan Avenue, Suite 1050
	 

	 	Chicago, Illinois 60611
	 

	 	Attn: Real Estate Notices (JDL/EF)
	 

	 	Facsimile: (312) 915-3348
	 
	 	 
	  To Escrow Agent:

	 	Fidelity National Title Insurance Company
	 

	 	7130 Glen Forest Drive, Suite 403
	 

	 	Richmond, Virginia 23226
	 

	 	Attn: Melodie T. Rochelle
	 

	 	Facsimile: (804) 673-3308

or at such other address, and to the attention of such other person, as the parties hereto shall
give notice as herein provided. A notice, request and other communication shall be deemed to be
duly received if delivered in person or by a recognized delivery service, when left at the address
of the recipient and if sent by facsimile transmission, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine from which the facsimile
transmission was sent indicating that the facsimile was sent in its entirety to the recipient’s
facsimile number; provided, however, that if a notice, request or other communication is delivered
or served on a day which is not a Business Day, or after 5:00 p.m. on any Business Day at the
recipient’s location, such notice or communication shall be deemed to be duly received by the
recipient at 9:00 a.m. on the first Business Day thereafter.

C-4

 

     IN WITNESS WHEREOF, this Agreement has been executed as of the date and year first set forth
above.

	 	 	 	 	 
	 	SELLERS:

HR ACQUISITION I CORPORATION,

a Maryland corporation

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	HR ACQUISITION OF

PENNSYLVANIA, INC., a Pennsylvania

corporation

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

HR ACQUISITION OF SAN ANTONIO,

LTD., an Alabama limited partnership

By: HEALTHCARE ACQUISITION

     OF TEXAS, INC., an Alabama

     corporation, General Partner

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	HRT HOLDINGS, INC., a Delaware

corporation

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 

C-5

 

	 	 	 	 	 

	 	 	 	 	 
	 	PURCHASER:

EMERITUS CORPORATION, a

Washington corporation

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	ESCROW AGENT:

FIDELITY NATIONAL TITLE INSURANCE COMPANY

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 

C-6

 

	 	 	 	 	 

Exhibit D

to Agreement of Sale and Purchase

List of Facilities

	 	 	 
	1.

	 	Loyalton at Bloomsburg
	 

	 	420 Shaffer Road
	 

	 	Bloomsburg, PA
	 
	 	 
	2.

	 	Loyalton at Danville
	 

	 	432 Hermitage Drive
	 

	 	Danville, VA
	 
	 	 
	3.

	 	Loyalton at Harrisburg
	 

	 	3560 N. Progress Ave.
	 

	 	Harrisburg, PA
	 
	 	 
	4.

	 	Loyalton at Harrisonburg
	 

	 	2101 Deryerle Ave.
	 

	 	Harrisonburg, VA
	 
	 	 
	5.

	 	Loyalton at Creekview
	 

	 	1100 Grandon Way
	 

	 	Mechanicsburg, PA
	 
	 	 
	6.

	 	Loyalton at Greensboro
	 

	 	3823 Lawndale Drive
	 

	 	Greensboro, NC
	 
	 	 
	7.

	 	Loyalton at Ravenna
	 

	 	141 Chestnut Hill Drive
	 

	 	Ravenna, OH
	 
	 	 
	8.

	 	Loyalton at Roanoke
	 

	 	3585 Brambleton Ave.
	 

	 	Roanoke, VA
	 
	 	 
	9.

	 	Kingsley Place of Henderson
	 

	 	100 Richardson Drive,
	 

	 	Henderson, TX
	 
	 	 
	10.

	 	Kingsley Place of McKinney
	 

	 	1650 S. Stonebridge
	 

	 	McKinney, TX

D-1

 

	 	 	 
	11.

	 	Kingsley Place Medical Oakwell
	 

	 	9000 Floyd Curl Road
	 

	 	San Antonio, TX
	 
	 	 
	12.

	 	Kingsley Place of Oakwell
	 

	 	1970 Oakwell Farms Parkway
	 

	 	San Antonio, TX

D-2

 

Exhibit E

to Agreement of Sale and Purchase

Form of General Assignment

GENERAL ASSIGNMENT

     THIS
GENERAL ASSIGNMENT (this “Assignment”) is made and entered into as of the ___ day of
_______________,
2007, by and between _______________, a _______________ (the
“Assignor”), and
_______________, a _______________ (the “Assignee”).

W I T N E S S E T H:

     WHEREAS, Assignor and Assignee are parties to that certain Agreement of Sale and Purchase,
dated as of _______________, 2007, [as amended] (the “Agreement”), pertaining to the sale of the
[senior living or skilled nursing facility] (the “Facility”) described on Exhibit A hereto
and incorporated herein by reference; and

     WHEREAS, the Agreement provides that Assignor shall assign to Assignee, and Assignee shall
assume, Assignor’s rights, title and interest in certain [permits, guarantees, warranties, licenses
and agreements] relating to the ownership of the Facility;

     NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained
herein and in the Agreement, Assignor and Assignee agree as follows:

     1. Assignment and Assumption. Assignor hereby assigns to Assignee all of Assignor’s
right, title and interest in and to and all of Assignor’s obligations under any of the following
that are listed in Exhibit B hereto (collectively, the “Assigned Rights”), to the extent
that they relate exclusively to the Facility and are assignable by Seller under the terms and
conditions thereof without the consent or approval of any other individual, partnership, joint
venture, corporation, limited liability company, trust, unincorporated organization, Government (as
herein defined) or other legal entity: [(i) certificates of occupancy and permits or approvals of
any nature from any federal, state, local or municipal government or any department, commission,
board, bureau, agency, instrumentality, unit or taxing authority thereof ( a “Government”); (ii)
guarantees, warranties and indemnities pertaining to the ownership of the Facility; and (iii)
management agreements, service contracts, contractor agreements, construction contracts or other
agreements or instruments affecting all or a portion of the Facility.] Assignee hereby accepts all
of such right, title and interest to, in and under the Assigned Rights and assumes all of the
obligations of Assignor under the Assigned rights and arising or accruing on or after
_______________, 2007 (the “Effective Date”).

     2. Indemnification. Assignee agrees to indemnify, defend and hold Assignor harmless
from and against any liability, loss, damage, cost, claim or expense directly or indirectly related
to or in any way associated with the Assigned Rights arising from the obligations of Assignee to be
performed on or after the Effective Date. Assignor agrees to indemnify, defend and hold Assignee

E-1

 

harmless from and against any liability, loss, damage, cost, claim or expense directly or
indirectly related to or in any way associated with the Assigned Rights arising from the
obligations of Assignor under the Assigned Rights and incurred prior to the Effective Date. Any
claim made by Assignee or Assignor against the other under this Section 2 shall be made in
accordance with the provisions of Section 8.3 of the Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and
delivered on the day and year first above written.

	 	 	 	 	 
	 	ASSIGNOR:

_______________, a _______________

 	 
	 	By:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	ASSIGNEE:

_______________, a _______________

 	 
	 	By:  	 	 
	 	Title:  	 	 
	 	 	 	 

E-2

 

	 	 	 	 	 

Exhibit A

to General Assignment

E-3

 

Exhibit B

to General Assignment

E-4

 

Exhibit F

to Agreement of Sale and Purchase

Form of Lease Termination

This instrument was prepared by:

________________________________

________________________________

________________________________

________________________________

LEASE TERMINATION AGREEMENT

     THIS LEASE TERMINATION AGREEMENT (the “Termination”) is dated as of _______________,
2007, and effective at the Effective Time (as defined in Section 1 hereof), and is by and
among
_______________, _______________ (the “Landlord”), with an address of
_______________,
and _______________, a _______________ (the “Tenant”),
with an address of _______________.

PRELIMINARY STATEMENTS

     A. Pursuant to that certain [Lease Agreement identified on Exhibit A attached hereto]
(the “Lease”), Tenant leased from Landlord the premises more particularly described as the
“_______________” in the Lease (the “Premises”).

     B. In conjunction with the conveyance of the Premises by Landlord to Tenant, Landlord and
Tenant wish to agree and consent to the termination of the Lease.

TERMS

     NOW, THEREFORE, in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the
mutual promises contained in this Termination, the parties, intending to be legally bound, agree as
follows:

     1. Landlord and Tenant hereby agree and consent to the termination of the Lease, effective as
of ____________ ___.m. (Central Time) on the date hereof (the “Effective Time”); provided, however, that
Tenant is not released from any liabilities, duties or obligations under the Lease that arose or
accrued prior to the Effective Time, including, without limitation, the obligation, responsibility
or liability for the payment to Landlord or any other person or entity for any losses, liabilities,
damages, injuries, penalties, fines, costs, expenses, claims and other amounts of any and every
kind whatsoever (including, without limitation, reasonable attorneys’ fees and expenses) that
relate to (a) the Lease; (b) Tenant’s occupancy of the Premises or the improvements thereon; (c)
the use or enjoyment of any appurtenances, easements, rights and privileges belonging to the
Premises

F-1

 

by Tenant or its invitees, officers, contractors, subcontractors, agents, representatives or
employees; or (d) causes of action, claims, suits, actions or other proceedings (i) pending at the
Effective Time or (ii) filed or made at or after the Effective Time and relating to events
occurring or liabilities or obligations arising or accruing prior to the Effective Time.

     2. Tenant hereby releases and forever discharges Landlord from all known or unknown causes of
action, claims, suits, actions, demands or other proceedings of any kind that Tenant has as of the
Effective Time or may have after the Effective Time on account of or in any way arising out of or
related to the Lease or the Premises.

     3. This Termination shall be construed and interpreted in accordance with the laws of the
State in which the Premises are located.

     4. This Termination shall inure to the benefit of the successors and assigns of the parties
hereto.

     5. This Termination may be executed in any number of counterparts, each of which shall be
deemed an original hereof and all of which together shall constitute but one Termination. In the
event of any conflict between the terms of this Termination and the terms of the Lease, the terms
of this Termination shall govern and shall be controlling.

     IN WITNESS WHEREOF, the parties hereto have executed this instrument effective on the date set
forth above.

	 	 	 	 	 
	 	LANDLORD:

___________________________, a

___________________________

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	TENANT:

___________________________, a

___________________________

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[INSERT APPROPRIATE ACKNOWLEDGEMENT

FORM AND RECORDING REQUIREMENTS]

F-2

 

Exhibit A

to Lease Termination

Description of Lease

F-3

 

Exhibit G-1

to Agreement of Sale and Purchase

Emeritus Mortgage Loan

Promissory Note, dated June 30, 2005, executed by Emeritus Corporation in the principal amount of
$10.8 million and payable to Healthcare Realty Trust Incorporated, as amended, renewed, modified or
extended. As of the February 28, 2007, the outstanding principal balance thereunder was $10.8
million and non-default rate of interest thereunder was 10% per annum.

F-1

 

Exhibit G-2

to Agreement of Sale and Purchase

Term Mortgage Loan

Term Loan Note, dated May 1, 2003, executed by Emeritus Corporation in the principal amount of
$600,000 and payable to HR Acquisition I Corporation, as amended, renewed, modified or extended.
As of February 28, 2007, the outstanding principal balance thereunder was $600,000 and the
non-default rate of interest thereunder was 10% per annum.

G-1

 

Exhibit H

to Agreement of Sale and Purchase

List of Tenant Leases

     1. Lease Agreement, dated May 1, 2003, by and between HR Acquisition I Corporation, Capstone
Capital of Pennsylvania, Inc., and HRT Holdings, Inc., as lessor, and Emeritus Corporation, as
lessee, as amended, modified, extended or assigned, and including any recorded lease memoranda or
short form leases thereof, as amended, modified, extended or assigned.

     2. Lease Agreement, dated as of December 31, 1996, by and between Capstone Capital of San
Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated Living Communities of
McKinney, Inc., as lessee, as amended, modified, extended or assigned, and including any recorded
lease memoranda or short form leases thereof, as amended, modified, extended or assigned.

     3. Lease Agreement, dated as of December 31, 1996, by and between Capstone Capital of San
Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated Living Communities of
Henderson, Inc., as lessee, as amended, modified, extended or assigned, and including any recorded
lease memoranda or short form leases thereof, as amended, modified, extended or assigned.

     4. Lease Agreement, dated as of December 31, 1996, by and among Capstone Capital of San
Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated Living Communities of
Oakwell, Inc., as lessee, and Integrated Living Communities, Inc., as amended, modified, extended
or assigned, and including any recorded lease memoranda or short form leases thereof, as amended,
modified, extended or assigned.

     5. Lease Agreement, dated as of December 31, 1996, by and among Capstone Capital of San
Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated Living Communities of
San Antonio, Inc., as lessee, and Integrated Living Communities, Inc., as amended, modified,
extended or assigned, and including any recorded lease memoranda or short form leases thereof, as
amended, modified, extended or assigned.

H-1

 

Exhibit I

to Agreement of Sale and Purchase

Form of Title Affidavit

TITLE AFFIDAVIT

     BEFORE ME, the undersigned authority, on this day personally appeared
_______________ (the “Affiant”), personally known to be the person whose name is
subscribed hereto, and upon his oath deposes and says as follows:

	1.	 	Affiant is the _______________ of
_______________, a _______________ (the
“Owner”). Deponent has knowledge of the statements made herein and is qualified and authorized
to make and deliver this Title Affidavit on behalf of Owner.

	2.	 	Owner is the present owner of the property described in Exhibit A attached hereto
(the “Property”).

	3.	 	To the best of Affiant’s knowledge, there are no pending disputes concerning the location of
the boundary lines, fences, driveways, walks, encroachments or improvements, either onto or
from the Property.

	4.	 	To the best of Affiant’s knowledge, there are no currently pending suits, proceedings or
judgments that adversely affect the title to the Property.

	5.	 	There are no tenancies, leases, subleases, occupancies or parties in possession of the
Property except for _______________.

	6.	 	No bankruptcy proceedings in any federal court, federal tax liens, state tax liens and/or
judgments have been or are being filed against or by Owner.

	7.	 	There are no liens for past due taxes of any nature or any unpaid assessments of any kind
against the Property, other than shown on Commitment No.
___ (the “Commitment”)
issued by Fidelity National Title Insurance Company (“Fidelity”).

	8.	 	As of the closing of the sale of the Property, there will be no financing statements under
which Owner is the debtor encumbering the Property and no outstanding indebtedness of Owner
for equipment, appliances or other fixtures attached to the Property.

	9.	 	This Title Affidavit is being delivered to Fidelity in connection with the conveyance of the
Property to _______________, a _______________.

E-1

 

	10.	 	There are no unpaid debts or liens for work, improvements or repairs that have been
undertaken by or at the request of Owner on the Property preceding the date of the making of
this Title Affidavit.

E-2

 

     EXECUTED
this _______________ day of _______________, 2007.

	 	 	 	 	 
	 	___________________________

 	 
	 	By:  	 	 
	 	Title: 	 	 
	 	 	 	 
	 

     SUBSCRIBED
AND SWORN TO BEFORE ME this _______________ day of _______________, 2007.

___________________________

Notary Public, State of _______________

___________________________

Printed Name

My commission expires:

___________________________

[SEAL]

E-3

 

Exhibit A

to Title Affidavit

Description of Property

E-4

 

Exhibit J

to Agreement of Sale and Purchase

Form of Mortgage Assignment

ASSIGNMENT AND ASSUMPTION

OF LOAN AND LOAN DOCUMENTS

     THIS ASSIGNMENT AND ASSUMPTION OF LOAN AND LOAN DOCUMENTS (the “Assignment”) is made as of
_______________,
by and between _______________, a _______________ (the
“Assignor”), and
_______________, a _______________ (the “Assignee”).

     FOR A VALUABLE CONSIDERATION AND THE MUTUAL COVENANTS HEREIN CONTAINED, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

     1. Assignor hereby bargains, sells, assigns, transfers and conveys unto Assignee, without
recourse or warranty, all of Assignor’s right, title and interest in and to those loan documents
(collectively, the “Loan Documents”) listed and identified in Exhibit A hereto, the loan
indebtedness (the “Loan”) evidenced and secured, respectively, by the Note and the
[_______________] identified in Exhibit A hereto and all rights, options, benefits and
privileges granted to Assignor in the Loan Documents. Assignee hereby accepts such assignment and
assumes, effective as of _______________, 2007 (the “Effective Date”), all liabilities, duties and
obligations of Assignor under the Loan Documents and hereby agrees to be bound by and upon all of
the covenants, agreements, terms, provisions and conditions of the Loan Documents.

     2. ASSIGNOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LOAN, THE LOAN DOCUMENTS, THE COLLATERAL SECURITY FOR THE LOAN, IF ANY, OR THE ABILITY OF THE
OBLIGORS UNDER ANY OF THE LOAN DOCUMENTS TO SATISFY THEIR RESPECTIVE OBLIGATIONS THEREUNDER.
ASSIGNEE AGREES THAT THE LOAN AND THE LOAN DOCUMENTS ARE ACCEPTED BY ASSIGNEE IN “AS-IS, WHERE-IS”
CONDITION, AND ASSIGNOR SPECIFICALLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.

     3. Assignee hereby releases and forever discharges Assignor from all known or unknown causes
of action, claims, suits, actions, demands or other proceedings of any kind relating to the Loan,
the Loan Documents or the ability of the obligors under any of the Loan Documents to satisfy their
respective obligations thereunder. REGARDLESS OF ANY STATEMENTS OR REPRESENTATIONS IN THE LOAN
DOCUMENTS TO THE CONTRARY, ASSIGNEE ACKNOWLEDGES AND AGREES THAT REPAYMENT OF THE LOAN IS
UNSECURED AND ANY PRIOR COLLATERAL SECURITY FOR THE LOAN WAS RELEASED OR EXTINGUISHED PRIOR TO
THIS ASSIGNMENT.

E-1

 

     4. This Assignment shall be construed and interpreted in accordance with the laws of the State
of __________________.

     5. This Assignment shall inure to the benefit of the successors and assigns of the parties
hereto.

     6. This Assignment may be executed in any number of counterparts, each of which shall be
deemed an original hereof and all of which together shall constitute but one Assignment. In the
event of any conflict between the terms of this Assignment and the terms of the Lease, the terms of
this Assignment shall govern and shall be controlling.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment to be effective as of the
Effective Date.

	 	 	 	 	 
	 	ASSIGNOR:

_______________, a _______________

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	ASSIGNEE:

_______________, a _______________

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

[INSERT APPROPRIATE ACKNOWLEDGEMENT

FORM AND RECORDING REQUIREMENTS]

E-2

 

Exhibit A

to Assignment and Assumption of Loan and Loan Documents

E-3

 

Schedule 3.6

to Agreement of Sale and Purchase

	 	 	 
	Facility	 	Zoning Classification
	Loyalton at Bloomsburg

	 	C (General Commercial District)
	420 Shaffer Road
	 	 
	Bloomsburg, Pennsylvania
	 	 
	 
	 	 
	Loyalton at Harrisburg

	 	B.O.R. (Business, Office, Residential)
	3560 N. Progress Ave.
	 	 
	Harrisburg, Pennsylvania
	 	 
	 
	 	 
	Loyalton at Creekview

	 	R-T (Residential Towne)
	1100 Grandon Way
	 	 
	Hampden, Pennsylvania
	 	 

E-1EX-10.1 CONTRIBUTION AGREEMENT

 

CONTRIBUTION AGREEMENT

BY AND AMONG

ODESSA REGIONAL HOSPITAL, LP

ALLIANCE HOSPITAL, LTD.,

AND

SRI-SAI ENTERPRISES, INC.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	List of Annexes/Exhibits/Schedules
	 	 	i	 
	 
	 	 	 	 
	RECITALS
	 	 	1	 
	 
	 	 	 	 
	AGREEMENT
	 	 	1	 
	 
	 	 	 	 
	ARTICLE I CONTRIBUTION OF ASSETS; CLOSING
	 	 	1	 
	Section 1.1 Assets to Be Contributed
	 	 	1	 
	Section 1.2 Excluded Assets
	 	 	2	 
	Section 1.3 Assumed Liabilities
	 	 	3	 
	Section 1.4 Excluded Liabilities
	 	 	4	 
	Section 1.5 Purchase Price; Working Capital Adjustment.
	 	 	5	 
	Section 1.6 Allocation
	 	 	8	 
	Section 1.7 Closing
	 	 	8	 
	Section 1.8 Closing Obligations
	 	 	8	 
	Section 1.9 Government Payment Receivables
	 	 	10	 
	Section 1.10 Inventory
	 	 	11	 
	Section 1.11 Prorations
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	11	 
	Section 2.1 Organization and Good Standing.
	 	 	11	 
	Section 2.2 Authority; No Conflict.
	 	 	12	 
	Section 2.3 Financial Statements
	 	 	12	 
	Section 2.4 No Material Adverse Change
	 	 	13	 
	Section 2.5 Assets.
	 	 	13	 
	Section 2.6 Real Property.
	 	 	13	 
	Section 2.7 Capitalization
	 	 	14	 
	Section 2.8 Taxes
	 	 	14	 
	Section 2.9 Employees.
	 	 	15	 
	Section 2.10 Employee Benefits.
	 	 	16	 
	Section 2.11 Legal Proceedings, Orders.
	 	 	16	 
	Section 2.12 Environmental Matters
	 	 	17	 
	Section 2.13 Insurance
	 	 	18	 
	Section 2.14 Contracts; No Defaults.
	 	 	18	 
	Section 2.15 Intellectual Property.
	 	 	18	 
	Section 2.16 Relationships with Related Persons
	 	 	20	 
	Section 2.17 No Undisclosed Liabilities
	 	 	20	 
	Section 2.18 Absence of Certain Changes and Events
	 	 	20	 
	Section 2.19 Accounts Receivable
	 	 	21	 
	Section 2.20 Compliance with Legal Requirements
	 	 	21	 
	Section 2.21 Governmental Authorizations
	 	 	22	 
	Section 2.22 Medicare Participation/Accreditation.
	 	 	22	 
	Section 2.23 Hill-Burton Care
	 	 	23	 
	Section 2.24 Third Party Payor Cost Reports
	 	 	23	 

2

 

	 	 	 	 	 
	Section 2.25 Medical Staff Matters
	 	 	23	 
	Section 2.26 Experimental Procedures
	 	 	24	 
	Section 2.27 Compliance Program
	 	 	24	 
	Section 2.28 Securities Law Matters.
	 	 	24	 
	Section 2.29 Brokers or Finders
	 	 	24	 
	Section 2.30 Insolvency
	 	 	24	 
	Section 2.31 Disclosure
	 	 	25	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	25	 
	Section 3.1 Organization and Good Standing
	 	 	25	 
	Section 3.2 Authority, No Conflict.
	 	 	25	 
	Section 3.3 Capitalization
	 	 	26	 
	Section 3.4 Financial Statements
	 	 	26	 
	Section 3.5 No Material Adverse Change
	 	 	26	 
	Section 3.6 Sufficient Financial Resources
	 	 	26	 
	Section 3.7 Brokers or Finders
	 	 	26	 
	 
	 	 	 	 
	ARTICLE IV PRE-CLOSING COVENANTS
	 	 	27	 
	Section 4.1 Access and Investigation
	 	 	27	 
	Section 4.2 Operation of the Business of Seller
	 	 	27	 
	Section 4.3 Required Approvals.
	 	 	28	 
	Section 4.4 Notification
	 	 	29	 
	Section 4.5 No Negotiation
	 	 	29	 
	Section 4.6 Title Commitment; Surveys.
	 	 	29	 
	Section 4.7 Insurance Ratings
	 	 	31	 
	Section 4.8 Pre-Closing Financial Statements
	 	 	31	 
	Section 4.9 Related Party Receivables
	 	 	31	 
	Section 4.10 Confidential Information Statement/Private Placement Memorandum
	 	 	31	 
	Section 4.11 Reasonable Best Efforts
	 	 	31	 
	Section 4.12 Payment of Accrued Vacation and Sick Leave
	 	 	31	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS TO CLOSING
	 	 	31	 
	Section 5.1 Conditions to Obligations of Buyer
	 	 	31	 
	Section 5.2 Conditions to Obligations of Seller
	 	 	34	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL COVENANTS
	 	 	35	 
	Section 6.1 Employees and Employee Benefits.
	 	 	35	 
	Section 6.2 Payment of Taxes Resulting From Sale of Assets by Seller
	 	 	35	 
	Section 6.3 Payment of Other Excluded Liabilities
	 	 	35	 
	Section 6.4 Restrictive Covenants.
	 	 	36	 
	Section 6.5 Public Announcements
	 	 	37	 
	Section 6.6 Confidentiality.
	 	 	37	 
	Section 6.7 Customers and Other Business Relationships
	 	 	38	 
	Section 6.8 Cost Reports
	 	 	38	 
	Section 6.9 Misdirected Payments, Etc
	 	 	38	 
	Section 6.10 Insurance Matters
	 	 	38	 
	Section 6.11 Audited Statements Cooperation
	 	 	39	 

3

 

	 	 	 	 	 
	Section 6.12 Retention and Access to Books and Records
	 	 	39	 
	Section 6.13 Cooperation on Tax Matters
	 	 	39	 
	Section 6.14 Litigation Cooperation
	 	 	40	 
	Section 6.15 Distribution of Buyer LP Units.
	 	 	40	 
	Section 6.16 Guaranty by General Partner
	 	 	41	 
	Section 6.17 Termination of Governmental Authorizations
	 	 	41	 
	Section 6.18 Further Assurances
	 	 	41	 
	Section 6.19 Minimum Cash Amount
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VII INDEMNIFICATION
	 	 	42	 
	Section 7.1 Survival
	 	 	42	 
	Section 7.2 Indemnification and Reimbursement By Seller
	 	 	42	 
	Section 7.3 Indemnification and Reimbursement by Buyer
	 	 	42	 
	Section 7.4 Limitations on Indemnification by Seller
	 	 	43	 
	Section 7.5 Limitations on Indemnification by Buyer
	 	 	43	 
	Section 7.6 Time Limitations.
	 	 	43	 
	Section 7.7 Third-Party Claims.
	 	 	44	 
	Section 7.8 Procedure For Indemnification — Other Claims
	 	 	45	 
	Section 7.9 No Double Materiality
	 	 	45	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION
	 	 	45	 
	Section 8.1 Termination Events
	 	 	45	 
	Section 8.2 Effect of Termination
	 	 	46	 
	 
	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS
	 	 	46	 
	Section 9.1 Expenses
	 	 	46	 
	Section 9.2 Assignment; No Third Party Beneficiaries
	 	 	46	 
	Section 9.3 Notices
	 	 	47	 
	Section 9.4 Entire Agreement; Modification
	 	 	47	 
	Section 9.5 Waiver
	 	 	48	 
	Section 9.6 Severability
	 	 	48	 
	Section 9.7 Headings; Construction
	 	 	48	 
	Section 9.8 Governing Law
	 	 	48	 
	Section 9.9 Execution of Agreement; Counterparts
	 	 	48	 
	Section 9.10 Tax and Medicare Advice and Reliance
	 	 	48	 
	Section 9.11 Submission to Jurisdiction
	 	 	49	 
	Section 9.12 Consent to Assignment
	 	 	49	 
	Section 9.13 CON Disclaimer
	 	 	49	 

4

 

List of Annexes/Exhibits/Schedules

	 	 	 	 	 	 	 	 	 
	Annexes
	 	 	 	 	 	 	 	 
	Annex A
	 	 	—	 	 	Defined Terms

	Annex B
	 	 	—	 	 	Assumed Seller Contracts

	Annex C
	 	 	—	 	 	Assumed Employee Benefit Plans

	Annex D
	 	 	—	 	 	Material Consents

	Annex E
	 	 	—	 	 	Net Working Capital Example Calculation

	 
	 	 	 	 	 	 	 	 
	Exhibits
	 	 	 	 	 	 	 	 
	Exhibit A
	 	 	—	 	 	Form of Bill of Sale, Assignment and Assumption Agreement

	Exhibit B
	 	 	—	 	 	Form of Special Warranty Deed

	Exhibit C
	 	 	—	 	 	Form of Escrow Agreement

	Exhibit D
	 	 	—	 	 	Form of Buyer Subscription Document Package

	Exhibit E
	 	 	—	 	 	Form of Indemnification Agreement

	Exhibit F
	 	 	—	 	 	Form of Restrictive Covenant Agreement

	Exhibit G
	 	 	—	 	 	Amended and Restated Buyer LPAgreement

	Exhibit H
	 	 	—	 	 	Form of Working Capital Adjustment Escrow Agreement

	Exhibit I
	 	 	—	 	 	Form of Opinion of Seller’s Counsel

	Exhibit J
	 	 	—	 	 	Form of Opinion of Buyer’s Counsel

	 
	 	 	 	 	 	 	 	 
	Schedules
	 	 	 	 	 	 	 	 
	Schedule 2.2(b)
	 	 	—	 	 	Seller Conflicts

	Schedule 2.2(c)
	 	 	—	 	 	Seller Consents

	Schedule 2.3
	 	 	—	 	 	Financial Statements

	Schedule 2.5(a)
	 	 	—	 	 	Encumbrances

	Schedule 2.5(b)
	 	 	—	 	 	Tangible Personal Property

	Schedule 2.6(a)
	 	 	—	 	 	Real Property

	Schedule 2.6(b)
	 	 	—	 	 	Real Property Encumbrances

	Schedule 2.7
	 	 	—	 	 	Capitalization

	Schedule 2.8
	 	 	—	 	 	Taxes

	Schedule 2.9(a)
	 	 	—	 	 	Employees

	Schedule 2.9(b)
	 	 	—	 	 	Employment Contracts

	Schedule 2.9(d)
	 	 	—	 	 	WARN Act

	Schedule 2.10(a)
	 	 	—	 	 	Employee Benefits

	Schedule 2.11(a)
	 	 	—	 	 	Proceedings

	Schedule 2.12
	 	 	—	 	 	Environmental Matters

	Schedule 2.13
	 	 	—	 	 	Insurance

	Schedule 2.14(a)
	 	 	—	 	 	Seller Contract

	Schedule 2.14(b)
	 	 	—	 	 	Seller Contract Defaults

	Schedule 2.15(b)
	 	 	—	 	 	Intellectual Property

	Schedule 2.15(c)
	 	 	—	 	 	Intellectual Property Licenses

	Schedule 2.16
	 	 	—	 	 	Related Persons

	Schedule 2.17
	 	 	—	 	 	No Undisclosed Liabilities

	Schedule 2.18
	 	 	—	 	 	Absence of Certain Changes and Events

	Schedule 2.20
	 	 	—	 	 	Compliance with Legal Requirements

	Schedule 2.21
	 	 	—	 	 	Governmental Authorizations

	Schedule 2.22
	 	 	—	 	 	Medicare Participation/Accreditation

	Schedule 2.24
	 	 	—	 	 	Cost Reports

i

 

	 	 	 	 	 	 	 	 	 
	Schedule 2.25
	 	 	—	 	 	Medical Staff Matters

	Schedule 2.27
	 	 	—	 	 	Compliance Program

	Schedule 2.29
	 	 	—	 	 	Brokers; Finders

	Schedule 3.3
	 	 	—	 	 	Buyer Capitalization

	Schedule 3.4
	 	 	—	 	 	Buyer Financial Statements

ii

 

 

CONTRIBUTION AGREEMENT

     This
Contribution Agreement (the “Agreement”), made and entered into as of May 9, 2007, is
by and among Odessa Regional Hospital, LP, a Delaware limited partnership (“Buyer”), Alliance
Hospital, Ltd., a Texas limited partnership (“Seller”) and (solely for purposes of Section 6.15 and
Section 6.16) Sri-Sai Enterprises, Inc., a Texas corporation (the “General Partner”). Capitalized
terms used herein are defined as set forth in Annex A attached hereto.

RECITALS

     Seller desires to contribute and sell, and Buyer desires to acquire, the Assets
for the consideration and on the terms set forth in this Agreement.

AGREEMENT

     The parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

CONTRIBUTION OF ASSETS; CLOSING

     Section 1.1 Assets to Be Contributed. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Seller shall contribute, sell, convey, assign,
transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of
any Encumbrance, excluding any Permitted Real Property Encumbrances, all of Seller’s property and
assets, real, personal or mixed, tangible and intangible, of every kind and description, wherever
located, including the following assets (but excluding the Excluded Assets):

          (a) (i) all of Seller’s fee right, title and interest in and to any real property, including
the real property described in Schedule 2.6(a), together with all covenants, rights,
options, easements and privileges thereto (the “Owned Real Property”), and, further, together with
all buildings, structures, fixtures and other improvements located thereon (including, without
limitation, any and all plumbing, air conditioning, heating, ventilating, mechanical, electrical
and other utilities and other utility systems, landscaping, sidewalks, construction in progress,
security devices, signs and lighting fixtures) (collectively, the “Improvements”); and (ii) all of
Seller’s leasehold interest in Leased Real Property, including the Leased Real Property described
in Schedule 2.6(a);

          (b) all tangible personal property owned or leased by Seller (other than the Inventories)
(collectively, the “Tangible Personal Property”), including, without limitation, all equipment,
furniture, fixtures, machinery, vehicles, office furnishings, computer hardware, instruments,
leasehold improvements, spare parts and, to the extent assignable or transferable, including, but
not limited to, the tangible personal property listed on Schedule 2.5(b);

          (c) the Seller Contracts listed on Annex B (the “Assumed Seller Contracts”);

          (d) all inventories of usable goods and supplies of Seller, including pharmaceuticals and
medications, food, janitorial supplies, office supplies, forms, consumables, disposables, linens,
and medical supplies, wherever located (collectively, the “Inventories”);

          (e) all accounts receivable of Seller (excluding the Government Patient Receivables), billed
and unbilled, recorded or unrecorded, accrued and existing, whether or not

1

 

written off, as of the Closing Date (collectively, the “Non-Government Receivables”);

          (f) the right to payments received by Seller in respect of the Government Patient Receivables
pursuant to Section 1.9;

          (g) except as otherwise provided in Section 1.2(h) and (i), all Governmental Authorizations of
Seller and all pending applications or renewals for Governmental Authorizations, including those
Governmental Authorizations listed on Schedule 2.21, in each case to the extent
transferable to Buyer;

          (h) all financial, patient, medical staff, personnel and other records relating to the
Facility or the Assets (including, without limitation, all accounts receivable records, equipment
records, medical administrative libraries, medical records, patient billing records, documents,
catalogs, books, records, files, operating manuals and current personnel records), but excluding
the Excluded Records;

          (i) all of the intangible rights and property of Seller, including the Intellectual Property
Assets, and all going concern value and goodwill of Seller;

          (j) all insurance benefits, including rights and proceeds, arising from or relating to the
Assets prior to the Closing Date;

          (k) all claims of Seller against third parties relating to the Assets, and any transferable
warranties or guaranties issued for the benefit of Seller with respect to the Assets;

          (l) all rights of Seller relating to deposits and prepaid expenses, claims for refunds and
rights to offset in respect thereof which are not excluded under
Section 1.2(a) or Section 1.2(f);

          (m) all Employee Benefit Plans of Seller listed on Annex C (the “Assumed Benefit
Plans”); and

          (n) all other properties and assets of every kind, character and description, tangible or
intangible, owned by Seller, whether or not similar to the items specifically set forth above.

All of the property and assets to be transferred to Buyer hereunder are herein referred to
collectively as the “Assets.” Notwithstanding the foregoing, the transfer of the Assets pursuant
to this Agreement will not include the assumption of any liability or obligation in respect thereof
unless the Buyer expressly assumes such liability or obligation pursuant to Section 1.3.

     Section 1.2 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 1.1 or elsewhere in this Agreement, the following items (collectively, the “Excluded
Assets”) are not part of the sale and purchase contemplated hereunder, are excluded from the
Assets, and will remain the property of Seller after the Closing:

          (a) all cash and cash equivalents and all securities and short-term investments, and the
maintenance deposit of Seller with MPT of Odessa Hospital, L.P. referenced under “Deposits” in the
balance sheets of Seller included in the Financial Statements;

          (b) any Seller Contracts other than the Assumed Seller Contracts;

2

 

          (c) all records relating to the Excluded Assets and Excluded Liabilities to the extent that
Buyer does not need the same (as determined by Buyer) in connection with the ongoing activities of
the Facility, the Assets or the Assumed Liabilities, as well as all records which under applicable
Legal Requirements Seller is required to maintain in its possession (the “Excluded Records”);

          (d) the minute book, stock records and corporate seal, as applicable, of Seller;

          (e) all of Seller’s insurance policies and rights thereunder (except to the extent specified
in Sections 1.1(j) and (k));

          (f) all claims for refund of Taxes and other governmental charges of whatever nature;

          (g) all rights in connection with and assets of any Employee Benefit Plans (other than the
Assumed Benefit Plans);

          (h) all governmental provider numbers of Seller, including, but not limited to, Medicare and
Medicaid provider numbers (the “Governmental Provider Numbers”);

          (i) the hospital license of Seller with the State of Texas;

          (j) any intercompany payables owing to Seller from Alliance Medical Group, Inc. (“AMG”); and

          (k) all rights of Seller in connection with the transactions contemplated hereby.

     Section 1.3 Assumed Liabilities. Buyer will not assume or otherwise be responsible
for any liabilities or obligations of Seller, except that from and after the Effective Time, the
Buyer will assume as and when due the following liabilities and obligations of Seller (the “Assumed
Liabilities”):

          (a) all those current liabilities and obligations of Seller which are included in the
calculation of the Net Working Capital Amount;

          (b) all liabilities and obligations of Seller which accrue on or after the Effective Time
which arise out of the Assumed Seller Contracts (excluding any liability or obligation with respect
to any Assumed Seller Contracts arising as a result of any act or omission which occurred on or
prior to the Effective Time or the breach of any representation or warranty hereunder by Seller);
and

          (c) any liabilities and obligations arising after the Effective Time under the Assumed Benefit
Plans.

3

 

     Section 1.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer shall not
assume or become obligated with respect to any other obligation or liability of Seller of any
nature whatsoever and Seller shall retain and shall pay, discharge and perform all liabilities not
specifically included in the Assumed Liabilities (the “Excluded Liabilities”), including, without
limitation, the following:

          (a) any liability or obligation under any Assumed Seller Contract which arises after the
Effective Time but which arises out of or relates to any act or omission which occurred on or prior
to the Effective Time;

          (b) any liability or obligation under any Seller Contract that is not an Assumed Seller
Contract;

          (c) any current liabilities and obligations of Seller not specifically included in the
calculation of the Net Working Capital Amount;

          (d) any liability or obligation of Seller for Taxes, including (i) any Taxes arising as a
result of Seller’s operation of its business or ownership of the Assets prior to the Effective
Time, (ii) any Taxes that will arise as a result of the sale of the Assets pursuant to this
Agreement, (iii) any deferred Taxes of any nature, and (iv) any Taxes relating to the Post-Closing
Seller Tax Returns;

          (e) any claims or potential claims for medical malpractice or general liability to the extent
relating to periods prior to the Effective Time;

          (f) any liabilities or obligations associated with or arising out of any of the Excluded
Assets;

          (g) liabilities and obligations of Seller in respect of periods prior to the Effective Time
arising under the terms of the Medicare, Medicaid, CHAMPUS/TriCare, Blue Cross, or any other third
party payor programs, whether governmental or non-governmental, including any claim, penalty or
sanction relating to any claim for overpayment, any cost report relating to a period prior to
Effective Time, and Seller’s terminating cost report for the Facility;

          (h) any obligation or liability asserted under the federal Hill-Burton program or other
restricted grant and loan programs with respect to the ownership or operation of the Facility or
the Assets;

          (i) any liability or obligation under any Environmental Law arising out of or relating to the
operation of Seller’s business or Seller’s leasing, ownership or operation of real property;

          (j) except as set forth in Section 1.3(c), any liability or obligation under the Employee
Benefit Plans or relating to payroll, vacation, sick leave, workers’ compensation, unemployment
benefits, pension benefits, employee stock option or profit sharing plans, health care plans or
benefits, or any other employee plans or benefits of any kind for Seller’s employees or former
employees or both;

          (k) except as otherwise provided herein, any liability or obligation under any employment,
severance, retention or termination agreement with any employee of Seller;

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          (l) any liability or obligation arising out of or relating to any employee grievance with
respect to the employees of Seller, whether or not the affected employees are hired by Buyer;

          (m) any liability or obligation to any Seller Partner (or Affiliate thereof) or Related Person
of Seller not assumed by Buyer pursuant to Section 1.3;

          (n) any liability or obligation to indemnify, reimburse or advance amounts to any officer,
director, employee or agent of Seller;

          (o) any liability or obligation to distribute to the Seller Partners or otherwise apply all or
any part of the consideration received hereunder;

          (p) any liability or obligation arising out of any Proceeding pending as of the Effective
Time, whether or not set forth in any of the Schedules attached hereto, or any Proceeding commenced
after the Effective Time and arising out of, or relating to, any occurrence or event happening
prior to the Effective Time;

          (q) any liability or obligation arising out of or resulting from Seller’s compliance or
non-compliance with any Legal Requirement or Order of any Governmental Authority;

          (r) all obligations of Seller for borrowed money;

          (s) any intercompany liabilities and obligations owing by Seller to AMG;

          (t) all liabilities and obligations relating to any oral agreements, oral contracts or oral
understandings with any referral sources including, but not limited to, physicians, unless reduced
to writing and expressly assumed as part of the Assumed Seller Contracts;

          (u) any liability arising out of the act of assignment of any of the Assumed Seller Contracts
to Buyer, provided that Section 9.12 shall apply with respect to the assignment of the Seller
Contracts; and

          (v) any liability or obligation of Seller based upon Seller’s acts or omissions occurring
after the Effective Time.

     Section 1.5 Purchase Price; Working Capital Adjustment.

          (a) Preliminary Working Capital. Attached as Annex E is a chart (the “Net
Working Capital Chart”) setting forth (i) the Net Working Capital of Seller as of October 31,
2006, and (ii) the estimated Net Working Capital of Seller as of May 31, 2007, as determined by
Seller in accordance with GAAP applied on a basis consistent with Seller’s Accounting Practices and
Procedures. The Net Working Capital Chart provides that the estimated Net Working Capital as of
May 31, 2007 is -$1,289,206 (such estimated amount
is referred to as the “Preliminary Net Working Capital Amount”).

          (b) Purchase Price.

               (i) Subject to the terms of this Agreement and in reliance upon the representations and
warranties of Seller contained herein, the consideration payable by Buyer for the Assets (the
“Purchase Price”), will be $65,500,000 (the “Base Amount”), prior to adjustment for

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the Closing Adjustment Amount pursuant to Section 1.5(b)(ii)(A) and the Final Adjustment
Amount pursuant to Section 1.5(c).

               (ii) The Purchase Price payable to Seller at Closing, prior to adjustment for the Final
Adjustment Amount, will equal the Base Amount, minus (1) $2,469,009 (the estimated long-term
portion of all obligations of Seller, as of May 31, 2007, as lessee or lessees under leases that
have been recorded as capital leases in accordance with GAAP (or should have been recorded as
capital leases in accordance with GAAP) and are included in the Assumed Seller Contracts), minus
(2) $29,511 (the estimated amount payable, as of May 31, 2007, under
that certain lease agreement dated as of May 28, 2004, by and between
General Electric Capital Corporation and Seller (the “GE
Lease”))plus (3)
$659,120 (the cost of the upgrade of the CT Scanner to 64 slice leased by Seller pursuant to
Leasing Schedule #12748 of that certain lease agreement dated as of September 28, 2006, by and
between Seller and Siemens Medical Solutions, USA), plus (4) $437,830 (the amount by which the
Preliminary Net Working Capital Amount exceeds the Net Working Capital of Seller as of October 31,
2006 (-$1,727,036)) (the adjustments pursuant to clauses (1)-(4) above, the “Closing Adjustment
Amount”) (the Base Amount, as adjusted by the Closing Adjustment Amount, the “Closing Purchase
Price”). The Closing Purchase Price, after giving effect to the Closing Adjustment Amount, is
$64,098,430.

               (iii) At the Closing, the Purchase Price, prior to adjustment for the Final Adjustment Amount,
will be delivered as follows:

     (A)
an amount in cash (the “Base Cash Purchase Price”),
equal to $60,581,385; plus

     (B)
the issuance of Buyer LP Units (with a value of $11,097 per Buyer LP Unit, after
giving effect to the Buyer Unit Split (the “Buyer LP Unit Value”)) at Closing with an
aggregate value equal to (x) $3,517,045, minus (y) the Residual Cash Amount as determined in
accordance with Section 6.15, which Buyer LP Units will be distributed by Seller to the
Seller Partners immediately following the Closing in accordance with Section 6.15; plus

     (C) an amount in cash equal to the Residual Cash Amount as determined in accordance
with Section 6.15; plus

     (D) the assumption of the Assumed Liabilities provided in Section 1.3 above.

               (iv) The Base Cash Purchase Price will be paid at Closing by Buyer as follows: (v) $2,000,000
of the Base Cash Purchase Price will be paid at Closing to the escrow agent pursuant to the Escrow
Agreement, (w) $500,000 of the Base Cash Purchase Price will be paid at Closing to the escrow agent
pursuant to the Working Capital Adjustment Escrow Agreement, (x) an additional portion of the Base
Cash Purchase Price will be paid to the Secured Lenders at the direction of Seller pursuant to
Section 1.8(a)(v) in satisfaction of all outstanding amounts owed by Seller pursuant to the Pay-Off
Letters, (y) an additional portion of the Base Cash Purchase Price will be paid in satisfaction of
all liabilities (including any penalties and interest) related to the 2006 Property Tax referenced
in clause (b) of Schedule 2.8 and (z) the remaining portion of the Base Cash Purchase Price
will be paid by wire transfer to an account or accounts designated by Seller.

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          (c) Final Net Working Capital Calculation.

               (i) As promptly as possible, but in any event within 90 days after the Closing Date, Buyer
will deliver to Seller a consolidated statement of Net Working Capital of Seller as of the Closing
Date and a reasonably detailed statement (the “Closing Statement”) setting forth Buyer’s
calculation of the Net Working Capital Amount. After delivery of the Closing Statement, Seller and
its accountants shall be permitted reasonable access during normal business hours to review records
included in the Assets and work papers reasonably related to the preparation of the Closing
Statement. Seller and its accountants may make inquiries of Buyer and its accountants and
employees regarding questions concerning or disagreements with the Closing Statement arising in the
course of their review thereof, and Buyer shall use its commercially reasonable efforts to cause
any such accountants and employees to cooperate with and respond to such inquiries. If Seller has
any objections to the Closing Statement, Seller shall deliver to Buyer a written statement setting
forth its objections thereto (an “Objections Statement”). Such Objections Statement shall set
forth in reasonable detail the basis of such objections together with the amounts in dispute and
any determination not specifically objected to in the Objections Statement shall be final, binding
and non-appealable on the parties hereto upon delivery of the Objections Statement. If an
Objections Statement is not delivered to Buyer within 30 days after delivery of the Closing
Statement, the Closing Statement shall be final, binding and non-appealable by the parties hereto.
Seller and Buyer shall negotiate in good faith to resolve any objections set forth in the
Objections Statement (and all such discussions related thereto shall, unless otherwise agreed by
Buyer and Seller, be governed by Rule 408 of the Federal Rules of Evidence (and any applicable
similar state rule)), but if they do not reach a final resolution within 15 days after the delivery
of the Objections Statement, Seller and Buyer shall submit such dispute to PricewaterhouseCoopers
LLP (the “Independent Auditor”). Seller and Buyer shall use their commercially reasonable efforts
to cause the Independent Auditor to resolve all such disagreements as soon as practicable. The
resolution of the dispute by the Independent Auditor shall be final, binding and non-appealable on
the parties hereto. The Closing Statement shall be modified if necessary to reflect such
determination. The fees and expenses of the Independent Auditor shall be allocated to be paid by
Buyer, on the one hand, and/or Seller, on the other hand, based upon the percentage which the
portion of the contested amount not awarded to each party bears to the amount actually contested by
such party, as determined by the Independent Auditor.

               (ii) If the Net Working Capital Amount as finally determined pursuant to Section 1.5(c)(i)
above exceeds the Preliminary Net Working Capital Amount, Buyer shall pay to Seller the amount of
such excess in accordance with this Section 1.5(c)(ii). If the Net Working Capital Amount as
finally determined pursuant to Section 1.5(c)(i) above is less than the Preliminary Net Working
Capital Amount, Seller shall pay such shortfall to Buyer in accordance with this Section 1.5(c)(ii)
(and/or shall direct the escrow agent under the Escrow Agreement to pay such amount up to the
amount of the escrow funds to Buyer in accordance with the terms of the Escrow Agreement). All
payments due and owing under this Section 1.5 will be made together with interest at the prime rate
as reported by the Wall Street Journal on the Closing Date, which interest will begin accruing on
the Closing Date and end on the date the payment is made. All amounts owed pursuant to this
Section 1.5(c)(ii) by Buyer to Seller, on the one hand, or Seller to Buyer, on the other hand, is
referred to as the “Final Adjustment Amount.” The Final Adjustment Amount shall be calculated as
an adjustment to the Cash Purchase Price. At such time that Buyer and Seller have agreed regarding
the Closing Statement and the Final Adjustment Amount in accordance with Section 1.5(c)(i), Buyer
and Seller shall execute and deliver a signature page to the Closing Statement to evidence their
agreement to the terms thereof. Payment of the Final Adjustment Amount shall be

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paid by delivery of immediately available funds to an account designated by the recipient
party(ies) within five business days after the date of final determination (subject to the terms of
the Escrow Agreement).

     Section 1.6 Allocation. The Purchase Price will be allocated in the manner proposed
by Buyer as soon as practicable following the Closing, and reasonably agreed to by Seller. After
the Closing, the parties shall make consistent use of such Purchase Price allocation for all tax
purposes and in any tax returns filed with the Internal Revenue Service in respect thereof,
including IRS Form 8594.

     Section 1.7 Closing. The consummation of the purchase and sale provided for in this
Agreement (the “Closing”) will take place at the offices of Seller’s counsel, Hollmann, Lyon,
Patterson & Durell, Inc. at 5030 East University Blvd. D-103, Odessa, Texas 79762, at 10:00 a.m.
(central time) on May 31, 2007, or such other time and place that the parties may agree (the
“Closing Date”), effective as of 11:59 p.m. (central time) on the Closing Date (the “Effective
Time”). Subject to the provisions of Article VIII, failure to consummate the contribution and sale
contemplated by this Agreement on the date and time and at the place determined pursuant to this
Section 1.7 will not result in the termination of this Agreement and will not relieve any party of
any obligation under this Agreement. In such an event, the Closing will occur as soon as
practicable, subject to Article VIII.

     Section 1.8 Closing Obligations. In addition to any other documents to be delivered
under other provisions of this Agreement, at the Closing (or such period prior to Closing as set
forth below):

          (a) Seller shall deliver to Buyer:

               (i) a bill of sale, assignment and assumption agreement with respect to the Assets and the
Assumed Liabilities in the form of Exhibit A (the “Bill of Sale, Assignment and Assumption
Agreement”), executed by Seller;

               (ii) for each interest in Owned Real Property, a recordable special warranty deed, executed by
Seller in favor of Buyer, in the form attached hereto as Exhibit B conveying such interest
subject only to the applicable Permitted Real Property Encumbrances described specifically and not
categorically;

               (iii) an escrow agreement in the form attached hereto as Exhibit C (the “Escrow
Agreement”), executed by Seller and the escrow agent set forth therein;

               (iv) evidence reasonably satisfactory to Buyer that all liabilities (including any penalties
and interest) relating to the 2006 Property Tax referenced in clause (b) of Schedule 2.8
have been paid in full at or prior to the Closing;

               (v) pay-off letters (the “Pay-off Letters”) from Western National Bank, The National Bank of
Andrews and MPT of Odessa Hospital, L.P. (the “Secured Lenders”) in a form acceptable to Buyer
providing for, upon the payment of all outstanding amounts owed by Seller to each of the Secured
Lenders at Closing, the termination of all security interests held by the Secured Lenders with
respect to the Assets (including the authorization of the filing of all necessary UCC-3 termination
statements and other necessary documentation in connection with the termination of each of the
Secured Lender’s security interests), executed by each of the Secured Lenders;

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               (vi) no later than seven days prior to Closing, completed subscription document packages of
Buyer in the form attached hereto as Exhibit D (which will include, without limitation, a
subscription agreement, investor questionnaire and indemnification units forfeiture and offset agreement as set
forth therein) (the “Subscription Document Package”), executed by each Seller Partner or
stockholder of the General Partner (and, in the event such Seller Partner or stockholder is an
entity, each indirect owner thereof) who will be distributed Buyer LP Units immediately following
the consummation of the transactions contemplated hereby in accordance with Section 6.15;

               (vii) no later than seven days prior to Closing, an indemnification agreement in the form
attached hereto as Exhibit E (the “Indemnification Agreement”), executed by each of the
direct and indirect holders of Class B Units of Seller;

               (viii) no later than seven days prior to Closing, restrictive covenant agreements in the form
attached hereto as Exhibit F (the “Restrictive Covenant Agreement”), executed by each
stockholder of the General Partner;

               (ix) a copy of the certificate of limited partnership and all amendments thereto of Seller,
duly certified as of a recent date by the Secretary of State of Texas;

               (x) certificates dated as of a date not earlier than the fifth business day prior to Closing
as to the good standing of, and the payment of all applicable state Taxes by, Seller, executed by
the appropriate officials of the State of Texas;

               (xi) a FIRPTA affidavit, executed by Seller, stating, under penalty of perjury, Seller’s U.S.
taxpayer identification number and that Seller is not a foreign person within the meaning of
Section 1445 of the Code (and any similar affidavit that may be required under state law);

               (xii) all instruments and documents reasonably required by the Title Company to issue the
Title Policy for the Real Property owned or leased by Seller as described in and provided by
Section 4.6 hereof;

               (xiii) a certificate executed by Seller as to the accuracy of its representations and
warranties as of the date of this Agreement and as of the Closing and as to its compliance with and
performance of its covenants and obligations to be performed or complied with at or before the
Closing in accordance with Section 5.1;

               (xiv) a certificate of the Secretary of Seller certifying, as complete and accurate as of the
Closing, attached copies of the Seller Limited Partnership Agreement, certifying and attaching all
requisite resolutions or actions of Seller’s general partner and limited partners approving the
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby and certifying to the incumbency of the officers of Seller executing this Agreement and any
other documents being executed in connection with the consummation of the transactions contemplated
hereby;

               (xv) a working capital adjustment escrow agreement in the form attached hereto as Exhibit
H (the “Working Capital Adjustment Escrow Agreement”), executed by Seller and the escrow agent
set forth therein; and

9

 

               (xvi) such other deeds, bills of sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as may reasonably be requested by Buyer, each in form and
substance satisfactory to Buyer and its counsel and executed by Seller.

          (b) Buyer shall deliver to Seller:

               (i) the Cash Purchase Price, payable as set forth in Section 1.5(b)(iv) above;

               (ii) the Escrow Agreement, executed by Buyer and the escrow agent, together with the delivery
of $2,000,000 of the Cash Purchase Price by wire transfer to the escrow agent thereunder;

               (iii) a second amended and restated Buyer Limited Partnership Agreement in the form of
Exhibit G (the “Amended and Restated Buyer LP Agreement”), executed by IASIS Healthcare
Holdings, Inc. and IASIS Healthcare LLC;

               (iv) the Bill of Sale, Assignment and Assumption Agreement, executed by Buyer;

               (v) the Indemnification Agreements, executed by Buyer;

               (vi) the Restrictive Covenant Agreements, executed by Buyer;

               (vii) the certificate of limited partnership and all amendments thereto of Buyer, duly
certified as of a recent date by the Secretary of State of Delaware;

               (viii) a certificate dated as of a date not earlier than the fifth business day prior to
Closing as to the good standing of Buyer, executed by the Secretary of State of Delaware;

               (ix) a certificate executed by Buyer as to the accuracy of its representations and warranties
as of the date of this Agreement and as of the Closing and as to its compliance with and
performance of its covenants and obligations to be performed or complied with at or before the
Closing in accordance with Section 5.2;

               (x) the Working Capital Adjustment Escrow Agreement, executed by Buyer and the escrow agent
set forth therein, together with the delivery of $500,000 of the Cash Purchase Price by wire
transfer to the escrow agent thereunder; and

               (xi) a certificate of the Secretary of Buyer certifying, as complete and accurate as of the
Closing, attached copies of the limited partnership agreement of Buyer, certifying and attaching
all requisite resolutions or actions of the board of directors of Buyer’s general partner approving
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby and certifying to the incumbency of the officers of Buyer’s general partner executing this
Agreement and any other documents being executed in connection with the consummation of the
transactions contemplated hereby.

     Section 1.9 Government Payment Receivables. The parties acknowledge that Buyer is not
acquiring, and the Assets do not include, all patient receivables of Seller related to Medicare,
Medicaid and other third-party patient claims due from beneficiaries or governmental third party

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payors arising from the rendering of services to patients at the Facility, billed and
unbilled, recorded or unrecorded, accrued and existing in respect of services rendered up to the
Effective Time which by law may not be assigned (the “Government Patient Receivables”; together
with the Non-Government Receivables, the “Accounts Receivable”); provided that Buyer is purchasing
an interest in, and the Assets include, all amounts of Seller collected after the Effective Time in
respect of the Government Patient Receivables. Seller hereby appoints Buyer to act as Seller’s
collection agent with respect to the Government Patient Receivables. In connection therewith, on
or before the Closing Date, Seller shall establish or maintain an existing depository bank account
at a financial institution mutually acceptable to Seller and Buyer, and after the Closing, Buyer,
as collection agent, shall deposit in such depository account cash, checks, drafts or other similar
items of payment received in respect of the Government Patient Receivables. Seller hereby assigns
to Buyer the right to receive all amounts collected in respect of the Government Patient
Receivables as set forth above.

     Section 1.10 Inventory. Buyer and Seller will mutually agree on a date within three
business days prior to the Closing Date on which Buyer and Seller will conduct an inventory of
Seller’s Tangible Personal Property and Inventory for purposes of identifying the Tangible Personal
Property and Inventory. Buyer and Seller will each designate a representative to conduct such
inventory.

     Section 1.11 Prorations. At the Closing, but only to the extent not included in the
Net Working Capital Amount, Buyer and Seller shall prorate real estate and personal property lease
payments, real estate and personal property Taxes, and all other income and expenses (including
utilities) with respect to the Assets which are normally prorated upon a sale of assets as a going
concern.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer as follows:

     Section 2.1 Organization and Good Standing.

          (a) Seller is a limited partnership duly formed, validly existing, and in good standing under
the laws of the State of Texas, with full limited partnership power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets that it purports to
own or use, and to perform all its obligations under its contracts. Seller is not qualified to do
business as a foreign limited partnership in any jurisdiction, and the ownership or use of the
properties owned or used by it, and the nature of the activities conducted by it, do not require
such qualification.

          (b) Complete and accurate copies of the certificate of limited partnership of Seller and the
Seller Limited Partnership Agreement, as currently in effect, have been delivered to Buyer.

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     Section 2.2 Authority; No Conflict.

          (a) This Agreement constitutes the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms. Upon the execution and delivery by Seller and the
Seller Partners of each of the documents and instruments to be executed and delivered by them at
Closing pursuant to Section 1.8(a) (collectively, the “Seller’s Closing Documents”), each of
Seller’s Closing Documents will constitute the legal, valid, and binding obligation of Seller and
the Seller Partners a party thereto, enforceable against each of them in accordance with their
respective terms. Seller and the Seller Partners have the right, power, authority and capacity to
execute and deliver this Agreement and the Seller’s Closing Documents to which they are a party and
to perform their obligations under this Agreement and the Seller’s Closing Documents to which they
are a party, and such action has been duly authorized by the general partner of Seller. To the
Knowledge of Seller, each Seller Partner has all necessary legal capacity to execute and deliver
the Seller’s Closing Documents to which such Seller Partner is a party and to perform such Seller
Partner’s obligations thereunder.

          (b) Except as set forth in Schedule 2.2(b), neither the execution and delivery of this
Agreement nor the consummation or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or
result in a violation of any provision of the certificate of limited partnership of Seller or the
Seller Limited Partnership Agreement, (ii) contravene, conflict with, or result in a violation of
any Legal Requirements, or any Order of any Governmental Authority to which Seller or any of the
Assets are subject, or (iii) breach any provision of, give any Person the right to declare a
default or exercise any remedy under, accelerate the maturity or performance of or payment under,
result in the creation or imposition of any Encumbrance upon any of the Assets under, or cancel,
terminate, or modify any, Seller Contract.

          (c) Except as set forth in Schedule 2.2(c), Seller will not be required to give any
notice to or obtain any consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of the transactions contemplated hereby
(including in connection with the assignment of any Assumed Seller Contracts to Buyer hereunder).

     Section 2.3 Financial Statements. Seller has delivered to Buyer copies of the
following financial statements of Seller, copies of which are attached hereto as Schedule
2.3: (i) the audited consolidated and consolidating financial statements of Seller and AMG as
of December 31, 2005, and 2004, including the balance sheet and the related statements of
operations, statements of changes in partners’ equity and statements of cash flows of Seller and
AMG as of and for the years then ended, including in each case the notes thereto, together with the
report of the independent certified public accounting firm set forth therein, (ii) the audited
consolidated and consolidating financial statements of Seller and AMG as of December 31, 2006 (the
“Balance Sheet Date”), including the balance sheet (the “Balance Sheet”) and the related statement
of operations, statement of changes in partners’ equity and statement of cash flows of Seller and
AMG as of and for the fiscal year then ended, including in each case the notes thereto, together
with the report of the independent certified public accounting firm set forth therein, (the audited
financial statements referred to in clauses (i) and (ii) above, the “Audited Financial
Statements”); and (iii) unaudited financial statements of Seller as of March 31, 2007, including
the balance sheet and the related statement of operations and statement of cash flows of Seller as
of and for the three-month period then ended (such financial statements, the “March Financial
Statements”; the March Financial Statements, together with the unaudited financial statements to be
delivered by Seller pursuant to Section 4.9 below, the “Unaudited

12

 

Financial Statements”) (the Audited Financial Statements and the Unaudited Financial
Statements, collectively, the “Financial Statements”). The Financial Statements referred to in
clauses (i)-(iii) above have been, and the Financial Statements to be delivered pursuant to Section
4.9 below will be, prepared in accordance with GAAP consistently applied (except, in the case of
the Unaudited Financial Statements, for the absence of footnotes (that, if presented, would not
differ materially from those included in the Audited Financial Statements) and normal recurring
year end adjustments (the effect of which will not, individually or in the aggregate, be
significant)). The Financial Statements referred to in clauses (i)-(iii) fairly present, and the
Financial Statements to be delivered pursuant to Section 4.9 will fairly present, the financial
position of Seller and the results of operations and changes in financial position and cash flows
as of the dates and for the periods specified. The Financial Statements have been prepared in
accordance with the books and records of Seller.

     Section 2.4 No Material Adverse Change. Other than the financial results of Seller
since December 31, 2006 disclosed in the March Financial Statements, since the Balance Sheet Date,
there has not been any material adverse change in the business, operations, prospects, assets,
results of operations or condition of Seller, and no event has occurred or circumstance exists that
may result in such a material adverse change.

     Section 2.5 Assets.

          (a) Except as set forth on Schedule 2.5(a), Seller owns good and transferable title to
all of the Assets (excluding the Owned Real Property, in respect of which Seller is making the
representations set forth in Section 2.6 below), free and clear of any Encumbrances.

          (b) Schedule 2.5(b) sets forth all Tangible Personal Property of Seller with an
initial, nondepreciated book value of at least $5,000. All Tangible Personal Property is in the
possession of Seller.

          (c) The Inventory is substantially of a quality and quantity usable and salable in the
ordinary course of business of the Seller. Obsolete items and items of below-standard quality have
been or will be written off or written down in the Financial Statements. Inventory and supplies
are carried at cost, and are properly stated in the Financial Statements. The inventory levels of
Seller are based on past practices of the Facility. Seller is not in possession of any Inventory
not owned by Seller.

          (d) The Assets (i) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to conduct Seller’s business in the manner presently operated by Seller, and
(ii) constitute all of the operating assets of the Seller and the Facility.

     Section 2.6 Real Property.

          (a) Schedule 2.6(a) sets forth a (i) correct legal description, street address and tax
parcel identification number of each parcel of Owned Real Property and (ii) list of all real
property leases to which Seller is a party (whether as a (sub)lessor, (sub)lessee, guarantor or
otherwise) (the “Seller Real Property Leases”), street address, approximate rentable square
footage, monthly rent, expiration date and any renewal options with respect to the Seller Real
Property Leases (the real property leased by Seller (as a lessee or sublessee), the “Leased Real
Property”; the Owned Real Property and Leased Real Property, collectively, the “Real Property”).
Except for the Owned Real

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Property and Seller Real Property Leases identified in Schedule 2.6(a), Seller does
not own any interest (fee, leasehold or otherwise) in any real property and no Seller has entered
into any leases, arrangements, licenses or other agreements relating to the use, occupancy, sale,
option, disposition or alienation of all or any portion of the Owned Real Property. Except as set
forth in Schedule 2.6(a), Seller enjoys peaceful and undisturbed possession of the Real
Property.

          (b) Except as set forth in Schedule 2.6(b), Seller owns good and marketable title to
the Owned Real Property, free and clear of any Encumbrances.

          (c) The use of the Real Property by the Seller for the purposes for which it is currently
being used, conforms in all material respects to all applicable public and private restrictions,
fire, safety, zoning and building laws and ordinances, laws relating to the disabled, and other
applicable Legal Requirements. There are no pending or, to the Knowledge of Seller, threatened,
eminent domain, condemnation, zoning, or other Proceedings affecting the Real Property that would
result in the taking of all or any part of the Real Property or that would prevent or hinder the
continued use of the Real Property as currently used in the conduct of Seller’s business. The Real
Property has adequate rights of access to dedicated public ways and is served by water, electric,
sewer, telephone, gas and other necessary services appropriate for the operation of the Facility.

          (d) All Improvements located on the Real Property are in compliance in all material respects
with all applicable Legal Requirements (including those pertaining to public and private
restrictions, fire, safety, zoning and building laws and ordinances, and laws relating to the
disabled).

          (e) True and complete copies of (i) all deeds or leases, as the case may be, existing title
insurance policies, surveys, appraisals, specifications and plans of or pertaining to each parcel
of Real Property and (ii) all instruments, agreements and other documents evidencing, creating or
constituting any Encumbrances with respect to the Real Property have been delivered to Buyer.

     Section 2.7 Capitalization. Schedule 2.7 sets forth the direct and indirect
owners of (i) all of the outstanding general partnership and limited partnership units and/or
interests of Seller, and (ii) all of the outstanding shares of capital stock of the General
Partner. Other than the Seller Limited Partnership Agreement, there are no contracts or agreements
relating to the issuance, sale, transfer or voting rights of the general partnership interests or
limited partnership interests of Seller. Seller is not a party to any joint venture, and does not
own, and has not entered into any agreement or contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest in any other
business.

     Section 2.8 Taxes. Except as set forth in Schedule 2.8:

          (a) Seller has timely filed all federal, state, local and municipal tax returns (including any
information returns), declarations, reports, statements, schedules, notices or forms (the “Tax
Returns”) required to have been filed. All such Tax Returns were correct and complete in all
material respects.

          (b) Seller has timely paid all Taxes due to any Governmental Authority. All Taxes that Seller
is or was required by applicable Legal Requirements to withhold or collect has been withheld or
collected, and, to the extent required, have been properly paid on a timely basis to the
appropriate Governmental Authority.

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          (c) No examination or audit of any Tax Return of Seller by any taxing authority, court or
other Governmental Authority is currently in progress or, to the Knowledge of Seller, threatened.
No assessment or other proceeding by any taxing authority, court or other Governmental Authority is
pending, or to the Knowledge of Seller, threatened, with respect to the Taxes or Tax Returns of
Seller. There is no dispute or claim concerning (i) any liability of Seller for additional Taxes,
or (ii) any obligation of Seller to file Tax Returns or pay Taxes in any jurisdiction in which it
does not file Tax Returns or pay Taxes, either (x) claimed or raised by any Governmental Authority
in any written notice or communication provided to Seller, or (y) as to which Seller has Knowledge.
Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.

          (d) Seller has no liability for Taxes of any individual or entity (other than Seller) (i)
under Treasury Regulations Section 1.1502-6 (or any similar provision of applicable law); or (ii)
as a transferee or successor. Seller has not been a member of an “affiliated group” within the
meaning of Section 1504(a) of the Code. Seller is not a party to any Tax allocation agreement, Tax
sharing agreement, or Tax indemnity agreement.

          (e) None of the assets of Seller are “tax-exempt use property” within the meaning of Section
168(h) of the Code.

          (f) Seller has not made any payments, is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it to make any payments,
that will not be deductible under Section 280G of the Code.

     Section 2.9 Employees.

          (a) Schedule 2.9(a) sets forth the following information (to the extent applicable)
with respect to (i) each employee of Seller, including each employee on leave of absence or layoff
status, and (ii) any independent contractors who render services on a regular basis to, or are
under contract with Seller: name, job title, current compensation paid or payable, salary and bonus
received during the fiscal year ended December 31, 2006, sick and vacation leave that is accrued
but unused, services credited for purposes of vesting and eligibility to participate under any
Employee Benefit Plan, and any accrued paid-time off and performance-related bonuses and
commissions. There is no collective bargaining agreement in effect between Seller and any labor
unions or organizations representing any of the employees of Seller. Seller has not experienced
any organized slowdown, work interruption strike or work stoppage by its employees, and, to the
Knowledge of Seller, there is no strike, labor dispute or union organization activities pending or
threatened affecting Seller.

          (b) Except as set forth in Schedule 2.9(b), the employment of each employee of Seller
is terminable at the will of Seller, and Seller is not a party to any employment, non-competition
or severance contract or agreement with any current or former employee of Seller.

          (c) Seller is and has been, in compliance in all material respects with all applicable Legal
Requirements regarding employment and employment practices, terms and conditions of employment,
wages and hours, anti-discrimination and occupational health and safety, including laws concerning
unfair labor practices within the meaning of Section 8 of the National Labor Relations Act, as
amended, and the employment of non-residents under the Immigration Reform and Control Act of 1986,
as amended. There is no unfair labor practice claim or proceeding under the Fair Labor Standards
Act, Title VII of the Civil Rights Act of 1964, the Family Medical

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Leave Act or any other Legal Requirement pending or, to the Knowledge of Seller, threatened,
against Seller.

          (d) Schedule 2.9(d) sets forth the employees of Seller who had an “employment loss,”
as such term is defined in the Worker Adjustment and Retraining Notification Act (the “WARN Act”)
on or after December 1, 2006. In relation to the foregoing, Seller has not violated the WARN Act
or any similar state or local Legal Requirement.

     Section 2.10 Employee Benefits.

          (a) Schedule 2.10(a) lists all deferred compensation, incentive compensation, stock
purchase, stock option or other equity-based, retention, change in control, severance or
termination pay, hospitalization or other medical, life, dental, vision, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plans,
programs, agreements or arrangements, and each other fringe or other employee benefit plan,
program, agreement or arrangement (including any “employee benefit plan”, within the meaning of
Section 3(3) of ERISA), sponsored, maintained or contributed to or required to be contributed to by
Seller or by any ERISA Affiliate for the benefit of any employee or former employee of Seller, or
with respect to which Seller or ERISA Affiliate otherwise has any liabilities or obligations (the
“Employee Benefit Plans”).

          (b) No Employee Benefit Plan is a “multiemployer plan,” as such term is defined in Section
3(37) of ERISA, or a plan that is subject to Title IV of ERISA.

          (c) None of the Employee Benefit Plans that are “welfare benefit plans,” within the meaning of
Section 3(1) of ERISA, provide for continuing benefits or coverage after termination or retirement
from employment, except for COBRA rights under a “group health plan” as defined in Section 4980B(g)
of the Code and Section 607 of ERISA. The consummation of the transactions contemplated hereby
will not result in an increase in or accelerate the vesting of any of the benefits available under
any Employee Benefit Plan.

          (d) Seller does not have any liability or obligation under any Employee Benefit Plan other
than normal salary or wage accruals and paid vacation, sick leave and holiday accruals in
accordance with Seller’s past practice and policy. Each Employee Benefit Plan is and has been
maintained and administered in all material respects in compliance with its terms and with the
applicable requirements (including any filing or reporting obligations) of ERISA, the Code and any
other applicable Legal Requirements. Neither Seller nor any ERISA Affiliate nor, to Seller’s
Knowledge, any other Person, has engaged in any transaction with respect to any Employee Benefit
Plan that would be reasonably likely to subject Seller or Buyer to any Tax or penalty (civil or
otherwise) imposed by ERISA, the Code or other applicable Legal Requirements.

     Section 2.11 Legal Proceedings, Orders.

          (a) Except as set forth in Schedule 2.11(a), there are no Proceedings pending (i) by
or against Seller or that otherwise relate to or may affect the business of, or any of the Assets
owned or used by, Seller, or (ii) that challenge, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the transactions contemplated hereby. To
the Knowledge of Seller, no such Proceeding has been threatened, and no event has occurred or
circumstance exists that may give rise to or serve as a basis for the commencement of any such

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Proceeding.

          (b) There are no Orders outstanding (i) against Seller or that otherwise relate to or may
affect the business of, or any of the assets owned or used by, Seller; or (ii) that challenge, or
that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the
transactions contemplated hereby. To the Knowledge of Seller, no such Order has been threatened,
and no event has occurred or circumstance exists that may give rise to or serve as a basis for the
commencement of any such Order.

     Section 2.12 Environmental Matters. Except as set forth on Schedule 2.12:

          (a) Seller is, and at all times has been, in full compliance with, and has not been and is not
in violation of or liable under, any Environmental Law. All tenants or other Persons that use any
portion of the Owned Real Property are conducting their operations in full compliance with, and are
not in violation of or liable under, any Environmental Law.

          (b) Seller does not have any Knowledge of or basis to expect, nor has it, or any other Person
for whose conduct it is or may be held responsible, received any citation, directive, inquiry,
notice, Order, summons, warning, request for information, or other communication that relates to
(1) Hazardous Materials, (2) any alleged, actual, or potential violation of or failure to comply
with any Environmental Law, or (3) any alleged, actual, or potential obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect to the Real
Property, the Assets or any properties or assets (whether real, personal or mixed) in which Seller
had an interest, or with respect to any property or facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used or processed by Seller or any other
Person for whose conduct it is or may be held responsible have been transported, treated, stored,
handled, transferred, disposed, recycled or received.

          (c) Neither Seller nor any other Person for whose conduct Seller is or may be held
responsible, has any Environmental, Health and Safety Liabilities with respect to the Real
Property, the Assets or, to the Knowledge of Seller, with respect to any other properties and
assets (whether real, personal, or mixed) in which Seller (or any predecessor) has or had an
interest, or at any property geologically or hydrologically adjoining the Real Property or any such
other property or assets.

          (d) There are no Hazardous Materials present on or in the environment at the Real Property
(except for any Hazardous Materials necessary to the operation of the Seller’s business as
disclosed in Schedule 2.12, all of which Hazardous Materials have been stored and disposed
of in accordance with all Environmental Laws) or, to the Knowledge of Seller, at any geologically
or hydrologically adjoining property, including any Hazardous Materials contained in barrels, above
or underground storage tanks, landfills, land deposits, dumps, equipment (whether movable or fixed)
or other containers, either temporary or permanent and deposited or located in land, water, sumps,
or any other part of the Real Property or such adjoining property, or incorporated into any
structure therein or thereon. No above or underground storage tanks are present on any portion of
the Real Property.

          (e) There has been no release (as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et. seq. as amended (“CERCLA”) or, to the
Knowledge of Seller, threat of release, of any Hazardous Materials at or

17

 

from (i) the Real Property, (ii) any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or processed from or by
the Real Property, (iii) any other properties and assets (whether real, personal, or mixed) in
which Seller (or any predecessor) have or had an interest, or (iv) to the Knowledge of Seller, any
property geologically or hydrologically adjoining the Real Property or any such other properties or
assets, whether by Seller or any other Person.

          (f) Seller has delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests or monitoring possessed or initiated by Seller pertaining to Hazardous
Materials or the release (as defined under CERCLA) thereof at, in, on or under the Assets or Real
Property, or concerning compliance, by Seller or any other Person for whose conduct they are or may
be held responsible, with Environmental Laws.

     Section 2.13 Insurance. Schedule 2.13 sets forth a complete and accurate list
of all insurance under which any of the assets or properties of Seller are covered or otherwise
relating to the business of Seller, including policy numbers, names and addresses of insurers and
liability or risk covered, amounts of coverage, limitations and deductions and expirations dates.
Such policies are in full force and effect, and Seller has paid or accrued (to the extent not due
and payable) all premiums due, and have otherwise performed in all material respects all of its
obligations under, each such policy of insurance.

     Section 2.14 Contracts; No Defaults.

          (a) Schedule 2.14(a) lists all Seller Contracts.

          (b) Except as set forth in Schedule 2.14(b):

               (i) Each Seller Contract is valid and binding and in full force and effect;

               (ii) Each Seller and, to the Knowledge of the Seller, each other party to each Seller Contract
is and has been, in material compliance with all applicable terms and requirements of each Seller
Contract; and

               (iii) Seller has not given to, or received from, any other party to any Seller Contract, any
notice or communication (whether written or oral) regarding any actual or alleged breach of or
default under any Seller Contract by Seller or any other party to such Seller Contract.

          (c) True and complete copies of each of the Seller Contracts have been delivered to Buyer.

     Section 2.15 Intellectual Property.

          (a) The term “Intellectual Property Assets” means all intellectual property owned, licensed
(as licensor or licensee) or used by Seller, including:

               (i) Seller’s name, all fictional business names, trade names, logos, slogans, trade dress,
registered and unregistered trademarks, registered and unregistered service marks, and applications
for any of the foregoing, together with the goodwill symbolized by any of the foregoing
(collectively, “Marks”);

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               (ii) all patents, patent applications, patent disclosures, and all related continuations,
continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions
thereof, and inventions and discoveries that may be patentable or unpatentable worldwide
(collectively, “Patents”);

               (iii) all registered and unregistered copyrights in both published works and unpublished
works, moral rights, and copyright applications (collectively, “Copyrights”);

               (iv) all rights in Internet web sites and domain names (collectively, “Internet Rights”);

               (v) all computer software used by Seller; and

               (vi) all know-how, trade secrets, confidential or proprietary information, customer lists,
technical information, data, methodologies processes, technology, plans, drawings, and blueprints
(collectively, “Trade Secrets”).

          (b) Schedule 2.15(b) contains a true and complete list of all of the Intellectual
Property Assets referenced in clauses (i)-(v) of Section 2.15(a) above in each case listing, as
applicable, (i) the title of the application or registration, (ii) the name of the
applicant/registrant and current owner, (iii) the jurisdiction where the application/registration
is located, (iv) the application or registration number, (v) filing date, and (vi) whether each
such Intellectual Property Asset is owned or licensed.

          (c) Schedule 2.15(c) contains a true and complete list of the agreements and contracts
under which Seller licenses Intellectual Property Assets (whether as a licensor or licensee).
Seller has the right to use, without payment to a third party, each of the Intellectual Property
Assets, other than any payment required under any agreement listed in Schedule 2.15(c).

          (d) None of the Intellectual Property Assets is infringed by any patent, proprietary right,
trade name, trademark, service mark, copyright, domain name or other intellectual property right of
any other Person or, to the Knowledge of Seller, has been challenged or threatened in any way.
None of the Intellectual Property Assets infringes or interferes with or is alleged to infringe or
interfere with any patent, trade name, trademark, service mark, copyright, domain name or other
intellectual property right of any other Person, or misappropriates any trade secret or proprietary
rights of any other Person.

          (e) All Patents, Marks and Copyrights that have been registered, and all Internet Rights, are
in compliance with all formal Legal Requirements (including the payment of any required maintenance
fees), and are valid and enforceable.

          (f) Seller owns, has a valid license to use or has the right validly to use all Intellectual
Property Assets (including, without limitation, all “clickwrap” or “shrinkwrap” agreements
contained in or pertaining to “off the shelf” software or terms of use or service for any website)
necessary to carry on its business substantially as currently conducted and possess a sufficient
number of software licenses to operate its business as currently conducted.

          (g) Seller has taken all reasonable precautions to protect the secrecy, confidentiality and
value of all Trade Secrets. The Trade Secrets are not part of the public

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knowledge or literature, and, to the Knowledge of Seller, have not been used, divulged, or
appropriated either for the benefit of any Person (other than Seller) or to the detriment of
Seller.

     Section 2.16 Relationships with Related Persons. Except as set forth in Schedule
2.16, (i) no shareholder, member, director, officer or partner of Seller (any such individuals,
a “Related Person”), or, to the Knowledge of Seller, any Affiliate or member of the immediate
family of any Related Person, is or has been, involved in any business arrangement or relationship
with Seller, other than employment arrangements entered into in the ordinary course of business,
and (ii) no Related Person or, to the Knowledge of Seller, any Affiliate or member of the immediate
family of any Related Person, owns or has owned, any property or right, tangible or intangible,
used by Seller in the conduct of its business.

     Section 2.17 No Undisclosed Liabilities. Except as set forth in Schedule
2.17, Seller has no liabilities or obligations except for (i) liabilities or obligations
reflected or reserved against in the Balance Sheet and (ii) current liabilities incurred in the
ordinary course of business of Seller since the Balance Sheet Date.

     Section 2.18 Absence of Certain Changes and Events. Since the Balance Sheet Date, (i)
the Seller has conducted its business in the ordinary course of business, and (ii) except as set
forth in Schedule 2.18, Seller has not:

          (a) granted any increase in the base compensation of, or paid any bonuses or other
compensation to, any of its officers and employees outside the ordinary course of business;

          (b) adopted, amended, or increased the payments or benefits under, any Employee Benefit Plan
outside of the ordinary course of business;

          (c) entered into, amended, terminated, or assigned (1) any Seller Contract having a value per
contract, or involving payments by or to Seller, of at least $25,000 in the aggregate, or (2) any
other material Seller Contract;

          (d) changed its capital structure, issued any partnership interests (or granted any option or
right to purchase any partnership interests), or issued any security convertible into any
partnership interests;

          (e) amended its certificate of limited partnership or the Seller Limited Partnership
Agreement;

          (f) acquired inventory, assets or other properties outside of the ordinary course of business;

          (g) sold, leased, or otherwise disposed of any assets or properties other than (1) sales of
inventory in the ordinary course of business, and (2) dispositions of obsolete equipment or
unsaleable inventory in the ordinary course of business;

          (h) failed to spend funds for any budgeted capital expenditures, or made, or committed to
make, any capital expenditures in excess of budgeted capital expenditures;

          (i) incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligations (excluding any indebtedness incurred pursuant to that certain line of

20

 

credit payable to Western National Bank, maturing on October 15, 2007, with a maximum balance
of $6,000,000 (the “Western National Bank Line of Credit”) as in effect on the date hereof);

          (j) compromised or settled any material Proceeding;

          (k) cancelled, compromised, waived or released any right or claim (or series of related rights
and claims) either involving more than $25,000 or outside the ordinary course of business;

          (l) made any change in connection with its accounts payable or accounts receivable terms,
systems, policies or procedures;

          (m) experienced any damage, destruction or loss (whether or not covered by insurance) to any
of the Assets in excess of $25,000;

          (n) made any distribution to the Seller Partners;

          (o) made any material change in its accounting or tax methods; or

          (p) entered into any agreement, whether oral or written, to do any of the foregoing.

     Section 2.19 Accounts Receivable. The Accounts Receivable reflected on the Balance
Sheet or the accounting records of Seller as of the Closing represent or will represent valid
obligations for monies due for goods sold and delivered or services actually performed by Seller in
the ordinary course of business. The respective reserves in respect of the Accounts Receivable,
including allowances for bad debts, charity care and contractual adjustments, shown on the Balance
Sheet or in the accounting records of Seller as of the Closing are or will be adequate and
calculated consistent with past practice in accordance with GAAP and, in the case of the reserves
in the accounting records of Seller as of the Closing, will not represent a lower percentage of the
Accounts Receivable than the reserve reflected in the Balance Sheet. There is no contest, claim,
defense or right of set-off relating to the amount or validity of any Accounts Receivable. There
shall not be a material adverse change in the composition of Accounts Receivables, in terms of
aging, as reflected in the accounting records of Seller as of the Closing as compared to Accounts
Receivables as reflected on the Balance Sheet.

     Section 2.20 Compliance with Legal Requirements. Except as set forth in Schedule
2.20, Seller and the operation of the Facility is, and at all times, has been, in compliance in
all material respects with all Legal Requirements that are or were applicable to the operation of
its business or the ownership or use of any of the Assets. Neither Seller nor any of its officers,
directors, agents or employees have committed a violation of federal or state laws regulating
health care fraud and abuse, including but not limited to the federal Anti-Kickback Law, 42 U.S.C.
§1320a-7b, the Ethics in Patient Referrals Act of 1989 (commonly referred to as the Stark Law), 42
U.S.C. §1395nn, as amended, and the False Claims Act, 31 U.S.C. §3729, et seq. Seller is in
compliance in all material respects with the administrative simplification provisions required
under HIPAA, including the electronic data interchange regulations and the health care privacy and
security regulations, as of the applicable effective dates for such requirements. Seller has
timely filed all reports, data, and other information required to be filed with any Governmental
Authority. Seller has not received any written notice or communication from any Governmental
Authority regarding any actual, alleged,

21

 

possible, or potential violation of, or failure to comply with, any Legal Requirement.

     Section 2.21 Governmental Authorizations. The Facility is duly licensed as a hospital
pursuant to the applicable laws of the State of Texas. The pharmacies, laboratories, and all other
ancillary departments operated by Seller of or for the benefit of the Facility which are required
to be specially licensed are duly licensed by the State of Texas. Seller has all other
Governmental Authorizations which are needed or required by applicable Legal Requirements for
Seller to operate the business related to or affecting the Facility or any ancillary services
related thereto (including, but not limited to, all such Governmental Authorizations required under
Environmental Laws) in the manner that Seller currently operates such business, the ancillary
services and the Facilities. Seller has delivered to Buyer an accurate list and summary
description (which is attached hereto as Schedule 2.21) of all such Governmental
Authorizations owned or held by Seller relating to the ownership, lease, development, or operation
of the Facility or the Assets, all of which are now and as of the Closing shall be valid and in
full force and effect. Seller is and has been in compliance in all material respects with the
terms of each Governmental Authorizations, and Seller has not received any written notice or
communication from any Governmental Entity or any other person regarding any actual, alleged or
potential violation of any Governmental Authorizations. All licensure and accreditation surveys
and deficiency reports related to the Facility operated by Seller are set forth on Schedule
2.21. Any violations or deficiencies set forth in any of the items on Schedule 2.21
have been corrected by Seller or, to the extent not corrected, the current status hereof is noted
on Schedule 2.21. Except as set forth on Schedule 2.21, no certificate of need or
exemption therefrom or any other approval based on community need is required for the operation of
the Facility or to consummate the transactions contemplated hereby.

     Section 2.22 Medicare Participation/Accreditation.

          (a) The Facility is qualified for participation in the Medicare, Medicaid and CHAMPUS/TriCare
programs, has a current and valid provider contract with such programs, is in material compliance
with the conditions of participation in such programs, and has received all approvals or
qualifications necessary for capital reimbursement for the Facility. Schedule 2.22 sets
forth a list of all provider numbers for the Facility issued by Medicare, Medicaid, CHAMPUS/TriCare
or any other governmental payor.

          (b) The Facility has never been accredited, or applied to be accredited, by the Joint
Commission.

          (c) Seller’s billing practices with respect to the Facility to all third party payors,
including the Medicare, Medicaid and CHAMPUS/TriCare programs and private insurance companies, have
been in material compliance with all applicable laws, regulations and policies of such third party
payors and the Medicare, Medicaid and CHAMPUS/TriCare programs. Seller has not billed or received
any payment or reimbursement from any such payors in excess of amounts allowed by applicable Legal
Requirements. All payments which have been received by Seller from Medicare have been reimbursed
under a hospital payment methodology, including inpatient and outpatient PPS reimbursement.

          (d) Neither Seller, nor any of Seller’s officers, directors, managing employees, or
controlling shareholders are excluded from participation in the Medicare, Medicaid or CHAMPUS
programs, and Seller has not received any written notice from the applicable Governmental Authority
that any such exclusion is threatened. Except as set forth on Schedule 2.22, Seller has
not received

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any written notice from any of the Medicare, Medicaid or CHAMPUS/TriCare programs, or any
other third party payor programs of any pending or threatened investigations or surveys, and to the
Knowledge of Seller, no such investigations or surveys are pending, threatened, or imminent.

          (e) Seller has registered with the Qnet Exchange as required by The Centers for Medicare and
Medicaid Services (“CMS”) under its Hospital Quality Initiative Program (the “HQI Program”). To
the Knowledge of Seller, Seller has submitted all quality data required under the HQI Program to
CMS or its agent for all prior calendar quarters, except for any quarter for which the respective
reporting deadlines have not yet expired. To the Knowledge of Seller, all such submissions of
material quality data have been made in accordance with applicable reporting deadlines and in the
form and manner required by CMS. Seller has not received notice of any reduction in reimbursement
under the Medicare program, or for failure to qualify for the full market basket update, resulting
from its failure to report quality data to CMS or its agent as required under the HQI Program.
Seller has provided Buyer with the HQI Program “validation results” for all prior calendar
quarters, except for any quarter for which the respective reporting deadlines have not yet expired.

     Section 2.23 Hill-Burton Care. The Facility has not received any loans, grants or
loan guarantees pursuant to the Hill-Burton Act (42 U.S.C. § 291a, et seq.), the Health
Professions Educational Assistance Act, the Nurse Training Act, the National Health Pharmacy and
Resources Development Act, or the Community Mental Health Centers Act, as amended, or any other
Legal Requirement or governmental program whatsoever and the transactions contemplated hereby will
not result in any obligation on the part of the Buyer to repay any such loans, grants or loan
guarantees or provide uncompensated care or any other obligation in consideration thereof.

     Section 2.24 Third Party Payor Cost Reports. Seller has duly filed all required cost
reports. All such cost reports accurately reflect the material information required to be included
thereon. Schedule 2.24 indicates which of such cost reports have not been audited and
finally settled and a brief description of any and all notices of program reimbursement, to the
Knowledge of Seller proposed or pending audit adjustments, disallowances, appeals of disallowances,
and any and all other unresolved claims or disputes in respect of such cost reports. Seller has
not received any notice of any dispute with any governmental payor, any fiscal intermediary or any
other party regarding any cost report which has not been resolved, and, to Seller’s Knowledge,
there is no basis for any such dispute. Seller has established any necessary reserves in the
Financial Statements to cover reasonable potential reimbursement obligations that Seller may have
in respect of any such third party cost reports.

     Section 2.25 Medical Staff Matters. Seller has provided to Buyer with respect to the
Facility (a) true, correct, and complete copies of the bylaws and rules and regulations of the
medical staff of the Facility, as well as a list of all current members of the medical staff and
(b) true and correct copies of the blank forms generally used with respect to medical staff
privilege and membership application or delineation of privilege. Except as set forth in
Schedule 2.25, there are no adverse actions with respect to any medical staff members of
the Facility or any applicant thereto for which a medical staff member or applicant has requested a
judicial review hearing which has not been scheduled or has been scheduled but has not been
completed, and there are no pending or, to the Knowledge of Seller, threatened disputes with
applicants, staff members, or health professional affiliates, and Seller knows of no basis for any
such disputes, and all appeal periods in respect of any medical staff member or applicant against
whom an adverse action has been taken have expired.

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     Section 2.26 Experimental Procedures. Seller has not performed or permitted the
performance of any experimental or research procedures or studies involving patients in the
Facility not authorized and conducted in accordance with the procedures of the Institutional Review
Board of the Facility.

     Section 2.27 Compliance Program. Seller has provided to Buyer a copy of its current
compliance program materials, including without limitation, all program descriptions, compliance
officer and committee descriptions, ethics and risk area policy materials, training and education
materials, auditing and monitoring protocols, reporting mechanisms, and disciplinary policies.
Except as set forth on Schedule 2.27, Seller (a) is not a party to a Corporate Integrity
Agreement with the Office of Inspector General of the United States Department of Health and Human
Services, (b) has no reporting obligations pursuant to any settlement agreement entered into with
any Governmental Authority, (c) to the Knowledge of Seller, has not been the subject of any
government payer program investigation conducted by any federal or state enforcement agency, (d)
has not been a defendant in any unsealed qui tam/False Claims Act litigation, (e) has not been
served with or received any search warrant, subpoena, civil investigative demand, contact letter,
or telephone or personal contact by or from any federal or state enforcement agency (except in
connection with medical services provided to third-parties who may be defendants or the subject of
investigation into conduct unrelated to the operation of the health care businesses conducted by
Seller), and (f) to the Knowledge of Seller, has not received any written complaints from
employees, independent contractors, vendors, physicians, or any other person that would indicate
that Seller has violated any Legal Requirements. Schedule 2.27 includes a description of
each audit and investigation conducted by Seller pursuant to its compliance program. For purposes
of this Agreement, the term “compliance program” refers to provider programs of the type described
in the compliance guidance published by the Office of Inspector General of the Department of Health
and Human Services.

     Section 2.28 Securities Law Matters.

          (a) Seller is acquiring the Buyer LP Units for its own account and not with a view to its
distribution within the meaning of Section 2(11) of the Securities Act (provided, that it is
acknowledged that the Seller will distribute the Buyer LP Units to the Seller Partners immediately
following the Closing in accordance with Section 6.15).

          (b) Seller confirms that Buyer has made available to Seller and its representatives the
opportunity to ask questions of the officers and management employees of Buyer and to acquire such
additional information about the business and financial condition of Buyer as Seller has requested,
and all such information has been received.

     Section 2.29 Brokers or Finders. Except as set forth on Schedule 2.29,
neither Seller nor any of its officers, directors, employees or agents have incurred any liability
or obligation for brokerage or finders’ fees or agents’ commissions or other similar payment in
connection with the sale of the Assets or the transactions contemplated hereby.

     Section 2.30 Insolvency. Seller is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated hereby. In addition, immediately after giving
effect to the consummation of the transactions contemplated hereby, (a) Seller will be able to pay
its debts as they become due, (b) Seller will not have unreasonably small capital with which to
conduct its present or proposed business, (c) Seller will have assets (calculated at fair market
value) that exceed its liabilities, and (d) taking into account all pending and threatened
litigation, final judgments against

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Seller in actions for money damages are not reasonably anticipated to be rendered at a time
when, or in amounts such that, Seller will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum probable amount of such judgments in
any such actions and the earliest reasonable time at which such judgments might be rendered) as
well as all other obligations of Seller. The cash available to Seller, after taking into account
all other anticipated uses of the cash, will be sufficient to pay all such debts and judgments
promptly in accordance with their terms.

     Section 2.31 Disclosure. To the Knowledge of Seller, no representation or warranty or
other statement made by Seller in this Agreement, the certificate to be delivered by Seller
pursuant to Section 1.8(a)(xiii), and any other document or agreement delivered or to be delivered
by Seller in connection with the transactions contemplated hereby contains or will contain any
untrue statement or omits or will omit to state a material fact necessary to make any of them, in
light of the circumstances in which it was made, not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller as follows:

     Section 3.1 Organization and Good Standing. Buyer is a limited partnership duly
formed, validly existing, and in good standing under the laws of the State of Delaware, with full
limited partnership power and authority to conduct its business as it is now being conducted, to
own or use the properties and assets that it purports to own or use, and to perform all its
obligations under its contracts. Buyer is qualified to do business as a foreign limited
partnership in the State of Texas, and the ownership or use of the properties owned or used by it,
and the nature of the activities conducted by it, do not require qualification in any other
jurisdiction.

     Section 3.2 Authority, No Conflict.

          (a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of each of
the documents and instruments to be executed and delivered by Buyer at Closing pursuant to Section
1.8(b) (collectively, the “Buyer’s Closing Documents”), each of the Buyer’s Closing Documents will
constitute the legal, valid, and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms. Buyer has the right, power and authority to execute and deliver this
Agreement and the Buyer’s Closing Documents and to perform its obligations under this Agreement and
the Buyer’s Closing Documents, and such action has been duly authorized by the general partner of
Buyer. The Buyer LP Units to be issued and sold hereunder at Closing will be duly and validly
authorized and issued, and will be issued free of any Encumbrances other than (i) restrictions on
transfer under the Amended and Restated Buyer LP Agreement, (ii) the requirement under and in
connection with the IASIS Credit Agreement that the holders of Buyer LP Units enter into a
drag-along rights agreement in favor of the Administrative Agent (as defined in the IASIS Credit
Agreement), and (iii) under applicable federal and state securities laws.

          (b) Neither the execution and delivery of this Agreement by Buyer nor the consummation or
performance of any of the transactions contemplated hereby by Buyer will give any Person the right
to prevent, delay, or otherwise interfere with any of the transactions contemplated hereby pursuant
to (i) any provision of Buyer’s certificate of limited partnership or the Buyer Limited

25

 

Partnership Agreement; (ii) any Legal Requirement to which the Buyer or its assets are
subject; or (iii) any contract or agreement to which Buyer is a party or by which Buyer may be
bound.

          (c) Buyer is not and will not be required to obtain any consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.

     Section 3.3 Capitalization. The general partnership interests and limited partnership
interests of Buyer are owned by the partners of Buyer as set forth on Schedule 3.3. Other
than the Buyer Limited Partnership Agreement, there are no contracts or agreements relating to the
issuance, sale, transfer or voting rights of the general partnership interests or limited
partnership interests of Buyer. Buyer does not own, and has not entered into any agreement or
contract to acquire, any equity securities or other securities of any Person or any direct or
indirect equity or ownership interest in any other business.

     Section 3.4 Financial Statements. Buyer has delivered to Seller copies of the
following financial statements of Buyer, copies of which are attached hereto as Schedule
3.4: (i) the audited financial statements of Buyer as of September 30, 2006, 2005 and 2004,
including the balance sheet and the related statement of operations, statement of changes in
partners’ capital and statement of cash flow of Buyer as of and for the years then ended, including
in each case the notes thereto, together with the report of the independent certified public
accounting firm set forth therein (the “Buyer Audited Financial Statements”); and (ii) unaudited
financial statements of Buyer as of March 31, 2007, including the balance sheet and the related
statement of operations and statement of cash flow of Buyer as of and for the six (6) month period
then ended (the “Buyer Unaudited Financial Statements”) (the Buyer Audited Financial Statements and
the Buyer Unaudited Financial Statements, collectively, the “Buyer Financial Statements”). The
Buyer Financial Statements have been prepared in accordance with GAAP consistently applied (except,
in the case of the Buyer Unaudited Financial Statements, for the absence of footnotes (that, if
presented, would not differ materially from those included in the Buyer Audited Financial
Statements) and normal recurring year end adjustments (the effect of which will not, individually
or in the aggregate, be significant)). The Buyer Financial Statements fairly present the financial
position of Buyer and the results of operations and changes in financial position and cash flows as
of the dates and for the periods specified. The Buyer Financial Statements have been prepared in
accordance with the books and records of Buyer.

     Section 3.5 No Material Adverse Change. Since September 30, 2006, there has not been
any material adverse change in the business, operations, prospects, assets, results of operations
or condition of Buyer, and no event has occurred or circumstance exists that may result in such a
material adverse change.

     Section 3.6 Sufficient Financial Resources. Buyer has sufficient financial resources,
and at the Closing Buyer will possess sufficient funds, to permit Buyer to deliver the Cash
Purchase Price in accordance with Section 1.5, subject to satisfaction of the conditions precedent
to Buyer’s obligations to close the transactions contemplated by this Agreement.

     Section 3.7 Brokers or Finders. Neither Buyer nor any of its officers, directors,
employees or agents have incurred any liability for brokerage or finders’ fees or agents’
commissions or other similar payment in connection with the transactions contemplated hereby.

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ARTICLE IV

PRE-CLOSING COVENANTS

     Section 4.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, and upon reasonable advance notice received from Buyer, Seller shall (a) afford Buyer
and its agents and representatives (collectively, the “Buyer Group”), reasonable access, during
regular business hours, to the Seller’s properties, facilities, contracts, books and records, and
other documents and data, such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Seller, (b) furnish to the Buyer Group copies of all
such contracts, books and records, and other existing document and data that the Buyer Group may
reasonably request, (c) furnish the Buyer Group with such additional financial, operating, and
other relevant data and information as the Buyer Group may reasonably request, and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer Group, with Buyer Group’s
investigation of the properties, assets and financial condition of Seller. In connection
therewith, Buyer will be permitted to review and inspect the condition and repair of the Tangible
Personal Property and the Improvements located on the Real Property. In the event that Buyer is
not satisfied, in its discretion, with the condition and repair of the Tangible Personal Property
and/or the Improvements located on the Real Property, it may terminate this Agreement within 30
days following the date of this Agreement pursuant to Section 8.1(h). In addition, between the
date of this Agreement and the Closing Date, Buyer will be provided access to Seller’s employees,
suppliers and other Persons having business relations with Seller, at such times and in the manner
mutually agreed to by Buyer and Seller.

     Section 4.2 Operation of the Business of Seller. Except as otherwise contemplated by
this Agreement or agreed to in writing by Buyer, between the date of this Agreement and the
Closing, Seller shall (i) conduct its business in the ordinary course of business and pay or
satisfy all of its obligations and liabilities in the ordinary course of business, (ii) use
reasonable best efforts to preserve intact the current business organization of Seller, keep
available the services of the Seller’s officers, employees, and agents, and maintain Seller’s
relations and good will with patients, landlords, suppliers, creditors, employees, agents and
others having business relationships with Seller, and (iii) otherwise periodically report to Buyer
concerning the status of the business, operations and finances of Seller. In addition, between the
date of this Agreement and the Closing Date, Seller shall not, without the prior written consent of
Buyer, take any of the following actions:

          (a) grant any increase in the base compensation of, or pay any bonuses or other compensation
to, any of the officers and employees of Seller outside the ordinary course of business;

          (b) adopt, amend or increase the payments or benefits under, any Employee Benefit Plan outside
of the ordinary course of business;

          (c) enter into, amend, terminate, renew or assign (1) any Seller Contract having a value per
contract, or involving payments by or to Seller, of at least $25,000 in the aggregate, (2) any real
property or personal property lease; or (3) any other material Seller Contract;

          (d) change its capital structure, issue any partnership interests (or grant any option or
right to purchase any partnership interests), or issue any security convertible into any
partnership interests;

          (e) amend its certificate of limited partnership or the Seller Limited Partnership

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Agreement;

          (f) acquire inventory, assets or other properties outside of the ordinary course of business;

          (g) sell, lease or otherwise dispose of, or permit any Encumbrance upon, any assets or
properties of Seller other than (1) sales of inventory in the ordinary course of business, and (2)
dispositions of obsolete equipment or unsaleable inventory in the ordinary course of business;

          (h) make any capital expenditures (except for routine maintenance);

          (i) incur, assume or guaranty any indebtedness for borrowed money or capitalized lease
obligations (excluding any indebtedness incurred pursuant to the Western National Bank Line of
Credit as in effect on the date hereof);

          (j) cancel, compromise, waive or release any right or claim (or series of related rights and
claims) either involving more than $25,000 or outside the ordinary course of business;

          (k) compromise or settle any material Proceeding;

          (l) make any change in connection with its accounts payable or accounts receivable terms,
systems, policies or procedures;

          (m) make any distribution to the Seller Partners;

          (n) make any material change in its accounting or tax methods; or

          (o) enter into any agreement, whether oral or written, to do any of the foregoing.

     Section 4.3 Required Approvals.

          (a) As promptly as practicable after the date of this Agreement, Seller shall use its
reasonable best efforts to (i) obtain all consents required in connection with the transactions
contemplated hereby as set forth in Schedule 2.2(c) and (ii) obtain the consent required to
assign to Buyer the Enterprise Zone Tax Abatement Agreement, dated and effective May 1, 2002,
between Ector County and Seller.

          (b) As promptly as practicable after the date of this Agreement, Seller shall make all filings
required by Legal Requirements to be made by them in order to consummate the transactions
contemplated hereby. Seller also shall cooperate with Buyer and its representatives with respect
to all filings that Buyer elects to make, or pursuant to Legal Requirements is required to make, in
connection with the transactions contemplated hereby. In furtherance thereof, Seller shall
cooperate with Buyer and shall use commercially reasonable efforts to file required Notification
and Report Forms under the HSR Act with the Federal Trade Commission (the “FTC”) and the Department
of Justice (“DOJ”) as promptly as practicable following the date of this Agreement (but in no event
later than five (5) business days from and after the date hereof), shall use commercially
reasonable efforts to obtain early termination of the waiting period under the HSR Act, and shall
respond as promptly as practicable to all requests or inquiries received from the FTC or DOJ for
additional documentation or information. Seller shall bear its own costs for filing and other fees
payable to Governmental Authorities (provided that Buyer will be responsible for the filing fee
under

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the HSR Act as set forth below).

          (c) As promptly as practicable after the date of this Agreement, Buyer shall make, or cause to
be made, all filings required by Legal Requirements to be made by it to consummate the Contemplated
Transactions. Buyer also shall fully cooperate with Seller with respect to all filings Seller is
required by Legal Requirements to make. In furtherance thereof, Buyer shall cooperate with Seller
and shall use commercially reasonable efforts to file required Notification and Report Forms under
the HSR Act with the FTC and DOJ as promptly as practicable following the date of this Agreement
(but in no event later than five (5) business days from and after the date hereof), shall use
commercially reasonable efforts to obtain early termination of the waiting period under the HSR
Act, and shall respond as promptly as practicable to all requests or inquiries received from the
FTC or DOJ for additional documentation or information. Buyer shall bear its own costs for filing
and other fees payable to Governmental Authorities and shall pay the filing fee under the HSR Act.

     Section 4.4 Notification. Between the date of this Agreement and the Closing Date,
Buyer or the Seller, as the case may be, shall promptly notify the other party in writing if such
party becomes aware of (i) any fact or condition that causes or constitutes a breach of any of the
representations and warranties of such party made as of the date of this Agreement, or (ii) the
occurrence after the date of this Agreement of any fact or condition that would or be reasonably
likely to cause or constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or such party’s discovery
of, such fact or condition. If any such fact or condition requires any change to the schedules
prepared by a party, such party shall promptly deliver to the other party a supplement to such
schedules specifying such change. In addition, between the date of this Agreement and the Closing,
Buyer or Seller, as the case may be, shall promptly notify the other party of the occurrence of any
breach of any covenant by such party in this Article IV or of the occurrence of any event that may
make the satisfaction of any conditions in Article V impossible or unlikely. No disclosure
pursuant to this Section 4.4 will prevent or cure any breach of any representation or warranty or
covenant set forth herein.

     Section 4.5 No Negotiation. Until such time as this Agreement is terminated pursuant
to Article VIII, Seller shall not, and Seller shall cause its directors, employees, representatives
and agents not to, directly or indirectly, solicit, initiate, encourage or entertain any inquiries
or proposals from, discuss or negotiate with, provide any non-public information to, or consider
the merits of any inquiries or proposals from, any Person (other than Buyer) relating to any
merger, consolidation, business combination or similar transaction involving Seller, or the sale of
the business or assets of Seller, or the sale of any capital stock or any equity interest of
Seller. Seller shall notify Buyer of any such inquiry or proposal and the terms thereof within
twenty-four (24) hours of receipt or awareness.

     Section 4.6 Title Commitment; Surveys.

          (a) Within fifteen (15) days after the date of this Agreement, Buyer may obtain, at its
expense, for each parcel of Owned Real Property, a Title Commitment, which shall (i) be for a Title
Policy in an amount equal to such amount as the Buyer reasonably determines to be the fair market
value of each such parcel, naming Buyer as insured and committing to insure good and marketable fee
simple title to such Real Property in Buyer’s name, and (ii) include the Title Company’s
requirements for issuing the Title Policy, which requirements must be met by Seller on or before
the Closing Date. The Title Policy will (i) provide for extended coverage deleting the

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standard and general printed exceptions, with any matters covered by the so-called standard
printed “survey exception” to be specifically referenced to as being shown by the Surveys, (ii)
will provide for the issuance of a Mortgage Title Policy (if requested by Buyer), and (iii) contain
such endorsements as Buyer or any lenders of Buyer shall require.

          (b) Within fifteen (15) days after the date of this Agreement, Buyer may obtain, at its
expense, Surveys for each parcel of Owned Real Property.

          (c) If any of the following occur (each, an “Objection”):

               (i) any Title Commitment or other evidence of title or search of the appropriate real estate
records discloses that any party other than Seller has title to the insured estate covered by the
Title Commitment;

               (ii) any title exception is disclosed in Schedule B to any Title Commitment that Buyer
reasonably believes could materially and adversely affect Buyer’s use and enjoyment of the Owned
Real Property described therein, including any exceptions pertaining to Encumbrances securing any
loans that do not constitute an Assumed Liability but excluding any exceptions that Seller
certifies in writing that Seller will cause to be deleted from the Title Commitment on or prior to
the Closing; or

               (iii) any Survey discloses any matter which Buyer reasonably believes could materially and
adversely affect Buyer’s use and enjoyment of the Owned Real Property described therein;

then, Buyer shall notify Seller in writing of any such Objections within fifteen (15) days after
the later of Buyer’s receipt of (x) the Title Commitment and (y) the Surveys (the “Title Review
Date”). In the event that the Title Company amends or updates the Title Commitment after the Title
Review Date (each, a “Title Commitment Update”), Buyer shall furnish Seller with a written
statement of Objections to any matter first raised in a Title Commitment Update within ten (10)
days after its receipt of such Title Commitment Update (each, a “Title Update Review Period”).
Except as otherwise set forth herein, if Buyer fails to notify Seller in writing of any Objections
in the Title Commitment or Surveys prior to the Title Review Date, or to any matter first disclosed
in a Title Commitment Update prior to the end of the Title Update Review Period, as applicable,
Buyer shall be deemed to have approved such matters which shall be considered to be Permitted Real
Property Encumbrances as set forth in Section 4.6(e) below.

          (d) If Seller receives a timely Objection in accordance with Section 4.6(c), Seller shall use
commercially reasonable efforts to cure each Objection and take all steps required by the Title
Company to eliminate each Objection as an exception to the Title Commitment. Notwithstanding
anything contained herein to the contrary, Seller shall in any event be obligated to cure any
matters, whether or not the Buyer identifies the same as an Objection, (i) that are mortgage or
deed of trust liens or security interests against the Owned Real Property other than taxes and
assessments not yet due, or (ii) that have been placed against the Owned Real Property after the
date of this Agreement and that are not otherwise permitted pursuant to the provisions hereof, and,
except as otherwise agreed to in writing by Buyer, such matters will not be deemed to be Permitted
Real Property Encumbrances.

          (e) At the Closing, Seller shall convey title to the Owned Real Property subject to

30

 

no exceptions other than (collectively, the “Permitted Real Property Encumbrances”):

               (i) Matters created by or with the written consent of Buyer;

               (ii) Liens for real estate taxes and assessments not yet due; and

               (iii) Any exceptions disclosed by the Title Commitment and any Title Commitment Update which
is approved or deemed approved by Buyer in accordance with this Section 4.6.

     Section 4.7 Insurance Ratings. From the date of this Agreement until the Closing
Date, Seller shall take all actions reasonably requested by Buyer to enable Buyer, at Buyer’s
expense, to succeed to the Workers’ Compensation and Unemployment Insurance ratings of Seller and
the business of Seller for insurance purposes; provided that Seller make no representation or
warranty that Buyer will be successful in such succession. Buyer shall not be obligated to succeed
to any such rating, except as it may elect to do so.

     Section 4.8 Pre-Closing Financial Statements. Until the Closing Date, Seller shall
deliver to Buyer within 20 days after the end of each month a copy of the unaudited monthly
financial statements of Seller as of the end of such month and for the fiscal period then ended
prepared in a manner and containing information consistent with Seller’s Accounting Practices and
Procedures.

     Section 4.9 Related Party Receivables. At or prior to the Closing, Seller shall cause
all amounts payable by Seller to AMG, or by AMG to Seller, to be paid, and all intercompany
accounts between Seller and AMG to be paid, cancelled or eliminated.

     Section 4.10 Confidential Information Statement/Private Placement Memorandum. In
connection with the investment decision to acquire Buyer LP Units by Seller Partners in connection
with the distribution contemplated by Section 6.15 and the Seller Partners’ determination whether
to approve the transactions contemplated hereby, Buyer and Seller will cooperate to complete and
cause a confidential information statement/private placement memorandum (the “CIS/PPM”) to be
distributed to all of the Seller Partners as promptly as practicable following the date of this
Agreement (but in no event later than five (5) business days after the date hereof). It is
anticipated that the CIS/PPM will be delivered to the Seller Partners approximately two weeks prior
to the time by which the Seller Partners will be required to make a determination whether to
approve the transactions contemplated hereby in accordance with the organizational documents of
Seller.

     Section 4.11 Reasonable Best Efforts. Each party shall use its reasonable best
efforts to cause all of the conditions precedent to Buyer’s and Seller’s obligations set forth in
Article V to be satisfied, to the extent that such party’s action or inaction can control or
influence the satisfaction of such conditions.

     Section 4.12 Payment of Accrued Vacation and Sick Leave. At the Closing, Seller will
pay all accrued vacation and sick leave payable to all of the employees of Seller through the
Closing.

ARTICLE V

CONDITIONS TO CLOSING

     Section 5.1 Conditions to Obligations of Buyer. The obligations of Buyer to

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consummate the transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of each of the following conditions (any of which may be waived in writing,
in whole or in part, by Buyer):

          (a) Representations and Warranties. (i) Each of the representations and warranties of
Seller in Article II of this Agreement must have been accurate in all material respects as of the
date of this Agreement, and must be accurate in all material respects as of the Closing as if made
on the Closing, without giving effect to any supplement to the Schedules, and (ii) each of the
representations and warranties of Seller in Article II of the Agreement that contains an express
materiality qualification must have been accurate in all respects as of the date of this Agreement,
and must be accurate in all respects as of the Closing as if made on the day of Closing, without
giving effect to any supplement to the Schedules.

          (b) Covenants. All of the covenants and obligations that Seller is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly
performed and complied with in all material respects.

          (c) Single Hospital License and Governmental Provider Numbers. Buyer must have
obtained documentation or other evidence satisfactory to Buyer in its reasonable discretion that
(i) the Joint Commission accreditation of Odessa Regional Hospital will be extended to the Facility
and Odessa Regional Hospital and the Facility will be permitted to operate as a single accredited
entity, (ii) the Facility and Odessa Regional Hospital will be permitted to operate under a single
hospital license effective as of the Closing, (iii) the Facility and Odessa Regional Hospital will
be permitted to operate under single Governmental Provider Numbers, and (iv) all Governmental
Provider Numbers of Seller have been terminated effective as of the Closing.

          (d) Governmental Approvals. All necessary regulatory approvals for the transactions
contemplated by this Agreement, and all Governmental Authorizations (or satisfactory assurance from
the applicable Governmental Authorities that such Governmental Authorization will be issued
promptly following the Closing Date and be effective as of the Closing Date) as are necessary or
desirable to allow Buyer to own the Assets and to allow the continued operation of the business of
Seller acquired by Buyer following the Closing, must have been obtained.

          (e) HSR Act. The applicable waiting period under the HSR Act must have expired or
been terminated.

          (f) Title Insurance; Surveys.

               (i) The Title Company must have issued and delivered to Buyer (or shall irrevocably committed
to issue and deliver to Buyer by a currently effective, duly “marked-up” Title Commitment or a pro
forma policy acceptable to Buyer) the Title Policy and the Mortgage Title Policy, if applicable, as
contemplated pursuant to Section 4.6 hereof.

               (ii) Buyer shall have received the Surveys, which must be certified to the Buyer and the Title
Company and, if requested by Buyer, to any mortgagee, and must show no matters materially affecting
the use or value of the Owned Real Property or rendering title thereto unmarketable.

          (g) Phase I Environmental Site Assessment Report. Buyer must have received a

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Phase I Environmental Site Assessment Report with respect to the Owned Real Property (which
report must cover mold, asbestos, radon and lead-based paint as well as environmental matters
customarily addressed in a Phase I Environmental Site Assessment Report), which report must be
acceptable to Buyer in its sole discretion.

          (h) Encumbrances. All Encumbrances (other than Permitted Real Property Encumbrances)
on the Assets must have been released at or prior to the Closing.

          (i) Due Diligence Review. Buyer must be reasonably satisfied with the results of its
due diligence investigation with respect to the business, operations, affairs, properties, assets,
liabilities and condition of Seller.

          (j) Seller Consents. All consents, waivers, and estoppels of third parties specified
on Annex D shall have been obtained and shall be in form and substance reasonably
satisfactory to Buyer.

          (k) No Material Adverse Effect. There must not have been any material adverse change
in the business, operations, prospects, assets, results of operations or condition of Seller since
the date of this Agreement.

          (l) No Action or Proceeding. No Order of any Governmental Authority restraining,
enjoining or otherwise preventing or delaying the consummation of this Agreement or the
transactions contemplated hereby shall be outstanding, and no Proceedings or investigations by or
before, or otherwise involving, any Governmental Authority shall be threatened or pending against
Seller or Buyer which seeks to enjoin or prevent the consummation of the transactions contemplated
under this Agreement or which seeks material damages in connection with the transactions
contemplated hereby.

          (m) No Conflict. Neither the consummation nor the performance of the transactions
contemplated hereby will, directly or indirectly (with or without notice or lapse of time),
contravene, or conflict with, or result in a violation of, or cause Buyer to suffer any adverse
consequence under, (a) any applicable Legal Requirement or Order or (b) any Legal Requirement or
Order that has been published, introduced, or otherwise proposed by or before any Governmental
Body.

          (n) IASIS Credit Agreement. All required consents, approvals and/or waivers under the
IASIS Credit Agreement shall have been obtained.

          (o) Non-Accredited Investors. There must be no more than 35 persons who are not
“accredited investors” (as defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission) among the Seller Partners and stockholders of the General Partner.

          (p) Approval of Seller Partners. The Seller Partners must have approved the
transactions contemplated hereby (including the distribution of the Buyer LP Units to the Seller
Partners pursuant to Section 6.15) in accordance with the organizational documents of Seller and
applicable Legal Requirements.

          (q) Closing Deliveries. Seller must have caused the documents and instruments
required by Section 1.8(a), and an opinion of counsel to Seller in substantially the form of
Exhibit I,

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to be delivered (or tendered subject only to Closing) to Buyer.

     Section 5.2 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the satisfaction at or
prior to the Closing of each of the following conditions (any of which may be waived in writing, in
whole or in part, by Seller):

          (a) Representations and Warranties. (i) Each of the representations and warranties of
Buyer in Article III of this Agreement must have been accurate in all material respects as of the
date of this Agreement, and must be accurate in all material respects as of the Closing as if made
on the Closing, without giving effect to any supplement to the Schedules, and (ii) each of the
representations and warranties of Buyer in Article III of the Agreement that contains an express
materiality qualification must have been accurate in all respects as of the date of this Agreement,
and must be accurate in all respects as of the Closing as if made on the day of Closing, without
giving effect to any supplement to the Schedules.

          (b) Covenants. All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must have been duly
performed and complied with in all material respects.

          (c) Approvals. All material consents, authorizations, orders and approvals of (or
filings or registrations with) any Governmental Authority required in connection with the
execution, delivery and performance of this Agreement shall have been obtained by Buyer when so
required, except for any documents required to be filed, or consents, authorizations, orders or
approvals required to be issued, after the Closing Date.

          (d) HSR Act. The applicable waiting period under the HSR Act must have expired or
been terminated.

          (e) No Action or Proceeding. No Order of any Governmental Authority restraining,
enjoining or otherwise preventing or delaying the consummation of this Agreement or the
transactions contemplated hereby shall be outstanding, and no Proceeding or investigations by or
before, or otherwise involving, any Governmental Authority shall be threatened or pending against
Seller or Buyer which seeks to enjoin or prevent the consummation of the transactions contemplated
under this Agreement or which seeks material damages in connection with the transactions
contemplated hereby.

          (f) Opinion of Counsel to Buyer. Seller shall have received an opinion from counsel
to Buyer dated as of the Closing Date and addressed to Seller, in form and substance satisfactory
to counsel for Seller, covering the matters set forth in Exhibit J hereto.

          (g) Approval of Seller Partners. The Seller Partners must have approved the
transactions contemplated hereby in accordance (including the distribution of the Buyer LP Units to
the Seller Partners pursuant to Section 6.15) with the organizational documents of Seller and
applicable Legal Requirements.

          (h) Closing Deliveries. Buyer must have paid the Consideration required to be paid at
Closing and delivered the documents and instruments required by Section 1.8(b).

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ARTICLE VI

ADDITIONAL COVENANTS

     Section 6.1 Employees and Employee Benefits.

          (a) At the Effective Time, Seller shall terminate all of its employees (the “Available
Employees”), and Buyer shall offer employment to all active employees in good standing commencing
as of the Effective Time; provided, however, that (i) any offer of employment made by Buyer
pursuant to this Section 6.1(a) will not constitute any commitment, contract or understanding
(expressed or implied) of any obligation on the part of Buyer to a post-Closing Date employment
relationship of any fixed term or duration or upon any terms or conditions other than those that
Buyer may establish pursuant to individual offers of employment; and (ii) employment offered by
Buyer is “at will” and may be terminated by Buyer or by an employee at anytime for any reason
(subject to any written commitments to the contrary made by Buyer or any such employee). Nothing
in this Agreement will be deemed to prevent or restrict in any way the right of Buyer after the
Closing to terminate, reassign, promote or demote any of the Available Employees hired by Buyer, or
to change (adversely or favorably) the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of any such Available
Employees.

          (b) Seller will be responsible for (i) the payment of all wages and other remuneration due to
its employees with respect to their services as employees of Seller through the Effective Time
(excluding liability under severance agreements expressly assumed by Buyer pursuant to the terms
set forth herein); and (ii) the payment of any termination or severance payments and the provision
of health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA), as amended, or any other Legal Requirement, with respect to any Available Employees
who are not hired by Buyer or other former or current employees of Seller. Seller will be liable
for any claims made or incurred by its employees and their beneficiaries under the Employee Benefit
Plans, and Buyer will not have any responsibility, liability or obligation, to such employees,
their beneficiaries or any other Person with respect to any Employee Benefit Plan (except as set
forth in Section 1.3(c)). Seller shall make or cause to be made on behalf of all the
employees of Seller all contributions due to be made under each Employee Benefit Plan for all
periods prior to the Effective Time. Additionally, Seller, at its sole cost and expense, shall
take such actions as are necessary to make, or cause each Employee Benefit Plan to make,
appropriate distributions to all the employees of Seller in accordance with such Employee Benefit
Plan and applicable legal requirements. Buyer will provide credit, for eligibility and vesting
purposes under the 401(k) plan of Buyer or its affiliates, for the period of prior service with
Seller of all Available Employees hired by Buyer.

          (c) Nothing in this Section 6.1 will be deemed to create or grant any employees of Seller or
other third parties third party beneficiary rights or claims of any nature.

     Section 6.2 Payment of Taxes Resulting From Sale of Assets by Seller. Seller shall
pay in a timely manner all Taxes resulting from or payable in connection with the sale of the
Assets pursuant to this Agreement.

     Section 6.3 Payment of Other Excluded Liabilities. Following the Closing, in addition
to payment of Taxes pursuant to Section 6.2, Seller shall pay, or make adequate provision for the
payment, in full of all other Excluded Liabilities. If any such Excluded Liabilities are not so
paid or

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provided for, or if Buyer reasonably determines that failure to make any payments will impair
Buyer’s use or enjoyment of the Assets or conduct of the business of the Seller previously
conducted using the Assets, Buyer may at any time after the Closing Date elect to make all such
payments directly (but shall have no obligation to do so) and will be promptly reimbursed by Seller
for such payments. Buyer will receive full credit under this Agreement for all payments so made.

     Section 6.4 Restrictive Covenants.

          (a) In consideration of the Purchase Price to be received under this Agreement, Seller agrees
that, for a period of three years after the Closing Date (the “Restrictive Covenant Period”),
Seller shall not, directly or indirectly, do any of the following:

     (i) engage in, or invest in, own, lease, manage, operate, control, be employed by,
associated with or in any manner connected with, or render services or advice or other aid
to, any person engaged in or planning to become engaged in, any Competing Business within
the Restricted Area; or

     (ii) without the prior written consent of Buyer, hire or attempt to hire, retain,
induce or attempt to induce any employee of Seller hired by Buyer to leave the employ of
Buyer or its Affiliates, or in any way interfere with the relationship between Buyer or its
Affiliates and any such employees, or solicit, offer employment to, or otherwise engage as
an employee, independent contractor, or otherwise, any such employees.

          (b) For purposes hereof, (i) “Competing Business” shall mean the ownership, leasing,
management, operation or control of any acute care hospital, specialty hospital, comprehensive
rehabilitation facility, rehabilitation agency, diagnostic imaging center, outpatient diagnostic
catheterization facility, inpatient or outpatient psychiatric or substance abuse facility,
ambulatory or other type of surgery center, nursing home, skilled nursing facility, assisted living
facility or home health agency, and (ii) “Restricted Area” shall mean the area within a 100 mile
radius of the city limits of Odessa, Texas.

          (c) Seller acknowledges that all of the foregoing provisions are reasonable and are necessary
to protect and preserve the value of the Assets and to prevent any unfair advantage being conferred
on Seller. If any of the covenants set forth in this Section 6.4 are held to be unreasonable,
arbitrary, or against public policy, the restrictive time period herein will be deemed to be the
longest period permissible by law under the circumstances and the restrictive geographical area
herein will be deemed to comprise the largest territory permissible by law under the circumstances.

          (d) In the event of a breach by Seller of any covenant set forth in Section 6.4(a) of this
Agreement, the Restrictive Covenant Period will be extended by the period of the duration of such
breach.

          (e) Seller acknowledges that a breach by Seller of any of the covenants set forth in Section
6.4(a) of this Agreement cannot be reasonably or adequately compensated in damages in an action at
law, and that Buyer will be entitled to, among other remedies, and without posting any bond or
other undertaking, injunctive relief, which may include, but will not be limited to: (i)
restraining Seller from engaging in any action that would constitute or cause a breach or violation
of Section 6.4(a), (ii) obtaining specific performance to compel Seller to perform its obligations
and

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covenants hereunder, and (iii) obtaining damages available either at law or in equity.

     Section 6.5 Public Announcements. No party hereto shall release, publish, or
otherwise make available to the public in any manner whatsoever any information or announcement
regarding the transactions herein contemplated without the prior written consent of the other
party, except for information and filings reasonably necessary to be directed to Government
Authorities to fully and lawfully effect the transactions herein contemplated or required in
connection with securities and/or other laws. Except as otherwise agreed to by Buyer and Seller or
required by Legal Requirements, prior to the Closing, each party and its representatives and agents
will keep this Agreement and any information about the transactions contemplated hereby strictly
confidential and shall not make any disclosure of this Agreement to any other Person. Seller and
Buyer will consult with each other concerning the means by which the Seller’s employees, patients,
physicians, suppliers and others having dealings with the Seller will be informed of the
transactions contemplated hereby, and Buyer will have the right to be present for any such
communications.

     Section 6.6 Confidentiality.

          (a) Buyer and Seller shall maintain in confidence, and shall cause their respective
representatives to maintain in confidence, and not use to the detriment of the other party, any
written, oral, or other proprietary or confidential information related to the other party obtained
in connection with this Agreement or the transactions contemplated hereby (“Confidential
Information”), except to the extent that the disclosure of such information (i) is necessary or
appropriate in making any filing or obtaining any consent required for the consummation of the
transactions contemplated hereby, (ii) is required pursuant to applicable Legal Requirements
(subject to Section 6.6(c) below), or (iii) is made to the receiving party’s representatives who
need to know such information for the purpose of evaluating the transactions contemplated hereby.

          (b) Notwithstanding the foregoing, Confidential Information will not include information that
(i) was or becomes generally available to the public other than as a result of disclosure by the
receiving party or its representatives or (ii) was or becomes available to the receiving party on a
non-confidential basis from a source other than the other party or its advisers, provided that such
source was not known by the receiving party to be bound by any agreement with the other party to
keep such information confidential, or otherwise prohibited from transmitting the information to
the receiving party by a contractual, legal or fiduciary obligation.

          (c) In the event that a party is required by applicable Legal Requirements to disclose any
Confidential Information pursuant to clause (ii) of Section 6.6(a) above, it shall provide the
other party with prompt written notice of such request or requirement so that the other party may
seek an appropriate protective order. If, failing the entry of a protective order, a receiving
party is, in the written opinion of its counsel, compelled to disclose Confidential Information, it
may disclose that portion of Confidential Information that its counsel advises that is compelled to
disclose and will exercise reasonable efforts to obtain assurance that confidential treatment will
be accorded to that portion of the Confidential Information that is being disclosed; provided,
however, that, prior to any such disclosure, it will consult with the other party with respect to
the nature and wording of the disclosure. In any event, neither party will oppose action by the
other party to obtain an appropriate protective order or other reliable assurance that confidential
treatment will be accorded to the Confidential Information.

          (d) Notwithstanding anything contained herein to the contrary, effective as of the

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Closing, all Confidential Information of Seller included in the Assets or otherwise related to
the business of the Seller will be deemed to be “Confidential Information” of Buyer and will be
subject to the protections set forth therein for the benefit of Buyer.

     Section 6.7 Customers and Other Business Relationships. After the Closing, Seller
will cooperate with Buyer in its efforts to continue and maintain for the benefit of Buyer those
relationships of Seller relating to the business of Seller, including relationships with patients,
physicians, suppliers, landlords, creditors, lessors and employees.

     Section 6.8 Cost Reports. Buyer shall, at its expense, cause to be prepared on behalf
of Seller all terminating and other cost reports required by law to be filed under Medicare and
Medicaid for periods ending on or prior to the Effective Time, or as a result of the consummation
of the transactions described herein, based on information provided by Seller to Buyer as set forth
below (the “Seller Cost Reports”). Notwithstanding the foregoing, Seller will review, be
responsible for, execute and timely file the Seller Cost Reports, and will be fully responsible for
all liabilities relating to the Seller Cost Reports and for the accuracy of all information set
forth therein; provided, however, that Buyer shall have the right to review and approve, in its
reasonable discretion, the Seller Cost Reports prior to filing. Seller shall provide Buyer or its
designee all records and data necessary for completion of the Seller Cost Reports. Buyer shall
forward to Seller any and all correspondence relating to the Seller Cost Reports within five (5)
business days after receipt by Buyer. Buyer shall remit any receipts of funds relating to the
Seller Cost Reports within ten (10) business days after receipt by the Buyer and shall forward to
Seller any demand for payments within three (3) business days after receipt by the Buyer. Seller
shall retain all rights to the Seller Cost Reports including any amounts receivable or payable in
respect of such reports or reserves relating to such reports. Such rights shall include the right
to appeal any Medicare or Medicaid determinations relating to the Seller Cost Reports.

     Section 6.9 Misdirected Payments, Etc. Buyer and the Seller covenant and agree to
remit, with reasonable promptness, to the other any payments received, which payments are on or in
respect of accounts or notes receivable owned by (or are otherwise payable to) the other. In
addition, and without limitation, in the event of a determination by any governmental or
third-party payor that payments to Seller or the Facility resulted in an overpayment or other
determination that funds previously paid by any program or plan to Seller or the Facility must be
repaid, Seller shall be responsible for repayment of said monies (or defense of such actions) if
such overpayment or other repayment determination was for services rendered prior to the Closing
Date and the Buyer shall be responsible for repayment of said monies (or defense of such actions)
if such overpayment or other repayment determination was for services rendered after the Closing
Date. In the event that, following Closing, the Buyer suffers any offsets against reimbursement
under any third-party payor or reimbursement programs due to the Seller, relating to amounts owing
under any such programs by Seller or any of its Affiliates, Seller shall immediately upon written
demand from the Buyer pay to the Buyer the amounts so billed or offset.

     Section 6.10 Insurance Matters. On or prior to Closing, Seller shall provide evidence
to Buyer of a minimum of five (5) years of reporting endorsement (extended reporting or “Tail”)
coverage (“Tail Coverage”) for professional liability insurance on events that may have occurred
prior to Closing, but are not reported until after the Closing. The amount of insurance for the
Tail Coverage for professional liability insurance will be no less than $1,000,000 per claim and
$3,000,000 in the aggregate for claims made after the Closing for the Primary Professional
Liability limit of insurance coverage. On or prior to Closing, Seller shall also provide evidence
to Buyer of

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Tail Coverage for Excess Professional Liability coverage with a limit no less than $10,000,000
per claim and $10,000,000 in the aggregate for a period of not less than five (5) years. On or
prior to Closing, Seller shall also provide Tail Coverage on any other “claims made” coverages with
respect to Seller’s insurance policies for a period of no less than five (5) years. “Claims made”
coverages may include, but are not limited to, Directors’ & Officers’ Liability, Employment
Practices Liability, and Environmental Liability. Seller shall name Buyer as an additional insured
on all Tail Coverage obtained by Seller pursuant to this Section 6.10. At the Closing, Buyer shall
reimburse Seller for all premiums paid by Seller relating to the Tail Coverage required to be
obtained by Seller pursuant to this Section 6.10 (except to the extent that such premiums exceed
$725,000, in which case Seller will be responsible for any such excess).

     Section 6.11 Audited Statements Cooperation. Seller shall cooperate with Buyer in
Buyer’s efforts to obtain the consent of Condley and Company, L.L.P. as may be required in order
for Buyer to include Seller’s audited financial statements in any registration statement or filing
under the Exchange Act or Securities Act.

     Section 6.12 Retention and Access to Books and Records. After the Closing Date, Buyer
shall retain for a period consistent with Buyer’s record retention policies and practices the books
and records included in the Assets. Subject to all Legal Requirements governing the privacy and
confidentiality of individually identifiable health information, and upon Buyer’s receipt of any
required consents and authorizations, Buyer also shall provide Seller and its representatives, at
Seller’s sole cost and expense, reasonable access thereto, during normal business hours and on at
prior written notice, for any reasonable purpose specified in such notice. After the Closing Date,
Seller shall provide Buyer and its representatives reasonable access to Excluded Records during
normal business hours and on prior written notice, for any reasonable business purpose specified by
Buyer in such notice. Any access to the Facility, its records or Buyer’s personnel granted to
Seller in this Agreement shall be upon the condition that any such access not materially interfere
with the business operations of Buyer. Neither Buyer (with respect to books and records included
in the Assets) nor Seller (with respect to Excluded Records) shall destroy any such books and
records prior to the applicable statute of limitations period without providing prior written
notice to the other party.

     Section 6.13 Cooperation on Tax Matters. Following the Closing, the parties shall
cooperate fully with each other and shall make available to the other, as reasonably requested and
at the expense of the requesting party, and to any taxing authority, all information, records or
documents relating to Tax liabilities or potential Tax liabilities of Seller for all periods on or
prior to the Closing and any information which may be relevant to determining the amount payable
under this Agreement, and shall preserve all such information, records and documents at least until
the expiration of any applicable statute of limitations or extensions thereof. Seller shall make
available to Buyer the records of individual wages of all employees, as well as copies of state
unemployment Tax returns, to the extent necessary for Buyer to verify future unemployment Tax rates
and to calculate the correct taxable payroll for the remainder of the calendar year in which the
transaction occurs. Buyer shall, at its expense, on behalf of Seller, cause to be prepared all Tax
Returns of Seller for its fiscal year ending December 31, 2007 (including terminating Forms W-2 and
Forms 1099 with respect to periods through and including the Closing Date), based on information
provided by Seller to Buyer as set forth below (the “Post-Closing Seller Tax Returns”).
Notwithstanding the foregoing, Seller will review, be responsible for, execute and timely file the
Post-Closing Seller Tax Returns, and will be fully responsible for all liabilities relating to the
Post-Closing Seller Tax Returns and for the accuracy of all information set forth therein;
provided, however, that Buyer shall have the right to review and approve, in its reasonable
discretion, the Post-Closing Seller Tax Returns prior to

39

 

filing. Seller shall provide Buyer or its designee all records and data necessary for
completion of the Post-Closing Seller Tax Returns.

     Section 6.14 Litigation Cooperation. Each party shall cooperate with the other party,
at the requesting party’s expense (but including only out-of-pocket expenses to third parties,
photocopying and delivery costs and not the costs incurred by any party for the wages or other
benefits paid to its officers, directors or employees), in furnishing reasonably available
information, testimony and other assistance in connection with any Proceedings, Tax or cost report
audits or disputes involving any of the parties hereto (other than in connection with disputes
between the parties hereto).

     Section 6.15 Distribution of Buyer LP Units.

          (a) Prior
to the Closing, it is contemplated that Buyer will effect a 6-1 split of the
Buyer LP Units (or such other split as determined by Buyer prior to Closing) (the “Buyer Unit
Split”). Immediately following the Closing, the Buyer LP Units issuable to the Seller at Closing
pursuant to Section 1.5(b)(iii)(B) will be distributed by Seller to the Seller Partners, and by the
General Partner to its stockholders, in accordance with the organizational documents of Seller and
the General Partner and applicable Legal Requirements, subject to the terms of this Section 6.15.

          (b) Notwithstanding anything contained herein to the contrary, if Buyer (i) determines, in
connection with its review of the Subscription Document Packages or otherwise, that any Seller
Partner or any stockholder of the General Partner (x) would or may be prohibited from acquiring
Buyer LP Units under applicable federal, state or other healthcare legal requirements, or (y)
otherwise determines that any Seller Partner or any stockholder of the General Partner would be
disruptive to the business and affairs of the Buyer (any such persons, the “Non-Qualified Seller
Partners”), then (A) Buyer will pay cash to Seller in lieu of Buyer LP Units in an amount equal to
the value (based on the Buyer LP Unit Value) of the Buyer LP Units otherwise issuable to the
Non-Qualified Seller Partners (such cash, the “Non-Qualified Seller Partner Cash Amount”), (B)
Seller and/or the General Partner will distribute to the Non-Qualified Seller Partners the
Non-Qualified Seller Partner Cash Amount in accordance with the organizational documents of Seller
and General Partner in lieu of distributing to the Non-Qualified Seller Partners the Buyer LP Units
otherwise issuable to them, and (C) Seller and the General Partner will in no event distribute any
Buyer LP Units to the Non-Qualified Seller Partners. Buyer will provide written notice to Seller
prior to Closing of any Seller Partners determined to be Non-Qualified Seller Partners.

          (c) Prior to the date of this Agreement, Seller has provided Buyer written notice regarding
the Seller Partners and the stockholders of the General Partner who will be distributed Buyer LP
Units immediately following the Closing as set forth above and the number of Buyer LP Units to be
distributed to such persons in accordance with the organizational documents of Seller and General
Partner (taking into account the Buyer Unit Split, and subject to any determination by Buyer that
any such persons are Non-Qualified Seller Partners). Seller and the General Partner will only be
permitted to distribute whole Buyer LP Units to the Seller Partners and stockholders of the General
Partner, as applicable, and will not be permitted to distribute any fractional Buyer LP Units. To
the extent that any fractional Buyer LP Units would otherwise be issuable to Seller Partners and
stockholders of the General Partner as set forth above (after giving effect to the Buyer Unit
Split), Buyer will pay cash to Seller in lieu of such fractional Buyer LP Units (the “Fractional
Unit Cash Amount; the Fractional Unit Cash Amount and the Non-Qualified Seller Partner Cash Amount,
collectively, the “Residual Cash Amount”), and such cash will be distributed to such Seller
Partners

40

 

and stockholders of the General Partner in lieu of the fractional Buyer LP Units in accordance
with the organizational documents of Seller and the General Partner; provided, however, that any
such Seller Partner or stockholder of the General Partner (excluding any Non-Qualified Seller
Partner) may elect, lieu of receiving the fractional Buyer LP Unit otherwise issuable to such
Seller Partner or stockholder as set forth above, to receive a whole Buyer LP Unit in lieu of such
fractional Buyer LP Unit by delivering to Buyer, on or prior to Closing, (1) a check for the
balance of such Buyer LP Unit (based on the Buyer LP Unit Value), and (2) a completed Subscription
Document Package in accordance with Section 1.8(a)(vi).

          (d) Following the Closing, Buyer shall deliver to each of the Seller Partners or stockholders
of the General Partner who are issued Buyer LP Units in connection with the consummation of the
transactions contemplated hereby documentation confirming the number of Buyer LP Units issued to
such Seller Partner or stockholder of the General Partner in connection with the transactions
contemplated hereby.

          (e) Notwithstanding anything contained herein to the contrary, in the event that Seller has
not delivered to Buyer a completed Subscription Document Package on or prior to Closing in
accordance with Section 1.8(a)(vi) with respect to any Seller Partner or stockholder of the General
Partner who would otherwise be issued Buyer LP Units immediately following the Closing in
accordance with this Section 6.15, then Seller shall not distribute any Buyer LP Units to any such
Seller Partner or stockholder of the General Partner until such time that such completed
Subscription Document Package has been delivered to Buyer and Buyer has delivered written notice to
Seller that Buyer has accepted the subscription of such Seller Partner or stockholder of the
General Partner.

     Section 6.16 Guaranty by General Partner. Subject to the terms and conditions of this
Agreement, the General Partner will cause Seller to perform all of its obligations under this
Agreement. Subject to the terms and conditions hereof, the General Partner waives (i) any and all
defenses specifically available to a guarantor (other than non-performance of Buyer’s obligations
hereunder and other than performance in full by Seller), and (ii) any notices, including, without
limitation, any notice of any amendment of this Agreement or waiver or other similar action granted
pursuant to this Agreement.

     Section 6.17 Termination of Governmental Authorizations. As soon as practicable after
the Closing, Seller shall use its best efforts to cause all Governmental Authorizations related to
the Facility which are not assigned to Buyer, or terminated effective as of the Closing pursuant to
Section 5.1(c) hereunder, to be terminated.

     Section 6.18 Further Assurances. Following the Closing, the parties shall cooperate
reasonably with each other and with their respective representatives and agents in connection with
any steps required to be taken as part of their respective obligations under this Agreement, and
the parties agree (a) to furnish upon request to the other parties such further information, (b) to
execute and deliver to each other such other documents, and (c) to do such other acts and things,
all as the other parties may reasonably request, for the purpose of carrying out the intent of this
Agreement and the transactions contemplated hereby.

     Section 6.19 Minimum Cash Amount. Notwithstanding anything contained herein to the
contrary, Seller shall retain at Closing, and shall not distribute to the Seller Partners except as
set forth below, at least $250,000 in cash (the “Minimum Cash Amount”). The Minimum Cash Amount
shall be used by Seller to pay professional fees and expenses and other fees and expenses

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incurred by Seller in the ordinary course of business following the Closing (including any
amounts payable to Purchaser hereunder). Seller shall hold the Minimum Cash Amount (as reduced to
pay fees and expenses as set forth above) for a minimum of two years following the Closing, and
Seller shall not dissolve prior to the end of such two-year period.

ARTICLE VII

INDEMNIFICATION

     Section 7.1 Survival. All representations, warranties, covenants, and obligations in
this Agreement, the Schedules attached hereto, the certificates delivered pursuant to Section 1.8,
and any other certificate or document delivered pursuant to this Agreement will survive the Closing
and the consummation of the transactions contemplated hereby, subject to Section 7.6. The right to
indemnification, reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted with respect to, or
any knowledge acquired (or capable of being acquired) about, the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation.

     Section 7.2 Indemnification and Reimbursement By Seller. Seller shall indemnify and
hold harmless Buyer, and its partners, directors, stockholders, employees, representatives and
agents (collectively, the “Buyer Indemnified Persons”), and shall reimburse the Buyer Indemnified
Persons, for any loss, liability, claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses)
or diminution of value, whether or not involving a third-party claim (collectively, “Damages”),
arising, directly or indirectly, from or in connection with:

          (a) any breach of any representation or warranty made by Seller in this Agreement, the
certificate delivered by Seller pursuant to Section 1.8(a)(xiii), or any other certificate or
document delivered by Seller at Closing pursuant to this Agreement;

          (b) any nonfulfillment or breach of any covenant or agreement contained in this Agreement to
be performed or complied with by Seller;

          (c) the Seller Cost Reports referenced in Section 6.8;

          (d) the Post-Closing Seller Tax Returns referenced in Section 6.13;

          (e) any other Excluded Liabilities; and

          (f) any brokerage or finder’s fees or commissions or similar payments based upon any agreement
or understanding alleged to have been made by any Person with Seller (or any Person acting on its
behalf) in connection with the transactions contemplated hereby.

     Section 7.3 Indemnification and Reimbursement by Buyer. Buyer shall indemnify and
hold harmless Seller, the Seller Partners, the officers and directors of the General Partner, and
the employees, representatives and agents of the Seller (collectively, the “Seller Indemnified
Persons”) and shall reimburse the Seller Indemnified Persons for any Damages arising, directly or
indirectly, from or in connection with:

          (a) any breach of any representation or warranty made by Buyer in this Agreement, the
certificate delivered by Buyer pursuant to Section 1.8(b)(ix), or any certificate or

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document delivered by Buyer at Closing pursuant to this Agreement;

          (b) any breach of any covenant or obligation of Buyer in this Agreement or in any other
document delivered by Buyer at Closing pursuant to this Agreement;

          (c) any Assumed Liabilities; and

          (d) any brokerage or finder’s fees or commissions or similar payments based upon any agreement
or understanding alleged to have been made by any such Person with Buyer (or any Person acting on
its behalf) in connection with the transactions contemplated hereby.

     Section 7.4 Limitations on Indemnification by Seller. Notwithstanding anything
contained herein to the contrary, the obligation of Seller to indemnify the Buyer Indemnified
Persons pursuant to Section 7.2 is subject to the following limitations and qualifications:

          (a) Seller will have no indemnification liability under Section 7.2(a) until the total amount
of Damages incurred by the Buyer Indemnified Persons hereunder exceeds $150,000 (the “Threshold”),
in which case Seller will be responsible for the full amount of the Damages.

          (b) The maximum indemnification liability of Seller under Section 7.2(a) will be $25,000,000
(the “Cap”).

          (c) Nothing contained herein (including Section 7.4(a) and 7.4(b)) shall limit or restrict any
Buyer Indemnified Person’s right to maintain or recover any amounts in connection with any action
or claim based upon any intentional misstatement, fraudulent misrepresentation or deceit.

          (d) In the event that the Buyer Indemnified Persons have any indemnification claim hereunder,
Buyer will be required to make a claim against any escrowed funds held at such time under the
Escrow Agreement (up to the amount of such escrowed funds) prior to exercising any other
indemnification remedies hereunder.

     Section 7.5 Limitations on Indemnification by Buyer. Notwithstanding anything
contained herein to the contrary, the obligation of Buyer to indemnify the Seller Indemnified
Persons pursuant to Section 7.3 is subject to the following limitations and qualifications:

          (a) Buyer will have no indemnification liability under Section 7.3(a) until the total amount
of Damages incurred by the Seller Indemnified Persons hereunder exceeds the Threshold, in which
case Buyer will be responsible for the full amount of the Damages.

          (b) The maximum indemnification liability of Buyer under Section 7.3(a) will be the Cap.

          (c) Nothing contained herein (including Section 7.5(a) and 7.5(b)) shall limit or restrict any
Seller Indemnified Person’s right to maintain or recover any amounts in connection with any action
or claim based upon intentional misstatement, fraudulent misrepresentation or deceit.

     Section 7.6 Time Limitations.

          (a) Seller will have no indemnification liability for the breach of any representation or
warranty set forth in Article II, unless on or before the third anniversary of the

43

 

Closing Date, Buyer notifies Seller of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer; provided, however, that any
claim with respect to Sections 2.8 (Taxes), 2.10 (Employee Benefits), 2.12 (Environmental Matters),
2.20 (Compliance with Legal Requirements), 2.21 (Governmental Authorizations), 2.22 (Medicare
Participation/Accreditation) or 2.24 (Third Party Payor Cost Reports), or a claim for
indemnification or reimbursement not based upon any representation or warranty made by Seller under
Article II, may be made by Buyer at any time prior to thirty days following the expiration of the
applicable statute of limitations period.

          (b) Buyer will have no indemnification liability for the breach of any representation or
warranty set forth in Article III, unless on or before the third anniversary of the Closing Date,
Seller notifies Buyer of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Seller; provided, however, that any claim for
indemnification or reimbursement not based upon any representation or warranty made by Buyer under
Article III may be made by Seller at any time prior to thirty days following the expiration of the
applicable statute of limitations period.

     Section 7.7 Third-Party Claims.

          (a) Promptly after receipt by a Person entitled to indemnity under Section 7.1 or 7.2 (an
“Indemnified Person”) of notice of the assertion of any claim against any Indemnified Person by a
third party (a “Third-Party Claim”), such Indemnified Person shall give notice to the Person
obligated to indemnify under such Section (an “Indemnifying Person”) of the assertion of such
Third-Party Claim, provided that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any liability that it may have to any Indemnified Person, except to the
extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is
prejudiced by the Indemnified Person’s failure to give such notice.

          (b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section
7.7(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to
participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i)
the Indemnifying Person is also a Person against whom the Third-Party Claim is made and the
Indemnified Person determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Person fails to provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Third-Party Claim and provide indemnification with respect to
such Third-Party Claim), to assume the defense of such Third-Party Claim with counsel satisfactory
to the Indemnified Person. After notice from the Indemnifying Person to the Indemnified Person of
its election to assume the defense of such Third-Party Claim, the Indemnifying Person shall not, so
long as it diligently conducts such defense, be liable to the Indemnified Person under this Article
VII for any fees of other counsel or any other expenses with respect to the defense of such
Third-Party Claim, in each case subsequently incurred by the Indemnified Person in connection with
the defense of such Third-Party Claim, other than reasonable costs of investigation. If the
Indemnifying Person assumes the defense of a Third-Party Claim, (i) no compromise or settlement of
such Third-Party Claims may be effected by the Indemnifying Person without the Indemnified Person’s
consent unless (A) there is no finding or admission of any violation of any Legal Requirement or
any violation of the rights of any Person; (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person; and (ii) the Indemnified Person shall have no
liability with respect to any compromise or settlement of such Third-Party Claims effected without
its consent. If notice is given to an Indemnifying Person of the assertion of any Third-Party
Claim and the Indemnifying Person does not, within ten (10) days after the Indemnified Person’s
notice is given, give notice to the

44

 

Indemnified Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person will be bound by any determination made in such Third-Party Claim or any
compromise or settlement effected by the Indemnified Person.

          (c) Notwithstanding the foregoing, if an Indemnified Person determines in good faith that
there is a reasonable probability that a Third-Party Claim may adversely affect it or its
Affiliates other than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying
Person, assume the exclusive right to defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-Party Claim so defended for
the purposes of this Agreement or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).

     Section 7.8 Procedure For Indemnification — Other Claims. A claim for
indemnification for any matter not involving a Third-Party Claim may be asserted by notice to the
party from whom indemnification is sought.

     Section 7.9 No Double Materiality. For purposes of calculating the amount of Damages
to which the Buyer Indemnified Persons and Seller Indemnified Persons are entitled under this
Article VII (but not for purposes of determining whether a representation or warranty has been
breached), the terms “material,” “materiality,” and “material adverse effect” will be disregarded.

ARTICLE VIII

TERMINATION

     Section 8.1 Termination Events. By written notice given prior to or at the Closing,
subject to Section 8.2, this Agreement may be terminated as follows:

          (a) by Buyer, in the event a material breach of this Agreement has been committed by Seller
and such breach has not been waived in writing by Buyer;

          (b) by Seller, in the event a material breach of this Agreement has been committed by Buyer,
and such breach has not been waived in writing by Seller;

          (c) by Buyer, if the satisfaction of any of the conditions to Buyer’s obligation to close the
transactions contemplated hereby as set forth in Section 5.1 becomes impossible (other than through
the failure of Buyer to comply with its obligations under this Agreement), and Buyer has not waived
such condition in writing on or before such date;

          (d) by Seller, if the satisfaction of any of the conditions to Seller’s obligation to close
the transactions contemplated hereby as set forth in Section 5.2 becomes impossible (other than
through the failure of Seller to comply with its obligations under this Agreement), and Seller has
not waived such condition in writing on or before such date;

          (e) by either Buyer or Seller if any Order of any Governmental Authority of competent
jurisdiction permanently restraining, enjoining or otherwise preventing the consummation of the
transactions contemplated hereby shall have been issued and become final and non-appealable;

          (f) by mutual written consent of Buyer and Seller;

45

 

          (g) by Buyer or Seller, if the Closing has not occurred on or before August 31, 2007 or such
later date as the parties may agree upon in writing, unless the terminating party is in material
breach of this Agreement; or

          (h) within 30 days after the date of this Agreement, by Buyer in accordance with Section 4.1.

     Section 8.2 Effect of Termination. Each party’s right of termination under Section
8.1 is in addition to any other rights it may have under this Agreement or otherwise, and the
exercise of such right of termination will not be an election of remedies. If the Agreement is
terminated pursuant to Section 8.1, all obligations of the parties under this Agreement will
terminate, except that the obligations in Section 6.5, Section 6.6, this Article VIII, and Article
IX will survive; provided, however, that termination of this Agreement will not preclude a party
from bringing an indemnification claim against any other party to this Agreement for a breach
arising prior to such termination pursuant to the terms and conditions set forth herein.

ARTICLE IX

GENERAL PROVISIONS

     Section 9.1 Expenses. Seller will be responsible for 50% of all recording costs and
transfer taxes payable in connection with the transfer of the Owned Real Property and the Assets.
Buyer will be responsible for (a) all fees and expenses related to obtaining the Title Commitment
and Title Policy, and the Surveys, pursuant to the terms herein, (b) all fees and expenses related
to obtaining Phase I Environmental Site Assessment Reports in connection with the transactions
contemplated hereby, (c) the filing fee under the HSR Act, (d) 50% of all recording costs and
transfer taxes payable in connection with the transfer of the Owned Real Property and the Assets,
(e) all expenses relating to the preparation of the Seller Cost Reports pursuant to Section 6.8,
(f) all expenses relating to the preparation of the Post-Closing Seller Tax Returns pursuant to
Section 6.13, and (g) reimbursing Seller for all expenses relating to the preparation of audited
financial statements of Seller as of October 31, 2006 and for the ten-month period then ended
payable by Seller to the accounting firm which audited such financial statements. Except as set
forth above or as otherwise expressly provided in this Agreement, each party to this Agreement
shall bear its respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the transactions contemplated hereby, including all fees and
expenses of its representatives. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party arising from a
breach by the other party.

     Section 9.2 Assignment; No Third Party Beneficiaries. No party may assign any of its
rights or delegate any of its obligations under this Agreement without the prior written consent of
the other party, except that Buyer may assign any of its rights and delegate any of its obligations
under this Agreement to any (i) to any Affiliate of Buyer, and (ii) in connection with the sale of
all or substantially all of the assets of Buyer, provided that no such assignment or delegation
will relieve Buyer from any of its obligations hereunder. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable right under or with
respect to this Agreement or any provision of this Agreement, except such rights as will inure to a
successor or permitted assignee pursuant to this Section 9.2.

46

 

     Section 9.3 Notices. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt), (b) sent by facsimile with confirmation of
transmission by the transmitting equipment, (c) received by the addressee, if sent by certified
mail, return receipt requested, or (d) received by the addressee, if sent by a nationally
recognized overnight delivery service, return receipt requested, in each case to the appropriate
addresses or facsimile numbers set forth below (or to such other addresses or facsimile numbers as
a party may designate by notice to the other parties):

If to the Seller:

Alliance Hospital, Ltd.

515 N. Adams

Odessa, Texas 79761

Attention: J.B. Naidu, M.D.

                 Steven Riley, M.D.

Facsimile:

with
a copy to:

Hollmann, Lyon, Patterson & Durell, Inc.

5030 East University Blvd. D-103

Odessa, Texas 79762

Attention: Daniel J. Hollmann, Esq.

Facsimile: 432-363-1310

If to Buyer:

Odessa Regional Hospital, LP

c/o IASIS Healthcare Holdings, Inc., its general partner

117 Seaboard Lane, Suite E

Franklin, Tennessee 37067

Attn: Frank A. Coyle, Esq., General Counsel

Facsimile: (615) 467-1271

with a copy to:

Bass, Berry & Sims PLC

315 Deaderick Street, Suite 2700

Nashville, Tennessee 37238-3001

Attn: Leigh Walton, Esq.

Facsimile: (615) 742-2701

     Section 9.4 Entire Agreement; Modification. This Agreement (together with the
Annexes, Schedules and Exhibits attached to this Agreement and the other documents delivered
pursuant to this Agreement) constitutes the entire agreement among the parties and supersedes all
prior agreements, whether written or oral, between the parties with respect to the subject matter
hereof and thereof. This Agreement may not be amended except by a written agreement signed by each
of the parties to this Agreement.

47

 

     Section 9.5 Waiver. Neither the failure nor any delay by any party in exercising any
right under this Agreement or the documents referred to in this Agreement will operate as a waiver
of such right, and no single or partial exercise of any such right will preclude any other or
further exercise of such right or the exercise of any other right. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to
in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation
of the claim or right unless in writing signed by the other parties; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it is given; and (c)
no notice to or demand on one party will be deemed to be a waiver of any obligation of such party
or of the right of the party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this Agreement. The rights
and remedies of the parties to this Agreement are cumulative and not alternative.

     Section 9.6 Severability. If any provision of this Agreement is held to be invalid or
unenforceable for any reason, such provision shall be ineffective to the extent of such invalidity
or unenforceability; provided, however, that the remaining provisions will continue in full force
and effect without being impaired or invalidated in any way unless such invalid or unenforceable
provision or clause is so significant as to materially affect the expectations of the Buyer and
Seller regarding this Agreement. Otherwise, any invalid or unenforceable provision shall be
replaced by the Buyer and the Seller with a valid provision which most closely approximates the
intent and economic effect of the invalid or unenforceable provision.

     Section 9.7 Headings; Construction. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its construction or interpretation.
All Annexes, Exhibits and Schedules to this Agreement are incorporated into and constitute an
integral part of this Agreement as if fully set forth herein. All words used in this Agreement
will be construed to be of such gender or number as the context requires. All references to
documents, instruments or agreements will be deemed to refer as well to all addenda, exhibits,
schedules or amendments thereto. The language used in the Agreement will be construed, in all
cases, according to its fair meaning, and not for or against any party hereto. The parties
acknowledge that each party has reviewed this Agreement and that rules of construction to the
effect that any ambiguities are to be resolved against the drafting party will not be available in
the interpretation of this Agreement.

     Section 9.8 Governing Law. This Agreement will be governed by and construed under the
laws of the State of Texas without regard to any conflicts of laws principles that would require
the application of any other law.

     Section 9.9 Execution of Agreement; Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile, or by .pdf or similar
imaging transmission, will constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be
their original signatures for any purpose whatsoever.

     Section 9.10 Tax and Medicare Advice and Reliance. Except as set forth in this
Agreement, none of the parties (nor any of the parties’ respective counsel, accountants or other
representatives) has made or is making any representation to any other party (or to any other
party’s

48

 

counsel), accountants or other representatives) concerning the consequences of the
transactions contemplated hereby under applicable tax laws or under the laws governing the Medicare
program. Except as expressly provided in this Agreement, each party has relied solely upon the tax
and Medicare advice of its own employees or of representatives engaged by such party and not on any
such advice provided by any other party hereto.

     Section 9.11 Submission to Jurisdiction. Each party hereby irrevocably submits in any
suit, action or proceeding arising out of or related to this Agreement or any of the transactions
contemplated hereby to the jurisdiction of the United States District Court for the Northern
District of the State of Texas and the jurisdiction of any court of the State of Texas sitting in
Dallas County, and irrevocably waives any immunity from the jurisdiction of such courts and any
claim of improper venue, forum non conveniens or any similar objection which it might otherwise be
entitled to raise in any such suit, action or proceeding.

     Section 9.12 Consent to Assignment. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any Assumed Seller
Contract, Assumed Benefit Plan, claim or other right if the assignment or attempted assignment
thereof without the consent of another Person would (i) constitute a breach thereof or in any
material way affect the rights of Seller thereunder; (ii) be ineffective or render the Assumed
Seller Contract or Assumed Benefit Plan void or voidable, or (iii) materially affect Seller’s
rights thereunder so that Buyer would not in fact receive all such rights. In any such event,
Seller shall cooperate in any reasonable arrangement designed to provide for Buyer the benefits
under any such Assumed Seller Contract, Assumed Benefit Plan, claim or right, including enforcement
of any and all rights of Seller against the other Person arising out of the breach or cancellation
by such other Person or otherwise. After Closing, except as otherwise requested by Buyer in
writing, the parties shall continue to use commercially reasonable efforts to obtain the consent to
the assignment of such Assumed Seller Contract, Assumed Benefit Plan, claim or right.

     Section 9.13 CON Disclaimer. This Agreement shall not be deemed to be an acquisition
or obligation of a capital expenditure or of funds within the meaning of the certificate of need
laws of any state, until the appropriate Governmental Authorities shall have granted a certificate
of need or other appropriate approval or determined that no certificate of need or other approval
is required.

[remainder of page intentionally left blank]

49

 

[signature page of Contribution Agreement]

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

Buyer:

Odessa Regional Hospital, LP

By: IASIS Healthcare Holdings, Inc.,

       its general partner

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	Name:  	
 	 
	 	Its:  	
 	 
	 

Seller:

Alliance Hospital, Ltd.

By: Sri Sai Enterprises, Inc., its general partner

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	Name:  	
 	 
	 	Its:  	
 	 
	 

	 	 	 	 	 
	 	General Partner:

Sri Sai Enterprises, Inc. (solely for purposes of

Sections 6.15 and 6.16)

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Its:  	 	 

 

 

	 	 	 	 	 

Annex A

Defined Terms

Index of Terms Defined Elsewhere in this Agreement

     Capitalized terms used herein are defined in the provisions of the Agreement set forth below:

	 	 	 	 	 
	Defined Term	 	Section	 
	Accounts Receivable
	 	Section 1.9

	Agreement
	 	First Paragraph

	Amended and Restated Buyer LP Agreement
	 	Section 1.8(b)(iii)

	AMG
	 	Section 1.2(j)

	Assets
	 	Section 1.1

	Assumed Benefit Plans
	 	Section 1.1(m)

	Assumed Liabilities
	 	Section 1.3

	Assumed Seller Contracts
	 	Section 1.1(c)

	Audited Financial Statements
	 	Section 2.3

	Available Employees
	 	Section 6.1(a)

	Balance Sheet
	 	Section 2.3

	Balance Sheet Date
	 	Section 2.3

	Base Amount
	 	Section 1.5(b)(i)

	Base Cash Purchase Price
	 	Section 1.5(b)(iii)(A)

	Bill of Sale, Assignment and Assumption Agreement
	 	Section 1.8(a)(i)

	Buyer
	 	First Paragraph

	Buyer Audited Financial Statements
	 	Section 3.4

	Buyer Financial Statements
	 	Section 3.4

	Buyer Group
	 	Section 4.1

	Buyer Indemnified Persons
	 	Section 7.2

	Buyer LP Unit Value
	 	Section 1.5(b)(iii)(B)

	Buyer Unaudited Financial Statements
	 	Section 3.4

	Buyer’s Closing Documents
	 	Section 3.2(a)

	Buyer Unit Split
	 	Section 6.15(a)

	Cap
	 	Section 7.4(b)

	Cash Purchase Price
	 	Section 1.5(b)(ii)(A)

	CERCLA
	 	Section 2.12(e)

	CIS/PPM
	 	Section 4.10

	Class B Unit Holders
	 	Section 1.5(b)(iv)

	Closing
	 	Section 1.7

	Closing Adjustment Amount
	 	Section 1.5(b)(ii)

	Closing Date
	 	Section 1.7

	Closing Purchase Price
	 	Section 1.5(b)(ii)

	Closing Statement
	 	Section 1.5(c)(i)

	CMS
	 	Section 2.22(e)

	Competing Business
	 	Section 6.4(b)

	Confidential Information
	 	Section 6.6(a)

 

 

	 	 	 	 	 
	Defined Term	 	Section	 
	Copyrights
	 	Section 2.15(a)(iii)

	Damages
	 	Section 7.2

	DOJ
	 	Section 4.3(b)

	Effective Time
	 	Section 1.7

	Employee Benefit Plans
	 	Section 2.10(a)

	Escrow Agreement
	 	Section 1.8(a)(iii)

	Excluded Assets
	 	Section 1.2

	Excluded Liabilities
	 	Section 1.4

	Excluded Records
	 	Section 1.2(c)

	Final Adjustment Amount
	 	Section 1.5(c)(ii)

	Financial Statements
	 	Section 2.3

	Fractional Cash Amount
	 	Section 6.15(c)

	FTC
	 	Section 4.3(b)

	GE Lease
	 	Section 1.5(b)(ii)

	General Partner
	 	First Paragraph

	Government Patient Receivables
	 	Section 1.9

	Governmental Provider Numbers
	 	Section 1.2(h)

	HQI Program
	 	Section 2.22(e)

	Improvements
	 	Section 1.1(a)

	Indemnification Agreement
	 	Section 1.8(a)(vii)

	Indemnified Person
	 	Section 7.7(a)

	Indemnifying Person
	 	Section 7.7(a)

	Independent Auditor
	 	Section 1.5(c)(i)

	Intellectual Property Assets
	 	Section 2.15(a)

	Internet Rights
	 	Section 2.15(a)(iv)

	Inventories
	 	Section 1.1(d)

	Leased Real Property
	 	Section 2.6(a)

	March Financial Statements
	 	Section 2.3

	Marks
	 	Section 2.15(a)(i)

	Minimum Cash Amount
	 	Section 6.19

	Net Working Capital Chart
	 	Section 1.5(a)

	Non-Government Receivables
	 	Section 1.1(e)

	Non-Qualified Seller Partner Amount
	 	Section 6.15(b)

	Non-Qualified Seller Partners
	 	Section 6.15(b)

	Objection
	 	Section 4.6(c)

	Objections Statements
	 	Section 1.5(c)(i)

	Owned Real Property
	 	Section 1.1(a)

	Patents
	 	Section 2.15(a)(ii)

	Pay-off Letters
	 	Section 1.8(a)(v)

	Permitted Real Property Encumbrances
	 	Section 4.6(e)

	Post-Closing Seller Tax Returns
	 	Section 6.13

	Preliminary Net Working Capital Amount
	 	Section 1.5(a)

	Purchase Price
	 	Section 1.5(b)(i)

	Real Property
	 	Section 2.6(a)

	Related Person
	 	Section 2.16

	Residual Cash Amount
	 	Section 6.15(c)

	Restricted Area
	 	Section 6.4(b)

 

 

	 	 	 	 	 
	Defined Term	 	Section	 
	Restrictive Covenant Agreement
	 	Section 1.8(a)(viii)

	Restrictive Covenant Period
	 	Section 6.4(a)

	Secured Lenders
	 	Section 1.8(a)(v)

	Seller Cost Reports
	 	Section 6.8

	Seller Real Property Leases
	 	Section 2.6(a)

	Seller
	 	First Paragraph

	Seller’s Closing Documents
	 	Section 2.2(a)

	Seller Indemnified Persons
	 	Section 7.3

	Subscription Document Package
	 	Section 1.8(a)(vi)

	Tail Coverage
	 	Section 6.10

	Tangible Personal Property
	 	Section 1.1(b)

	Tax Returns
	 	Section 2.8(a)

	Third Party Claim
	 	Section 7.7(a)

	Threshold
	 	Section 7.4(a)

	Title Commitment Update
	 	Section 4.6(c)

	Title Review Date
	 	Section 4.6(c)

	Title Update Review Period
	 	Section 4.6(c)

	Trade Secrets
	 	Section 2.15(a)(vi)

	WARN Act
	 	Section 2.9(d)

	Western National Bank Line of Credit
	 	Section 2.18(i)

	Working Capital Adjustment Escrow Agreement
	 	Section 1.8(a)(xiv)

	Unaudited Financial Statements
	 	Section 2.3

     For purposes of this Agreement, the following terms and variations thereof have the meanings
specified or referred to in this Annex A:

     “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling,
controlled by or under common control with such Person.

     “Buyer Limited Partnership Agreement” means Amended and Restated Limited Partnership Agreement
of Buyer dated as of March 1, 2001, as it may be amended from time to time.

     “Buyer LP Units” mean units of limited partnership interest of Buyer.

     “Cash Purchase Price” means the Base Cash Purchase Price plus the Residual Cash Amount.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Encumbrance” means any charge, claim, equitable interest, lien, encumbrance, option, pledge,
security interest, mortgage, encroachment, easement or restriction of any kind.

     “Environmental, Health and Safety Liabilities” means any cost, damages, expense, liability,
obligation or other responsibility arising from or under any Environmental Law.

     “Environmental Laws” means all domestic or foreign federal, state, local and municipal Legal
Requirements concerning pollution or the protection of the environment (including, without
limitation, soil, air, water and groundwater) or human health.

 

 

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “ERISA Affiliate” means any entity that is considered a single employer with Seller under
Section 414 of the Code.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Facility” means the acute care hospital owned and operated by Seller located in Odessa,
Texas.

     “GAAP” means United States generally accepted accounting principles, consistently applied.

     “Governmental Authority” means any federal, state, local or municipal court, legislature,
executive or regulatory authority, agency or commission, or other governmental entity, authority or
instrumentality.

     “Governmental Authorization” means any federal, state, special or local license, permit,
governmental authorization, certificate of need, certificate of exemption, franchise,
accreditation, registration, approval or consent.

     “Hazardous Materials” means any (a) pollutant, contaminant, waste, petroleum, petroleum
products, asbestos or asbestos-containing material, radioactive materials, polychlorinated
biphenyls, mold, urea formaldehyde and radon gas, and (b) any other chemicals, materials or
substances defined or regulated as “pesticide,” “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste,” “restricted hazardous waste,” “biohazardous waste,”
“biomedical waste,” “medical waste,” “sharps,” “contaminant,” “pollutant,” “toxic waste,” “toxic
substance” or words of similar import, under any Environmental Law.

     “HIPAA” means the Health Insurance Portability and Accountability Act of 1996.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “IASIS Credit Agreement” means that certain Amended and Restated Credit Agreement dated as of
April 27, 2007, among IASIS Healthcare LLC, IASIS Healthcare Corporation, the Lenders (as defined
therein), and Bank of America, N.A., as Administrative Agent, Swingline Lender, Revolving L/C
Issuer and Synthetic L/C Issuer (each as defined therein).

     “Knowledge of Seller” (and any similar expression) means any matters known by, or which should
be known following reasonable inquiry by, any officer or member of the board of directors of the
General Partner.

     “Legal Requirement” means any federal, state, local or municipal law, ordinance, code,
principle of common law, regulation, order or directive.

     “Net Working Capital” means the amount equal to the following, in each case determined in
accordance with GAAP applied on a basis consistent with Seller’s Accounting Practices and

 

 

Procedures,
and subject to the adjustments set forth in the Net Working Capital
Chart (all references to current assets and current liabilities below refer to the
corresponding line item on the Net Working Capital Chart):

          (a) the sum of the following current assets of Seller: (i) Net Accounts
Receivable; (ii) Inventory; (iii) Prepaid Expenses; plus
(iv) Other Current Assets; minus

          (b) the
sum of the following current liabilities of Seller: (i) Accounts
Payable & P.O. Liab.; (ii)
Accrued Salary, (iii) Accrued Liabilities, (iv) Current
Portion of Capital Leases, plus (v) Current Portion of Deferred Rent.

     In addition, if the Actual Capital Leases/Assumed GE Note Amount (as defined below) is less
than $2,498,520 (the sum of the amounts deducted from the Closing Purchase Price pursuant to
clauses (1) and (2) of Section 1.5(b)(ii)), then such difference will be added to the Net Working
Capital Amount as finally determined pursuant to Section 1.5(c). If the Actual Capital
Leases/Assumed GE Note Amount is greater than $2,498,520, then such excess will be subtracted from
the Net Working Capital Amount as finally determined pursuant to Section 1.5(c).

     For purposes of this Agreement, “Actual Capital Leases/Assumed GE Note Amount” means the sum
of (1) the long-term portion of all obligations of Seller, as of the Closing Date, as lessee or
lessees under leases that have been recorded as capital leases in accordance with GAAP (or should
have been recorded as capital leases in accordance with GAAP) and are included in the Assumed
Seller Contracts, plus (2) the amount payable under the GE Lease as of the Closing Date, each as
determined by Buyer in connection with preparing the Closing Statement pursuant to Section
1.5(c)(i).

     “Net Working Capital Amount” means the Net Working Capital of Seller as of the Effective Time.

     “Order” means any order, injunction, judgment, decree, ruling, assessment or arbitration award
of any Governmental Authority.

     “Person” means any individual, partnership, limited partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity, or any Governmental Authority.

     “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, judicial or investigative, whether formal or informal,
whether public or private).

     “Securities Act” means the Securities Act of 1933, as amended.

 

 

     “Seller Contract” means any contract or agreement (whether written or oral) (a) under which
Seller has or may acquire any rights or benefits, (b) under which Seller has or may become subject
to any obligation or liability, or (c) by which Seller or any of the assets owned or used by Seller
is or may become bound (and includes, without limitation, the Seller Real Property Leases).

     “Seller Limited Partnership Agreement” means the First Amended and Restated Limited
Partnership Agreement of Seller effective as of March 8, 2005, as it may be amended from time to
time.

     “Seller Partners” mean the general partner(s) and limited partners of Seller.

     “Seller’s Accounting Practices and Procedures” means the customary accounting methods,
policies, practices and procedures, including classification and estimation methodology, used by
Seller in the preparation of the Financial Statements.

     “Surveys” means current surveys of each parcel of Owned Real Property certified to the Buyer
and any lender Buyer may designate, prepared by a surveyor licensed in the State of Texas and
reasonably acceptable to Buyer, conforming to current ALTA Minimum Detail Requirements for land
title surveys, disclosing the location of all Improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads.

     “Taxes” means any income, payroll, employment, excise, property, franchise, withholding,
social security, unemployment, disability, sales, use, transfer or other tax, fee, assessment,
charge or duty of any kind, and any interest, penalties, additions or additional amounts thereon,
imposed, assessed, collect by or under the authority of, any Governmental Authority.

     “Title Commitment” means a title insurance commitment for an owner’s policy of title insurance
to be issued by the Title Company, and all underlying documents relating to any exceptions listed
in such commitment.

     “Title Company” shall mean Lawyer’s Title Insurance Company, or other nationally recognized
title insurance company reasonably acceptable to Buyer.

     “Title Policy” shall mean an Owner’s Policy of Title Insurance insuring good and indefeasible
fee simple title to the Owned Real Property in the name of Buyer, issued by the Title Company with
liability in the amount as Buyer may reasonably determine to be the fair market value of such Owned
Real Property, dated as of the Closing Date, which title insurance policy will (i) provide for
extended coverage deleting the standard and general printed exceptions, with any matters covered by
the so-called standard printed “survey exception” to be specifically referenced to as being shown
by the Surveys, (ii) will provide for the issuance of a Mortgage Title Policy (if requested by
Buyer), and (iii) contains such endorsements as Buyer shall require.

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