BARIATRIC PROGRAM SPONSORSHIP AGRtElViENT
 
This Bariatric Program Sponsorship Agreement (this "Agreement'') is entered into
this (22nd) day of  (March), 2006, but effective the (1st)  day of (May), 2006
(the "Effective Date") by and between (First Street Hospital),  a (Limited
Partnership) (hereinafter referred to as "Hospital"), and Vital Weight Control,
Inc., d/b/a NeWeigh, a Texas corporation (hereinafter referred to as "Vital").
 
WITNESSETH
 
WHEREAS, Hospital desires to sponsor in part a gastroplasty program involving
surgical intervention for morbid obesity through such procedures as gastric
bypass with Roux-en-Y gastroenterostomy, silastic ring gastroplasty, Lap Band
surgery and all related, consequential and incidental surgical procedures,
including gall bladder removal ("Bariatric Surgery") utilizing such surgery as
part of an interdisciplinary and coordinated approach for the treatment of
morbidly obes patients and desires to make available its facility known as
(First Street Hospital), located (Bellaire, TX) for surgeries on prospective
patients that are participants in the Bariatric Program (as defined below) as
well as for surgeries on other prospective patients that meet Hospital criteria
for eligibility for Bariatric Surgery;
 
WHEREAS, Vital has operated a bariatric program in the Houston area for the
treatment of morbid obesity through the use of Bariatric Surgery since 1991 and
wishes to continue to operate its bariatric program in Houston, Texas with the
support of and the sponsorship of Hospital (the "Program", the "NeWeigh Program"
or the "Bariatric Program");
 
WHEREAS, Vital has operated and managed bariatric programs utilizing an
interdisciplinary and coordinated approach specifically integrating the services
of hospitals, surgeons, nutritionists, anesthesiologists, respiratory
therapists, psychologists, cardiologists, pulmonologists, gastroenterologists,
insurance specialists and other clinicians around the needs of participants and
has done so since 1991;
 
WHEREAS, the patient-centered coordinated and interdisciplinary approach to a
bariatric program utilized by Vital since 1991 is now officially encouraged by
the American Society for Bariatric Surgery under its Centers of Excellence
program and Hospital has as one of its objectives the designation of the
Hospital as an ASBS Bariatric Surgery Center of Excellence;
 
WHEREAS, Vital does not provide hospital services or professional medical
services but does coordinate the provision of such clinical and administrative
services to the Program participants so as to allow for the provision of such
services to the participants in a convenient, friendly and non-threatening
environment so as to encourage maximum participation in the Program;
 
WHEREAS, Vital has extensive experience advertising, marketing and promoting the
advantages of interdisciplinary bariatric programs to the general public, health
professionals and the morbidly obese and will agree to utilize its expertise and
the NeWeigh service mark to advertise, market and promote maximum awareness of
and participation in the Bariatric Program, subject to applicable professional
standards and fraud and abuse laws;
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
 

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WHEREAS, Vital has experience assisting hospitals, surgeons and other health
professionals in conducting their practices and providing their services in a
manner so as to help minimize professional liability claims and other problems
related to patient dissatisfaction as. well as to maximize patient flow and
patient satisfaction;
 
WHEREAS, Vital has experience assisting participants in obtaining approvals for
payment for surgery from insurers and other third party payors ("Approvals")
utilizing its preexisting databases and in the coordination of any diagnostic
tests and clinical services required as a condition precedent to obrain4ng such
Approvals;
 
WHEREAS, Hospital is seeking to sponsor Vital to manage, market and coordinate
the Bariatric Program (with the explicit Understanding that Vital will not be
responsible for rendering inpatient or outpatient hospital services to any
patient of the Hospital and such services shall remain the sole responsibility
of Hospital at all times) in accordance with the management goals of the
Bariatric Program; and
 
WHEREAS, the parties to this Agreement desire to enter into this Agreement in
order to provide a full statement of their respective rights and
responsibilities in connection with the operation of the Program during the term
of this Agreement.
 
NOW, THEREFORE, in consideration of the above recitals, the terms and conditions
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
 
1.. DIRECTOR OF PROGRAM
 
Vital shall provide a qualified individual to serve as the program director of
the Program (the "Director") and to operate the Program in a manner that will
reflect favorably upon the Hospital's sponsorship of the Program. Vital shall
provide the services stated in Sections 2.1 and 2.2 for the benefit of the
Program through the Director.
 
2.           VITAL'S SERVICES
 
2.1         Services
 
The parties acknowledge and agree that the very essence of coordinating a
multidisciplinary approach to patient care such as the Bariatric Program
requires that the services of Vital provided with respect to the operation of
the Bariatric Program benefit all of the parties associated with the Program,
including Vital itself the Hospital, the surgeons, the allied health
professionals and the participants. The parties acknowledge and agree that the
sponsorship of the Hospital or the benefit of any such services to the Hospital
is not an indication that Vital is acting as a contractor or agent of the
Hospital with respect to any particular activity.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
 

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rn connection with the operation of the Program, the parties anticipate and
agree that Vital will act as an independent contractor and may act, at various
times, as agent for itself the surgeons, the allied health professionals and/or
the participants. For example, Vital will serve as an agent or contractor for
participants in such capacities as ombudsman or insurance advocate. Further,
Vital may (but is not required to) continue to perform services for the benefit
of participants even after it is evident such participants will utilize the
hospital services of a hospital other than Hospital. Vital may also perform
certain support services for surgeons associated with the Program. The Hospital
specifically acknowledges and agrees that Vital cannot legally agree to and will
not agree to provide free support services to surgeons that admit patients to
the Hospital and, to the extent Vital performs services for such admitting
surgeons, Vital will separately charge such surgeons a reasonable fee for any
such services, which fee will be determined in the sole discretion of Vital.
 
For the benefit of the Program and the Hospital, Vital shall, either directly or
through an affiliate of Vital, subject to any oversight rights of the Hospital
as specified herein;
 
(a)         Upon written request, consult with the Hospital regarding
management, design, development, planning, implementation, and evaluation of
specific Program marketing, services, policies, and procedures to carry out the
Program goals, provided, however, that the manner of meeting Program goals shall
be determined by Vital using its reasonable discretion and provided further that
nothing contained herein shall require Vital to alter its current methods of
operation utilized to accomplish Program goals without Vital's approval;
 
(b)         Work with Hospital personnel and departments to ensure that Hospital
personnel and departments know and adhere to Program philosophy and provide
patient services that meet the established policies and procedures of the
Program (which standards are in addition to and not in lieu of the established
standards of hospital care, set and adhered to by the Hospital);
 
(c)         Upon written request by Hospital, Vital will establish procedures as
part of Hospital's overall patient care evaluation program, to evaluate the
consistency and quality of Hospital services provided to participants in the
Program;
 
(d)         Assist the Hospital, as reasonably required by the Hospital, in the
performance of Hospital utilization review and cost 'containment functions
relating to Hospital services provided to Program participants;
 
(e)         At the reasonable request of the Hospital, prepare and submit to the
Hospital summary reports of activities of the Program and provide analysis and
interpretation of such reports, provided that nothing herein shall require Vital
to provide information regarding its services to participants other than
Hospital, or in violation of applicable patient privacy laws, including HIPAA;
 
(f)          Maintain continuous liaison with the Hospital in regard to
Hospital's patient care services, the professional conduct of health
professionals and the coordination of Hospital personnel insofar as these
activities are related to Hospital services to Program participants;
 
(g)         Provide such technical advice and assistance as may reasonably be
requested by the Hospital to facilitate Hospital's participation in Program
implementation and/or expansion;
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
 

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(h)         To the extent Program costs are pass-through coats to the Hospital,
conduct the Program in a cost. efficient and effective manner, subject to
reasonable budgetary systems and constraints established by the Hospital and
furnished in writing to Vital, and otherwise assist the Hospital in containing
pass-through Program costs;
 
(i)          Participate, as reasonably requested by the Hospital, in the
preparation of internal operating and capital budgets for the Hospital
(including projections of both revenues and expenditures) provided, however,
that Vital shall make no representations, shall have no liability and shall be
held harmless with respect to the accuracy of any such projections;
 
.(j)         Use reasonable efforts to elevate the standing of _Hospital and the
Hospital's Medical Staff with respect to their services provided to Program
participants, such as by assisting the Hospital and/or Hospital's Medical Staff
with the publication of unusual or interesting medical studies made with respect
to Program participants;
 
(k)         Upon request, assist Hospital and Hospital's Medical Staff in
obtaining the necessary equipment, education, training and experience to perform
existing and new forms of Bariatric Surgery;
 
(I)          Cooperate in the furtherance of teaching and educational functions
of the Hospital and the Hospital's Medical Staff with respect to the
availability of Hospital and physician services to Program participants;
 
(m)        Upon request, assist in the design and development of Hospital's
patient information forms, medical record forms, and consent forms for use by
the Hospital with bariatric patients of the Hospital;
 
(ti)        Screen participants in the Program in accordance with National
Institute of Health ("N111') screening policies and procedures and screen
prospective patients of the Hospital in accordance with the Hospital's screening
policies and procedures furnished to Vital by Hospital and advise participating
surgeons whether such prospective patients meet Hospital's criteria for
admission to the Hospital;
 
(a)         Upon request, undertake joint marketing and educational activities,
as authorized by the Hospital, involving professional contacts with physicians,
hospitals, public health agencies, nursing associates, and state and local
medical societies in order to apprize such individuals and groups of the nature
and availability of the Program and facilities of Hospital and to facilitate the
exchange of information with regard to the Program, patient care,
administration, medical policy, and utilization review (it being provided,
however, that Vital shall have no authority to bind Hospital to any contract nor
incur debt on behalf of Hospital except as authorized under Section 4.1);
 
(p)         Upon request, assist the Hospital in representing the value of the
Program before the medical staff,' as necessary; and
 
(q)         Advertise and market the availability of the Program and the
Hospital to prospective participants and prospective patients struggling with
morbid obesity and considering Bariatric Surgery as a treatment alternative, as
more specifically provided in Section 2.2-and in accordance with applicable
fraud and abuse and related laws, including Tex. 0cc. Code Sec. 102.001.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
 

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2.2 Program avertisinz and Marketing
 
•        All Program advertising conducted in the Houston market area during the
term of this Agreement will be conducted utilizing the NeWeigh name and service
mark. All prospective participants responding to Program advertising shall be
screened as to whether they meet NIH criteria to become Program participants and
will also be screened to determine if they are eligible candidates for surgery
at the Hospital (utilizing Hospital screening guidelines including insurance
criteria).. Any prospective patients of the Hospital will be educated about
available bariatric procedures and surgeons. The parties acknowledge and agree
that Vital makes no referral of participants or prospective patients to the
Hospital or to any hospital as such decisions are made by the participants
and/or their surgeons. Further, Hospital agrees and understands that a
participant may, at any time, elect to pursue surgery utilizing a surgeon that
is not part of the Hospital's Medical Staff or a surgeon on the Hospital's
Medical Staff that may elect to perform surgery on any such participant at a
different facility. Hospital further acknowledges that such decisions are made
between the surgeon and the patient and are matters beyond Vital's control.
 
Vital shall be responsible, at its expense, for developing and placing all
advertising for the Program with the media. Hospital has already reviewed and
approved the content of existing advertising content used by Vital. Any new
advertising content shall be subject to Hospital's prior review and approval;
provided, however, that if Hospital fails to respond to a request for approval
of advertising content within ten (10) business days, the approval of Hospital
shall be deemed to have been given. Except as provided above, advertising for
the Program shall be the sole responsibility of Vital. Although Hospital shall
have the right to approve any new advertising content, the frequency, placement
and media selected for advertising shall be the sole responsibility of Vital.
Vital shall retain all copyrights, trademarks, service marks, ownership and any
other rights with respect to advertising and marketing materials for the
Program.
 
2.3 Time and Efforts Requirempnts
 
1.n order to insure the quality and integrity of the entire Program and not just
the Hospital component, Vital and its appointed Director shall devote sufficient
lime and efforts to operate the Program in a professional manner so as (1) to
permit ample time for the performance of all of the duties normally associated
therewith, (2) to meet the needs of the Program participants, and (3) to perform
duties and conduct the Program to fulfill the responsibilities set forth in
Section 2.1. In performing the management duties under this Agreement, Vital
shall use reasonable efforts to perform all Program functions in a competent and
timely fashion. In the event that Vital has engaged third parties to perform one
or more services contemplated hereunder under the supervision of Vital, Vital
shall use its best efforts to cause such third parties to deliver each service
in a competent and timely fashion. Nothing contained in this Agreement shall be
construed to constitute Vital as a guarantor with respect to any obligations of
Hospital or with respect to the profitability of the Program or the Hospital.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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2.4 Standards of Practice and Compliance with Laws
 
The parties agree that Vital shall not be required to perform any services under
this Agreement that may not be properly delegated by Hospital under applicable
federal and state law and regulation without affecting the status of the
Hospital for purposes of licensure, accreditation, certification and Medicare
participation. Vital and its appointed Director as well as all of its other
employees and subcontractors shall perform their duties under this Agreement and
conduct the Program in accordance with (1) applicable federal and state statutes
and regulations, (ii) standards and recommendations of the Joint Commission on
Accreditation of Healthcare Organizations, (iii) Medical Staff Bylaws, (iv)
Rules and Regulations of the Hospital and the Medical Staff, and (v) the written
policies of Hospital, the Medical Staff, and the Program as may be in effect
from time to time. It is specifically agreed and understood any remuneration of
Vital or Vital's employees or subcontractors based directly or indirectly on the
volume or value of the business generated for a Hospital is strictly prohibited:
 
2.5 License to Use None
 
2.5 License to Use Name
 
Vital may utilize its trademarks, service marks and related marks (collectively
the "Marks") in connection with the advertising of the Program. During the term
of this Agreement, Vital shall provide to Hospital a non-exclusive,
non-transferable, right and license to the use of the Marks insofar as may be
necessary or appropriate to allow Hospital to market and describe Hospital's
sponsorship of the operation of the Program. Except as provided in this Section,
Hospital shall not use the Marks in whole or in part except directly in
connection with the Program and shall not permit or authorize any other person
or entity to use the Marks in any manner. Hospital's use of the Marks shall at
all times be subject to the prior written approval of Vital. Hospital, if
pertained to use the Marks, shall affix to any advertising, promotional, display
or other material, which uses any of the Marks, such notice or notices of
trademark protection as may be requested reasonably from time to time by Vital.
Upon the expiration or termination of this Agreement for any reason, such
license shall immediately cease, and Hospital shall have no further rights to
use the Marks or any NeWeigh materials and Hospital shall discontinue all Use of
any term(s) confusingly similar to the Marks. Hospital shall not register or
attempt to register the Marks in its own name or that of any other person or
entity and shall not contest the ownership or the validity of the Marks or any
registration of the Marks. Hospital shall conduct its business and the Program
in a manner designed to protect and enhance the reputation and integrity of the
Marks and the goodwill associated therewith. Nothing in this Agreement shall be
construed to prevent Vital from granting any other licenses for use of the Marks
or to prevent Vital from utilizing the Marks in any manner whatsoever outside of
the Houston, Texas market
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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2,6 Use of Program Materials.
 
During the term of this Agreement, Vital may provide to Hospital or other
program participants and/or utilize in connection with the Program various
business methods, processes, systems, forms and similar proprietary processes
(collectively the "Information"). Hospital shall use the Information solely for
the purpose of operating the Program during the tea-m. hereof and the
Information will be kept strictly confidential and will not be disclosed,
published or otherwise used or exploited, directly or indirectly, by the
Hospital or its Representatives or anyone acting in concert with them, Each
Hospital Representative who needs to know such Information for the foregoing
purpose must: (1) be informed of the confidential and proprietary nature of the
Information and (ii) agree to be bound by the confidentiality provisions hereof.
Hospital shall be responsible for any breach of this Agreement by its
Representatives. Furthermore, Hospital and its Representatives shall not
speculate about the Information or intimate to others that it has any
Information. Hospital shall not, directly or indirectly, (a) use the Information
to guide or aid a search and/or evaluation of publicly available information for
purposes of either showing Information is in the public domain or to recreate
the knowledge or logic contained within the Information from non-protected
sources and/or (b) disassemble, reverse engineer or otherwise use the
Information as a guide or template to otherwise recreate the logic or knowledge
contained within the Information and/or to offer or use a product and/or •
service that incorporates or uses the functionality of anything disclosed in the
Information or substantially equivalent to or substituting for, any
functionality disclosed by Vital in the Information or for any other purpose.
 
Upon termination of this Agreement, Hospital and its Representatives shall, at
their own sole cost and expense, promptly return to Vital or destroy all
Information and all copies, extracts or other reproductions in whole or in part
thereof. Notwithstanding the return or destruction of the Information, Hospital
and its Representatives shall continue to be bound by their confidentiality
obligations hereunder. Any oral Information that is retained by the Hospital
and/or its affiliates will continue to be subject to this Confidentiality
Agreement following the termination of this Agreement.
 
After termination of this Agreement, neither Hospital, nor any Person acting on
behalf of Hospital, shall directly or indirectly hold itself out to the public
as being or remaining (or otherwise associated with) a NeWeigh Program or in any
way affiliated with Vital.
 
Vital seeks to obtain proprietary local telephone numbers associated with the
NeWeigh Program. Ownership of such local telephone numbers shall be and remain
in Vital, without regard to the party paying for such phone number and/or who
the local telephone company shows as the owner of such phone number.
 
Each party agrees that money damages may not be a sufficient remedy for any
breach of this Section of the Agreement by the other party and that Vital shall
be entitled to seek equitable relie4, including injunction and specific
performance, in the event of any such breach, in addition to all other remedies
available to Vital at law or in equity. Hospital further agrees to waive, and to
use its commercially reasonable efforts to cause its directors, officers,
employees and agents to waive, any requirement for the securing or posting of
any bond in connection with such remedy. Should a dispute arise between Vital
and Hospital regarding an alleged breach of this Agreement, the non-prevailing
party shall reimburse the prevailing party for all costs, expenses, losses,
damage, and claims (including attorneys' costs) incurred as a result of the
breach of the dispute.
 
 
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3. INDEPENDENT CONTRACTOR
 
In the performance of this Agreement, it is mutually understood and agreed that
Vital and its employees, including its appointed Director, are at all times
acting and performing as an independent contractor and not as an employee, joint
venturer, agent, partner or lessee of Hospital, Hospital shall not exercise any
control or direction over the specific methods by which Vital and Director
perform their services hereunder; the sole interest and responsibility of
Hospital shall be to ensure that the services covered by this Agreement are
rendered in accordance with the terms and conditions hereof. Vital and its
personnel shall not have any claim under this Agreement or otherwise against
Hospital for Worker's Compensation, unemployment compensation, vacation pay,
sick leave, retirement benefits, social security benefits, disability insurance
benefits, unemployment insurance benefits, or other employee benefits, all of
which shall be the sole responsibility of Vital. Hospital shall not withhold on
behalf of Vital or any of its personnel any sums for income tax, unemployment
insurance, Social Security, or otherwise pursuant to any law or requirement of
any government agency, and all such withholding, if any is required, shall be
the sole responsibility of Vital, Vital shall indemnify and hold harmless
Hospital from any and all loss or liability, if any, arising with respect to any
of the foregoing benefits or withholding requirements.
 
4.           HOSPIT.A.L'S DUTIES AND 11.ESPONSIBILITIES TO VITAL
 
4.1 Services arid Facilities
 
(a)         At all times during the term of this Agreement, Hospital shall
either furnish, at its expense, or reimburse Vital amounts Vital expends for
operation of the Program, including such fully built out office space,
facilities, equipment, utilities, furniture, fixtures, office supplies, postage,
courier services and other outside services as may be reasonably required to
operate the Program. To the extent possible, Vital shall make all purchases
through Hospital or its affiliates. For any expenditure that is not described
above, Vital will not make any purchases in excess of $5130.00 without the
written approval of Hospital. If Vital makes a reimbursable purchase, Hospital
shall reimburse Vital within 5 business days of receipt of invoice. The items
furnished at Hospital expense shall not include any advertising, marketing,
computer software or personnel costs (except outside IT support) of Vital.
 
(b)         Notwithstanding the foregoing, Vital may agree to allow Hospital to
utilize certain items of equipment, furniture, and computers for the benefit of
the Programs, as set forth on Exhibit A hereto. Exhibit A may be modified from
time to time by mutual agreement of the parties. Vital shall provide such items
at its expense, provided that Hospital shall be responsible for any required
maintenance and repair
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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4.2         Exclusivity
 
Hospital represents and agrees that during the term of this Agreement Hospital
will not directly or indirectly operate or fund any other bariatric program
offering Bariatric Surgery.
 
4.3         Compensation
 
As compensation for the services rendered by Vital pursuant to this Agreement
for the benefit of the Hospital, Hospital shall pay as a Program sponsorship fee
the following monthly amounts, due and payable, in advance, on the 1st day of
each and every month:
 
(According to the payment schedule attached as an addendum hereto)
 
The first monthly payment shall be due upon the execution of this Agreement. The
parties hereby stipulate that the Program sponsorship fees represent fair
consideration for the services provided by Vital for the benefit of the
Hospital. Time is of the essence for purposes of this Section 4.3.
 
4.4         Books and Records
 
(a)        Vital recognizes that the Centers for Medicare & Medicaid Services
(CMS) require that persons and entities that provide services to the health care
providers maintain records reflecting the costs associated with such services.
Therefore, Vital agrees to allow the Comptroller General of the United States,
the Department of Health and Human Services, and their duly authorized
representatives access to books, documents and records until the expiration of
four (4) years after the services are furnished under this Contract. The types
of records covered by this clause, the persons entitled to access, and the
manner of which the records may be requested and reproduced shall be governed by
42 C.F.R. §§ 420.300-420.304, as amended from time to time (the "Regulations").
The sole purpose of this Section 4.4 is to comply with the Regulations. This
Section 4.4 shall not be interpreted to require Vital to provide access to its
records or to any persons or entities, other than those set forth in the
Regulations. Subsequent amendments to or repeal of the Regulations shall be
deemed to govern the obligations created in this paragraph as of the effective
date of amendment or repeal. Upon written request of the Secretary of Health and
Human Services or the Controller General or any of their duly authorized
representatives, Vital shall make available to the Secretary those contracts,
books, documents and records necessary to verify the nature and extent of the
cost of providing his or her services. If Vital carries out any of the duties of
this Agreement through a subcontract with a value of Ten Thousand ($10,000.00)
Dollars or more over a twelve (12) month period with a related individual or
organizations, Vital agrees to include this requirement in any such subcontract.
This section is included pursuant to and is governed by the requirements of
Section 1861(v)(1) of the Social Security Act and regulations promulgated
thereunder. The parties agree that any attorney-client, accountant-client or
other legal privileges shall not be deemed waived by virtue of this Agreement.
 
(b)        Upon reasonable notice to Hospital, Vital shall be entitled to
examine thebooks and records of each Hospital as they relate to charges and
revenues received attributable to the efforts of Vital and the Program.
 
 
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4.5         Covenants of Hospital
 
Hospital covenants and agrees as follows:
 
(a)         Hospital shall secure one or more board eligible or certified
surgeons to perform all surgical procedures associated with the Bariatric
Program, which surgeon(s) has been qualified and credentialed to perform
Bariatric Surgery by the Hospital's Medical Staff Credentialing Committee.
Hospital agrees Vital has the right to refuse to work with any surgeon in
Vital's sole discretion. Further, Hospital agrees that no surgeon is intended to
be a third party beneficiary of this Agreement and nothing in this Agreement
shall entitle any surgeon to any Program services or any work product of Vital.
 
(b)         Hospital shall promptly advise Vital in writing of any material
changes in its screening and financial policies and procedures.
 
(c)         In the event that any one or more of the surgeons associated with
the Bariatric Program have any financial relationship with Hospital, an
affiliate of Hospital; or a Hospital joint venture, whether through ownership or
compensation, Hospital represents that it will not make any distributions or pay
any compensation to any such surgeon based upon the volume or value of the
surgeon's referrals or admission of patients, including Bariatric Program
patients, to the Hospital.
 
(d)         Hospital shall operate its hospital facilities at all times in
compliance with all legal requirements including the rules, regulations or
orders of any agency or instrumentality establishing operational standards, and
/ or life safety or fire safety standards applicable to the Hospital. •Hospital
shall maintain and shall keep in full force any and all licenses or permits
required for the operation of the Hospital's hospital and related facilities.
 
(e)         If Vital shall desire the approval or consent of Hospital to any
matter, Vital may give notice to Hospital that it requests such approval,
specifying in reasonable detail the matter as to which such approval is
requested. If Hospital shall not approve such matter in writing within twenty
(20) days after receipt of such notice or such longer or shorter period as may
be specifically provided for herein, Hospital shall be deemed to have approved
the matter referred to in such notice.
 
5. TERM AND TERM:NATION
 
5.1         Term
 
The term of this Agreement shall commence upon the Effective Date and shall
continue in effect for a period of thirty-six (36) months thereafter ("Initial
Term"), unless terminated sooner or extended pursuant to the terms of this
Agreement. At any time during the ninety (90) day period preceding the
expiration of this Agreement, this Agreement may be renewed, upon the mutual
written agreement of Hospital and Vital, for an additional thirty-six (36) month
period, unless terminated sooner pursuant to the terms of this Agreement.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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5.2     Grounds for Termination

(a)         In the event of a material breach (other than a "Payment Breach", as
defined below) of this Agreement by either party, the other party shall have the
right to terminate this Agreement by service of written notice upon the
defaulting party (the "Default Notice"). In the event such breach is not cured
within thirty (30) days after service of the Default Notice, this Agreement
shall terminate at the election of the non-defaulting party upon the receipt of
a written notice of termination by the breaching party at any time after thirty
(30) clays after the service of the Default Notice.
 
(b)         In the event of the nonpayment by Hospital of any amounts due
hereunder on or before the due date thereof ("Payment Breach"), Vital shall have
the right to terminate this Agreement by service of written notice upon Hospital
("Payment Default Notice"). In the event such Payment Breach is not cured within
five (5) days after service of such Payment Default Notice, this Agreement may
be immediately terminated by Vital by giving Hospital written notice of
termination. If Hospital has had two (2) Payment Breaches in any twelve (12)
month period, upon any subsequent Payment Breach this Agreement may be
immediately terminated by Vital without sending a Payment Default Notice by
giving Hospital written notice of termination.
 
(c)         The termination of this Agreement may be made at any time by mutual
consent embodied in a written agreement signed by an authorized representative
of each of the parties hereto. The termination of this Agreement at any time
after the first year may be made by one of the parties hereto upon ninety (90)
days' written notice to the other party.
 
(d)         In addition, either party may terminate this Agreement immediately
at any time upon the happening of any of the following occurrences or acts of
the other party;
 
(i)         The other party ceases to function as a going concern or conduct its
operations in the normal course of business;
 
(ii)        The (a) suspension, liquidation or dissolution, or notice thereat of
substantially all of the other party's usual business without the prior written
consent of the terminating party hereto, (b) an assignment by the other party
for the benefit of its creditors, or (c) in the event of the filing of a
voluntary or involuntary petition Under the provisions of the U.S. Federal
Bankruptcy Act or amendments thereto, or any application for. or appointment of
a receiver for the property of the other party, the filing of which remains
unsatisfied and discharged at the end of sixty (60) days after the occurrence of
such event;
 
(iii)       The other party, without written consent, attempts to partially or
wholly assign its rights or delegate its duties under this Agreement; or
 
(iv)      The other party is convicted of any illegal activity which could, in
the reasonable opinion of the terminating party, jeopardize or adversely affect
the business reputation of the terminating party.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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(e)         In the event any of the following occur with respect to Hospital,
Vital may terminate this Agreement immediately:
 
(i)         In the event of Hospital's failure to maintain professional
liability insurance coverage on its own operations, as required pursuant to
Section 6.1 hereof, and Hospital fails to cure such failure within ten (10) days
of Hospital losing its insurance coverage; or
 
(ii)        If any of the Hospital's applicable licenses, permits, or
certifications from any person, entity, or agency, including, but not limited
to, any state agency, federal agency, or any other agreement, which is essential
for the operation of the Hospital, is at any time suspended, terminated, or
revoked and is not fully reinstated within ninety (90) days.
 
(1)         In the event that there shall be a change in applicable health care
law or the interpretation thereof, including, without limitation, Medicare or
Medicaid, statutes, regulations, or general instructions, (or the application
thereof), the adoption of new legislation or regulations or the initiation of an
enforcement action with respect to any applicable health care law which affects
the continuing viability or legality of this Agreement or the ability of either
party to be reimbursed for services or items provided hereunder or the ability
of others to make referrals, then either party may, by notice, propose an
amendment to conform this Agreement to applicable laws, If notice of such
proposed change is given and the parties hereto are unable to agree within
thirty (30) days upon an amendment, then either party may terminate this
Agreement by ten (10) days' advance written notice to the other party, unless a
sooner termination is required under applicable law or circumstances.
 
5.4         Effects of Termination.
 
The expiration or earlier termination of this Agreement shall not release or
discharge either party from any obligation, debt or liability which shall have
previously accrued and remain to be performed upon the date of such expiration
or termination. In the event of a termination due to a default by the Hospital,
all compensation due to Vital under Section 4.3 for, the remainder of the term
of the Agreement shall become immediately due and payable. Upon expiration or
termination of this Agreement, Vital shall retain the right to any telephone or
facsimile numbers used by the Program. In addition, Vital shall have the right
to assume the lease for any office space in which the Program has operated that
is not in a building owned or operated exclusively by Hospital or an affiliate.
The Hospital shall receive from Vital all patient information necessary -for
Hospital operations as to those participants that became Hospital patients at or
before the time of patient pre-op and no further participant information shall
be deliverable to Hospital upon termination of the Agreement. The parties agree
that Vital acquired all such information other than as a business associate of
the Hospital and that all such information shall be retained by Vital.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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6.           INSU'RAN'CE AND INDEMNIFICATION
 
6.1       Insurance.

At all times during the term of this Agreement and for a period of three (3)
years following the termination or expiration of this Agreement for any reason,
Hospital shall maintain or cause to be maintained, at its expense, professional
liability coverage for Vital and its affiliates, for services furnished during
the terra of this Agreement, in such amounts and under such terms of coverage as
Hospital shall provide for hospital's operations and activities. Vital will
furnish Hospital information necessary for Hospital to obtain insurance for
Vital. During the term of this Agreement, Hospital shall also maintain or caused
to be maintained professional liability coverage, including through a
self-insurance plan, on the Hospital's and its personnel and operations. In the
event that the Hospital should receive notice of the impending termination of
its professional liability coverage, Hospital shall immediately provide notice
thereof to Vital.
 
6.2        Indemnification

Hospital hereby agrees to indemnify, defend, and hold Vital, its shareholders,
directors, officers, employees, and affiliates (the "Indemnified Parties") free
and harmless from and against any and all liability, loss, damage, claim, or
cause of action (whether or not well-founded) (collectively, "Claims"),
including reasonable attorney's fees and costs, which may result from (i) any at
or omission of Hospital, its employees, contractors, or agents arising or,
otherwise related to this Agreement, and (ii) any other Claim against the
Indemnified Parties arises as a result of Vital's operation of the Programs on
behalf of Hospital, including but not limited to, claims arising under the Texas
Deceptive Trade Practices Act. To be entitled to such indemnification, the
Indemnified Party shall give Hospital prompt written notice of any assertion by
a third party of any claim with respect to which the Indemnified Party might
bring a claim for indemnification hereunder, and, in all events, must supply
such written notice to Hospital within the applicable period for defense of such
claim. The Indemnified Party may elect to retain and direct the actions of legal
counsel of its own choosing, the expense of which shall be borne by Hospital,
provided that the hourly rate for such counsel shall not exceed 5450.04 per
hour. The right to indemnification conferred herein shall include the right to
be paid or reimbursed by Hospital the reasonable expenses incurred by the
Indemnified Party if it is or is threatened to be made a named defendant or
respondent in any proceeding in advance of the final disposition of the
proceeding and without any determination as to the Indemnified Party's ultimate
entitlement to indemnification.

Notwithstanding the foregoing, Vital or any Indemnified Party shall not be
entitled. to any indemnification under this section for Claims arising out of
Vital's or an Indemnified Party's negligence, willful misconduct, or criminal
acts (collectively, "Vital Acts") in their provision of services or products
under this Agreement. Provided, however, that Hospital shall defend Vital or an
Indemnified Party with respect to any Claim, including potential Vital Acts,
and, if a court determines that Vital or an Indemnified Party has committed a
Vital Act, then Vital will reimburse Hospital for all costs it has incurred to
defend Vital or an Indemnified Party. Provided, however, that Hospital shall not
be required to indemnify or defend Vital or an Indemnified Party if the Claim is
brought only against Vital or an Indemnified Party, and not against Hospital,
its affiliates, a Hospital, or a physician practicing at a Hospital, and the
Claim does not relate in any manner to a situation in which medical malpractice
may be an issue.
 
 
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7.    NON-SOLICITATION
 
7.1        By Vital,.
 
During the term of this Agreement, or the term of this Agreement as extended,
and for a twelve (12) month period commencing on the date of the expiration or
earlier termination of this Agreement, Vital shall not, without the prior
written consent of Hospital, employ or contract with, or solicit for employment
or contract, any employee or independent contractor of Hospital or any affiliate
(other than persons who were employees of or had a contract with Vital
immediately prior to their employment by or contract with Hospital or an
affiliate and other than persons recruited by Vital and placed in the employment
of Hospital or an affiliate by Vital) to provide services- similar to those
provided in this Agreement. Vital acknowledges that a breach of this Section 7.1
by Vital will result in irreparable injury to Hospital, the precise amount of
which is not readily ascertainable in monetary damages, and that Hospital, in
addition to any other remedies, shall be entitled to injunctive relief.
 
7.2         By Hospital.
 
During the term of this Agreement, or the term of this Agreement as extended,
and for a twelve (12) month period commencing on the date of the expiration or
earlier termination of this Agreement, neither Hospital or any affiliate (the
"Non-Soliciting Parties") thereof Ann, without the prior written consent of
Vital employ or contract with, or solicit for employment or contract, any
employee or independent contractor of Vital to provide services similar to those
provided in this Agreement (other than persons who were employees of, or had a
contract with the Non-Soliciting Parties, immediately prior to their employment
by or those who had a contract with Vital and other than persons recruited by
the Non-Soliciting Parties. The Non-Soliciting Parties acknowledge that a breach
of this Section 7.2 by the Non-Soliciting Parties will result in irreparable
injury to Vital, the precise amount of which is not readily ascertainable in
monetary damages, and that Vital, in addition to any other remedies, shall be
entitled to injunctive relief.
 
8.      CONFIDENTIALITY
 
8.1         Confidential Information.Vital and Hospital recognize and
understandteat, during the term of this Agreement, or the term of this Agreement
as extended, each shall receive, have access to, and otherwise become acquainted
with various trade secrets, materials, and other proprietary information
relating to the other which is of a secret or confidential nature ("Confidential
Information"). During and after the term of this Agreement, Hospital and Vital
shall not use the other's Confidential Information for any purposes other than
the performance of this Agreement, and shall not disclose the other's
Confidential Information received by Hospital and Vital to any third party,
without the prior written consent of Hospital or Vital, as the case may be.
Provided, however, that either party may divulge Confidential Information to
the minimum extent necessary to comply with any applicable statute, governmental
rule or regulation or valid Court order. Confidential Information does not
include, however, information which (a) is or becomes generally available to the
public other than as a result of a disclosure by either party or its
Representatives (as defined below), (b) was available to the non-disclosing
party on a nonconfidential basis prior to its disclosure to such party by the
disclosing party or its Representative, or (c) becomes available to the
non-disclosing party on a nonconfidential basis from a person, other than the
disclosing party or its Representative, Who is not known by the non-disclosing
party to be bound by a confidentiality agreement with such disclosing party or
otherwise prohibited from, transmitting the information to the non-disclosing
party. As used in this Agreement, the term "Representative" means, as to any
party, such party's affiliates and its directors, officers, employees, agents,
advisors (including, without limitation, financial advisors, counsel and
accountants), and controlling persons.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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8.2         Protected Health Information.          In the event Vital acquires
protected health information in its capacity as a business associate of
Hospital, the use or disclosure of any such protected health information and
individually identifiable health information, as defined in 45 CFR Part 164
("Protected Health Information") shall be governed by a separate Business
Associate Agreement by and between the parties. Notwithstanding the foregoing,
Hospital acknowledges that Vital does not intend to collect or obtain any
Protected Health Information as a business associate of the Hospital but rather
collects or obtain such Protected Health Information as a non-covered entity
under direct authorization of the Program participant and/or as a business
associate of the surgeons and/or other health professionals. Vital expects to
have no access to Hospital records except for lab results and similar diagnostic
reports obtained as agent for the participant or as a business associate of the
surgeons and/or other health professionals.
 
9.           NOTICES
 
All notices which either party is required or may desire to give to the other
party under or in conjunction with this Agreement shall be in writing, and shall
be deemed to have been duly given on the date of delivery if delivered in person
or via overnight delivery service to the party named below, or as of the date
indicated on a return receipt if by certified or registered mail, postage or to
such other addresses or persons as may be designated by Hospital or Vital from
time to time in accordance with the provisions of this Section 9.

If to Hospital:
(Tony Rotondo, Pres/CEO)
     
(First Street Hospital)
     
(411 First Street)
     
(Bellaire, TX 74401)
 
Attention: President / CEO
   
If to Vital:
       
NeWeigh
     
10738 Braes Forest
     
Houston, TX 77071
     
Attention: E. Stacey Crumley

 
 
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10.        ENTIRE AGREEMENT; AMENDMENTS
 
This Agreement supersedes any and all other agreements, whether oral or written,
between the parties with respect to the subject matter hereof and there are no
representations, covenants or undertakings other than those expressly set forth
in this Agreement. This Agreement may not be modified or amended except by a
written document executed by both parties to this Agreement, and such written
modification(s) shall be attached hereto.
 
11.         STATE LAW: SEVERABILITY
 
This Agreement shall be construed and governed by the laws of the State of
Texas. In the event any provision of this Agreement is rendered invalid or
unenforceable by the enactment of any applicable statute or ordinance or by any
regulation duly promulgated or is made or declared unenforceable by any court of
competent jurisdiction, the remainder of this Agreement shall, subject to the
following, remain in full force and effect The parties agree that venue for any
proceeding arising hereunder shaft lie exclusively in Harris County, Texas, and
venue for any litigation arising for enforcement of this Agreement shall lie
exclusively in the state district courts of Harris County, Texas.
 
12.        CATASTROPHE
 
In the event that any Hospital facilities are partially damaged or destroyed by
fire, earthquake or other catastrophe, and such damage is sufficient to render
the facilities unusable for Program purposes but not entirely or substantially
destroyed, this Agreement shall be suspended until such time as Hospital
determines that the premises or the facilities shall again be usable. In the
event that Hospital determines that the 'affected Hospital facilities have been
entirely or substantially destroyed by fire, earthquake, or other catastrophe,
this Agreement may be terminated by either party Upon at least ten (10) days'
prior written notice to the other; or, in the alternative, this Agreement shall
be suspended until such time as Hospital shall erect or otherwise acquire new
facilities with accommodations substantially similar to those provided herein
for the use of Vital, provided that Hospital gives written notice to Vital that
it shall erect or otherwise acquire such facilities. Nothing in this Agreement
shall obligate Hospital to erect or otherwise acquire such facilities. .
 
13.        NON-WAIVER
 
The waiver by either party of any breach of any term, covenant or condition
contained herein shall not be deemed to be a waiver of any subsequent breach of
the same or any other term, covenant or condition contained herein. The
subsequent acceptance of performance hereunder by a party shall not be deemed to
be a waiver of any preceding breach by the other party of any term, covenant or
condition of this Agreement, other than the failure of such party to perform the
particular duties so accepted, regardless of such party's knowledge of such
preceding breach at the time of acceptance of such performance.
 
/s/Tony Rotondo
/s/Diane Crumley

 
 
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14.         CAPTIONS
 
Any captions to or hearing of the articles, sections, subsections, paragraphs,
or subparagraphs of this Agreement are solely for the convenience of the
parties, are not a part of this Agreement, and shall not be used for the
interpretation or determination of validity of this Agreement or any provision
hereof.
 
15.         ASSIGNMENT
 
Neither party shall assign any rights or delegate any duties under this
Agreement without the prior written consent of the other party, except that
either party may assign its rights and delegate its duties under this Agreement
in the event of any transfer of all or substantially all of its stock or assets
without the prior written consent of the other party. Any unauthorized attempted
assignment by either party shall be void and of no force and effect and shall
constitute a material breach of this Agreement. All covenants, conditions and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
 
•              16.          COUNTERPARTS
 
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original, and all of such counterparts shall together constitute one and
the same Agreement.
 
17.         THIRD PARTY BENEFICIARIES
 
This Agreement is solely for the benefit of the parties and their officers,
directors and employees to the extent named herein. No other third party is
granted or shall have any rights by virtue of this Agreement.
 
18.         AFFILIATE
 
For purposes of this Agreement, the term "affiliate" shall mean any wholly-owned
subsidiary of an entity or any entity with common ownership or common control.
 
19.         ALTERNATIVE DISPUTE RESOLUTION
 
The parties agree to submit any dispute arising under this Agreement to
voluntary mediation before a mediator to be mutually acceptable to both parties.
The parties shall share equally in the cost of the mediator, and each party
shall incur the cost of its own legal representation. In the event the dispute
is not resolved through mediation, the parties agree to submit the dispute to
binding arbitration before a mutually acceptable arbitrator in accordance with
the rules of the American Arbitration Association. Unless otherwise ordered by
the arbitrator, the parties shall share equally in the cost of the arbitration
and each party shall incur the cost of its own legal representation. Judgment
upon any award rendered by an arbitrator may be entered in any court having
jurisdiction. Notwithstanding anything to the contrary herein, this provision
shall not be applicable to the rights of any party to seek an equitable remedy
to enforce the terms of this Agreement, including but not limited to Section
2.5, 2.6, 7 and 8 of this Agreement
 
 
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It is the express intent of the parties that the terms and conditions of this
Agreement shall not be disclosed except in response to a request from a valid
subpoena, a request from a government agency, by mutual written consent of both
parties, or as otherwise specifically provided herein The parties also agree
that the parties may disclose the terms of this Agreement to its officers,
affiliates, directors, attorneys and to those employees who are necessary to
carry out the terms of the Agreement.
 
IN WNESS WHEREOF the parties hereto have caused this Agreement to be executed on
the (22nd) day of  (March) 2006.

VITAL:
 
VITAL WEIGHT CONTROL, INC. d/b/a NeWeigh a
Texas Corporation
 
By:
/s/Diane Crumley
Name: Diane Crumley
Title: President
 
Hospital:
Street Hospital
 
By:
/s/ Tony Rotondo
Name: 
Tony Rotondo
Title:
President/CEO

 
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EXHIBIT "A"
 
List of Vital Equipment

(all furniture, fixtures, and equipment located at 811 north stadium drive,
suite 200, Houston, TX 77054 with the exception only of any items of furniture
and equipment that may be listed on this Exhibit “A” and initiated by both
parties hereto.

/s/Tony Rotondo             /s/Diane Crumley

 
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It is the express intent of the parties that the terms and conditions of this
Agreement shall not be disclosed except in response to a request from a valid
subpoena, a request from a government agency, by mutual written consent of both
parties, or as otherwise specifically provided herein The parties also agree
that the parties may disclose the terms of this Agreement to its officers,
affiliates, directors, attorneys and to those employees who are necessary to
carry out the terms of the Agreement.

IN MINESS WHEREOF the parties hereto have caused this Agreement to be executed
on the (22nd) day of (March)             2006.
 
VITAL:
 
VITAL WEIGHT CONTROL, INC. d/b/a NeWeigh
a Texas Corporation
   
By:
(/s/Diane Crumley)
Name: Diane Crumley
Title: President
   
Hospital:
 
(First Street Hospital)
   
By:
/s/ Tony Rotondo
Name: 
(Tony Rotondo)
Title:
(President/CEO)

/s/Tony Rotondo
/s/Diane Crumley
/s/Tony Rotondo
/s/Diane Crumley

 
 
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ADDENDUM
 
Both parties agree that to the following payment schedule:
May 1, 2006
  $ 100,000  
June 1'2006
  $ 200,000  
July 1, 2006
  $ 225,000  
August 1, 2006
  $   225,000  
September 1, 2006
  $ 250,000  
October 1, 2006
  $ 200,000  

 
For the remaining term of the contract, payments will be $200,000 per month.

/s/ Diane Crumley
 
3-22-06
Vital Weight Control, Inc.
 
Date
     
[ex10-9_sig.jpg]
 
(3/22/06)
     
(First Street Hospital)
 
Date

 
 
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EXHIBIT "A"
 
List of Vital Equipment

(all furniture, fixtures, and equipment located at 811 north stadium drive,
suite 200, Houston, TX 77054 with the exception only of any items of furniture
and equipment that may be listed on this Exhibit “A” and initiated by both
parties hereto
 
 
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