Document:

Unassociated Document

    
      
        

        

      

      EXHIBIT
10.18

      

      

      

      

      

      

      

      

      

      

      

      

      

      SEPARATION
AGREEMENT BETWEEN THE REGISTRANT

      AND
PHYHEALTH CORPORATION

      

       

       

       

       

       

       

       

       

       

      
 

      
        
           

        

        
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      SEPARATION
AGREEMENT

       

       

      BY AND
BETWEEN

       

      PHYSICIANS
HEALTHCARE MANAGEMENT GROUP, INC.

       

      AND

       

      PHYHEALTH
CORPORATION

       

       

       

        
          

        

      

       

      
        DATED AS
OF

         

      

      October
31, 2009

      

      
        
          

        

      

       

      Exhibits

       

      

      

      Exhibit I -
Tax Matters Agreement

      
 

      
        
           

        

        
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      SEPARATION
AGREEMENT

       

      SEPARATION
AGREEMENT (“Agreement”) is dated
as of October 31, 2009, by and between Physicians Healthcare Management Group,
Inc., a Nevada corporation (“PHYH”), and Phyhealth
Corporation, a Delaware corporation and wholly owned subsidiary of PHYH (“Phyhealth”).

       

      W I T N E S S E T H:

       

      WHEREAS,
the board of directors of PHYH (the “Board”) has
determined that it is advisable and in the best interests of PHYH and its
stockholders to separate Phyhealth from PHYH (the “Separation”,
Split-Off, or Spinoff), pursuant to the terms and subject to the conditions set
forth in this Agreement, so that, following completion of the Separation, the
Phyhealth Business will be conducted by Phyhealth as a separate, independent,
publicly-traded company;

       

      WHEREAS,
PHYH and the Board intend that all of the assets and liabilities of PHYH and its
subsidiaries attributed by the Board to Phyhealth (and no other assets or
liabilities of PHYH or any subsidiary thereof) will be held by Phyhealth or one
of the wholly owned Phyhealth Subsidiaries (as defined herein) once the
Separation is consummated;

      

      WHEREAS,
to effect the Separation, (i) all of the assets attributed by the Board to
Phyhealth will be conveyed, licensed, assigned or otherwise transferred to
Phyhealth or one or more of the wholly owned Phyhealth Subsidiaries,
(ii) all liabilities of Phyhealth will be assumed by, or will otherwise
become the obligation or responsibility of, or the subject of any indemnity by,
Phyhealth or one or more of the wholly owned Phyhealth Subsidiaries, and
(iii) PHYH will issue to all its shareholders on the Spinoff Date a pro
rata distribution of the following (based on the number of shares outstanding as
of September 30,  2009),  as follows: (i) 3,121,475 shares
of Phyhealth common stock on the 156,073,725 outstanding common shares
of  PHYH; (ii) 3,240,000 Phyhealth Series A Preferred Convertible
shares on the 162,000,000 Series A Preferred Convertible shares of PHYH; (iii)
622,324 Phyhealth Series B Preferred Convertible shares on the 31,116,175 Series
B Preferred Convertible shares of PHYH currently outstanding;
and  (iv) 3,472,713 common shares (10% of Phyhealth’s new
capitalization, fully diluted) to be retained by PHYH (the “Dividend”);

       

      WHEREAS,
PHYH maintains its Executive Offices at 700 South Royal Poinciana Boulevard,
Suite 506, Miami, Florida 33166;

       

      WHEREAS,
Phyhealth maintains its Executive Offices at 700 South Royal Poinciana
Boulevard, Suite 506, Miami, Florida 33166, with its website at
www.phyhealth.com;

       

      WHEREAS,
Phyhealth is a development stage company that has not yet generated revenue from
operations;

       

      WHEREAS,
in addition to prior funding, in 2008, Phyhealth has secured $4 million in
funding to develop its Pilot HMO which will operate in four counties in west
central Florida;

       

      
        
          
          

        

        
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        WHEREAS,
Florida Physicians, LLC, a Florida limited liability company, was formed as a
wholly owned subsidiary of Phyhealth, which in turn formed a wholly owned
subsidiary, Phyhealth Plan Corporation (“Plancorp”), a Florida domiciled,
for-profit corporation;

      

       

      WHEREAS,
Plancorp has filed its required applications with the Florida Department of
Financial Services, Office of Insurance Regulation (“OIR”) and Florida’s Agency
for Health Care Administration (“AHCA”) for a Certificate of Authority to
operate a Health Maintenance Organization;

       

      WHEREAS,
in February 2010, Plancorp intends to file its application for certification by
the federal government’s Centers for Medicare and Medicaid Services to operate a
Medicare Advantage Part C and Prescription Drug Part D plan;

       

      WHEREAS,
Phyhealth is a managed care organization that develops fully-integrated,
community healthcare systems in partnership with participating
physicians;

       

      WHEREAS,
Phyhealth Plans are designed to deliver high-quality, affordable healthcare by
enabling physicians to assume end-to-end management of healthcare for their
patients;

       

      WHEREAS,
the Phyhealth model empowers physicians to provide preventive healthcare and to
proactively manage their patient's general health by aligning the incentives of
the HMO, the physician and the patient;

       

      WHEREAS,
highly effective medical management will increase Phyhealth’s physician
partners’ practice revenues, reduce expenses, and improve the economic value
(equity) of their medical practices;

       

      WHEREAS,
Phyhealth will operate a centralized, scalable administrative operation at a
Miami-Dade County headquarters to optimize operational
efficiencies;

       

      WHEREAS,
Phyhealth is committed to locate key functions in its local service areas to
better understand and respond to customer needs while better controlling medical
expenses;

       

      WHEREAS,
Phyhealth believes this approach will also provide an important advantage over
competitors that do not have local operations;

       

      WHEREAS,
in addition to its health plans, Phyhealth intends to offer additional
value-added products and services in cooperation with physicians, including
medical malpractice insurance through its exclusive affiliate, Physhield
Insurance Exchange, a Risk Retention Group; local care facilities and wellness
programs; as well as information technologies such as secure electronic medical
records;

       

      WHEREAS,
Phyhealth focuses on serving consumers who choose their primary care doctor and
control their own healthcare financing and insurance purchasing
decisions;

       

      WHEREAS,
Phyhealth targets primarily small businesses with between two and 50 employees
that insure their own employees, individuals, Medicare beneficiaries and
recipients of government-sponsored programs such as Medicaid and State
Children’s Health Insurance Program (SCHIP);

       

      
        
          
          

        

        
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      WHEREAS,
Phyhealth believes each of these groups represent a significant growth
opportunity, particularly in Florida, where attractive, under-penetrated service
areas that are not dominated by a single competitor still exist;

       

       WHEREAS,
Phyhealth will launch its Pilot community HMO in 2009 in four contiguous
counties in west central Florida: Hillsborough, whose largest city is Tampa, and
neighboring Pinellas County, whose largest city is St. Petersburg, Pasco and
Polk;

       

      WHEREAS,
no competitors dominate this area, in terms of government or commercial
individual and small group programs;

       

      WHEREAS,
this service area is still under-penetrated in regard to Medicare Advantage
plans, as compared to other parts of the state, which will allow us to grow our
membership more quickly while maintaining discipline in pricing and risk
management;

       

      WHEREAS,
the Phyhealth structure is unique in that the attending physician-owners
maintain control of the physician-patient relationship and are responsible for
and manage 100% of patient healthcare costs;

       

      WHEREAS,
Phyhealth manages the business side of the health plans and offers incentives to
deliver the highest quality, patient-centered care while efficiently managing
medical expenses;

       

      WHEREAS,  Phyhealth
Plan members benefit by receiving higher quality healthcare through the Plan’s
focus on keeping members healthy and fully coordinating care for members with
acute and chronic disorders;

       

      WHEREAS,
Phyhealth Plans integrate all aspects of the delivery and financing of care in
the community, including providing the network physicians with medical liability
insurance protection through Physhield Insurance Exchange, a Risk Retention
Group (“Physhield”), a Phyhealth affiliated insurer;

       

      WHEREAS,
Phyhealth intends to layer on additional products and services that will provide
physicians the opportunity to develop local care facilities and wellness
programs, as well as implement cutting edge information technologies including
secure electronic medical records;

       

      WHEREAS,
PHYH and Phyhealth have no significant Liabilities.

       

      NOW,
THEREFORE, in furtherance of the foregoing and in consideration of the mutual
promises and undertakings contained herein and in any other document executed in
connection with this Agreement, the parties agree as follows:

       

      ARTICLE
I

       

      DEFINITIONS

       

      Section 1.1    
General. For
the purposes of this Agreement, the following terms shall have the meanings set
forth below:

       

      (a)    
“Action” shall
mean any claim (whether or not filed), cause of action, suit, arbitration, or
legal inquiry, demand, proceeding or investigation.

       

      
        
          
          

        

        
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      (b)    
“Affiliate”
shall mean, with respect to any specified Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, such
specified Person.

       

      (c)     “Applicable Law” shall
mean, with respect to any Person, all statutes, laws, ordinances, rules, orders
and regulations of any Governmental Authority applicable to such Person and its
business, properties and assets.

       

      (d)    
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, together with the
rules and regulations promulgated thereunder.

       

      (e)    
“Governmental
Authority” shall mean any foreign, federal, state or local government,
court, agency or commission or other governmental or regulatory body or
authority.

       

      (f)
     “Dividend Date” shall
mean 12:01 a.m. on October 31, 2008; provided, however, that if the
Registration Statement is not declared effective by the SEC on or prior to
October 31, 2008, then the Dividend Date shall be at 12:01 a.m. on the
first Business Day of next succeeding the Day in which the SEC has declared
effective the Registration Statement.  This is also referred to as the
“Spinoff Date”
or “Split-Off
Date”.

       

       

      (g)
     “Intellectual Property
Rights” or “IPR” means all
intangible property rights worldwide arising under statutory or common law,
whether or not perfected, including, without limitation, all (1) patents,
patent applications and patent rights; (2) divisions, continuations,
continuations-in-part, renewals, reissues, re-examinations, continuing
prosecutions, and extensions of the foregoing existing at a time in question, or
thereafter filed, issued or acquired; (3) rights associated with works of
authorship including copyrights, copyright applications, copyright
registrations, and derivative works; and (4) Know-how.

       

      (h)    
“Know-how”
means confidential and/or proprietary technical and other information, whether
patentable or not, including, without limitation, concepts, discoveries,
inventions, modifications, improvements, data, results, designs, formulae,
ideas, analyses, methods, techniques, assays, research plans, procedures, tests,
processes (including manufacturing processes, specifications and techniques),
laboratory records, chemical, pharmacological, toxicological, clinical,
analytical and quality control data, reports, and summaries.

       

      (i)    
“Registration
Statement” shall mean the Registration Statement on Form S-1 to filed by
PHYH and Phyhealth with the SEC, including any and all amendments thereto and
supplements thereof, as contemplated by this Agreement, with respect to the
shares of Phyhealth to be issued on the Dividend Date, thus separating Phyhealth
from PHYH.

       

      (j)    
“SEC” shall
mean the United States Securities and Exchange Commission.

       

      (k)    
“Securities
Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

       

      
        
          
          

        

        
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      (l)    
“Spinoff Date”
or “Split-Off
Date” shall mean 12:01 a.m. on October 31, 2008; provided, however,
that if the Registration Statement is not declared effective by the SEC on or
prior to October 31, 2008, then the Dividend Date shall be at 12:01 a.m. on
the first Business Day of next succeeding the Day in which the SEC has declared
effective the Registration Statement.  This is also referred to as the
“Dividend
Date”.

       

      ARTICLE
II

       

      ACTIONS TO BE TAKEN PRIOR TO
THE DIVIDEND

       

      Section 2.1    
Business
Separation.

       

      (a) On or
prior to the Dividend Date, PHYH and Phyhealth shall take or cause to be taken
all actions necessary to cause the transfer, assignment, delivery, license or
other transfer or conveyance to Phyhealth or one or more wholly owned
Subsidiaries of Phyhealth designated by Phyhealth of all right, title and
interest in and to Phyhealth Assets held by PHYH.

       

      (b) Following
the spinoff, all rights, title and obligations, of the Parties with regard to
the following assets/benefits shall belong to Phyhealth:

       

      The
$250,000.00 Secured Promissory Note (BWM Note) issued July 29, 2009 by Bottled
Water Media (BWM), due December 29, 2009.

      

      The Cash
balance held by held by PHYH and by Phyhealth at the date of separation, whether
in PHYH’s operating account, a brokerage account or elsewhere, less $50,000.00,
which shall belong to PHYH.

      

      All
Certificates of deposit held by PHYH at the date of separation.

      

      All
prepaid expenses including retainers and security deposits.

      

      The
Shares of Wound Management Technology common stock, currently 100,000 shares
held.

      

      The
312,500 shares of convertible preferred stock in ZST Digital Networks,
Inc.

      

       

      The
25,000 shares Bio-Matrix Scientific Group, Inc. (BMSN) non-convertible preferred
stock ., the 1,150,000 BMSN common shares and 150,000 BMSN common shares in the
name of Nutmeg/Mercury Fund, LLLP, all acquired January 12, 2009.

       

      

      The July
31, 2009 Forbearance Agreement with AccessKey IP, Inc. and the Amended
Convertible Note issued July 31, 2009 by AccessKey IP, Inc., all accrued
interest, 15 million shares of Access key common stock and the 25,000,000
AccessKey IP, Inc. Class A Stock Purchase Warrants.

      

      The
Surplus Promissory Note owed by Physhield Insurance Exchange, a Risk Retention
Group, and the Administrative Services Agreement with Phyhealth Plan
Corporation.

      The IPR
pertaining to the establishment and operation of a Health Maintenance
Organization (HMO) and IPR pertaining to the establishment and operation of a
medical profession liability insurance company.

      

      
        
          
          

        

        
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      The
Physhield/Phyhealth Underwriters Memorandum of Understanding as Amended June 1,
2006.

      The
Application/certification to form Physhield Insurance Exchange, a Risk Retention
Group.

      

      Interest
earned by Physhield on the surplus contribution under the terms of the Surplus
Note dated February 15, 2006, including the 10% guarantee from Phyhealth
Underwriters.

      

      The
$100,000 start-up costs loan receivable from Phyhealth Underwriters and all
accrued interest up to the date of issuance of the first policies by
Physhield.

      

      All
furniture, fixtures, computers, trade show booth and equipment.

      

      All
intercompany receivables from, payables to and investments in Phyhealth
Underwriters, Inc., Florida Physicians, LLP and Phyhealth Plan
Corporation.

      

      (c) Following
the spinoff, all rights, title and obligations of the Parties with regard to the
following assets/benefits shall belong to PHYH:

       

      The IPR
pertaining to the establishment and operation of a Third Party Administrator
(“TPA”).

      The
148,218 shares of PHYH treasury stock, acquired in December 2008 and January
2009 during the company’s stock buyback program. 

      

      $50,000.00
Cash.

      

      (d) Following
the spinoff, all rights, title and obligations of the Parties with regard to the
following shall belong to both Parties:

       

      Each
Party shall be entitled to a 15% discount off of the retail price of any product
or service furnished by the other Party directly or indirectly. Such discount
will further extend to each of the PhyHealth HMO subscribers. Such discount will
extend to, and be available the other Party, relative to any product or service
in which either Party is a reseller.

      Each
Party shall be entitled to any and all advertising benefits granted by BWM in
the BWM Note, which is subject to the approval of the distributing or delivering
industry participant, e.g., JetBlue.

      Each
Party shall be entitled to the rights to the PHYH website(s).

       

      (e)    
The separation of Phyhealth Assets from PHYH, as contemplated by this Agreement,
shall be effected in a manner that does not unreasonably disrupt either the
Phyhealth Business or the PHYH Business. Notwithstanding the foregoing, PHYH and
Phyhealth agree, and agree to cause their respective Subsidiaries, to use
commercially reasonable efforts to obtain, before the Dividend Date, any
Consents.

       

      (f)    
Prior to the Dividend, PHYH and Phyhealth will use commercially reasonable
efforts to amend, in form and substance reasonably satisfactory to Phyhealth,
all contractual arrangements between or among PHYH, any of its Subsidiaries and
any other Person that either (i) relate to the Phyhealth Business or
(ii) relate solely to the Phyhealth Business, but, by their terms,

       

      
        
          
          

        

        
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      contain provisions applicable to PHYH or any Phyhealth Subsidiary, so that,
after the Dividend Date, such contractual arrangements (x) will relate
solely to the Phyhealth Business and (y) will eliminate any provisions
applicable to PHYH or any Phyhealth Subsidiary and, in either event, will inure
to the benefit of Phyhealth or a Phyhealth Subsidiary on substantially the same
economic terms as such arrangements exist as of the date hereof, but retain any
benefits or rights (and related obligations) relating to PHYH or the Phyhealth
Subsidiaries.

       

      (g)    
Except as otherwise specifically set forth herein, the rights and obligations of
the parties with respect to Taxes shall be governed exclusively by
Article VIII of this Agreement and the Tax Matters Agreement. Accordingly,
Taxes shall not be treated as Assets or Liabilities for purposes of, or
otherwise be governed by, this Section 2.1.

       

      Section 2.2    
Conveyance and
Assumption Agreements. In connection with the transfer of Phyhealth
Assets contemplated by this Article II, PHYH and Phyhealth shall execute,
or cause to be executed by the appropriate Phyhealth Subsidiary and Phyhealth
Subsidiary, respectively; conveyance and assumption instruments in such forms as
shall be reasonably acceptable to PHYH and Phyhealth.

       

      Section 2.3    
Other
Agreements. If subsequent to the Dividend Date, PHYH shall either
(i) receive written notice from Phyhealth or (ii) determine that
certain specified Assets of PHYH that properly constitute Phyhealth Assets were
not transferred to Phyhealth or a Phyhealth Subsidiary prior to the Dividend,
then, as soon as reasonably practicable thereafter, PHYH shall transfer and
deliver any and all of such Assets to Phyhealth or a Phyhealth Subsidiary
designated by it without the payment by Phyhealth or such Phyhealth Subsidiary
of any consideration therefore. If subsequent to the Dividend Date, Phyhealth
shall either (i) receive written notice from PHYH or (ii) determine
that certain specified Assets of Phyhealth or a Phyhealth Subsidiary that do not
properly constitute Phyhealth Assets were transferred to or held by Phyhealth or
a Phyhealth Subsidiary prior to the Dividend, then, as soon as reasonably
practicable thereafter, Phyhealth shall transfer and deliver, or shall cause the
applicable Phyhealth Subsidiary to transfer and deliver, any and all of such
Assets to PHYH without the payment by PHYH or such Phyhealth Subsidiary of any
consideration therefore. Any disagreement regarding whether or not any Asset or
Liability was or should have been a Phyhealth Group Asset or Phyhealth Group
Liability, on the one hand, or an Phyhealth Group Asset or Phyhealth Group
Liability, on the other hand, shall be resolved in accordance with the
provisions of Article XIII hereof.

      

      Section 2.4    
Securities
Matters.

       

      (a)    
Prior to the Dividend Date, PHYH and Phyhealth shall use their respective
reasonable best efforts to cause the Registration Statement and any amendments
or supplements thereto to be declared effective under the Securities Act. PHYH
and Phyhealth shall also cooperate in preparing and filing with the
SEC.

       

      (b)    
Prior to the Dividend Date, PHYH and Phyhealth shall prepare and file with the
SEC a registration statement registering under the Exchange Act the shares of
Phyhealth Common Stock to be issued in the Dividend, and shall take all actions
necessary to cause it to become effective prior to the Dividend
Date.

       

      
        
          
          

        

        
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      (c)    
Prior to the Dividend Date, Phyhealth shall use commercially reasonable efforts
to take all such actions as may be necessary or appropriate under state
securities and blue sky laws of the United States (and any comparable laws under
any foreign jurisdictions) in connection with the transactions contemplated by
this Agreement or the other Separation Documents.

       

      Section 2.5     Phyhealth Organizational
Documents. On or prior to the Dividend Date, Phyhealth shall take all
actions reasonably necessary to amend and restate the certificate of
incorporation and bylaws of Phyhealth substantially in the form attached hereto
as Exhibits A.

       

      Section 2.6    
Intercompany
Accounts. PHYH, on the one hand, and Phyhealth, on behalf of itself and
each Phyhealth Subsidiary, on the other hand, shall, to the extent practicable,
prior to the Dividend, settle, cancel or otherwise eliminate all Intercompany
Accounts. To the extent that it is not practicable for PHYH and Phyhealth to
settle, cancel or otherwise eliminate all Intercompany Accounts prior to the
Dividend, then each of PHYH and Phyhealth shall, promptly following the
Dividend, settle, cancel or otherwise eliminate all Intercompany Accounts. For
the avoidance of doubt, the provisions of this Section 2.6 shall not apply
to any intercompany receivables, payables or other balances arising under any of
the Separation Documents.

       

      ARTICLE
III

       

      THE
DIVIDEND

       

      Section 3.1    
Actions Prior to
Dividend.

       

      (a)    
Subject to the satisfaction, or to the extent permitted by Applicable Law, PHYH
shall establish the Dividend Date and any necessary or appropriate procedures in
connection with the Dividend.

       

      (b)    
PHYH shall prepare and mail, at least thirty-five (35) Trading Days, but
not more than forty-five (45) Trading Days, prior to the Dividend Date, to
all holders of its common and preferred stock, the Notice of Dividend. PHYH and
Phyhealth will prepare, and Phyhealth will, to the extent required under
Applicable Law, file with the SEC any such documentation which PHYH determines
is necessary or desirable to effectuate the Dividend and PHYH and Phyhealth
shall each use their respective reasonable best efforts to obtain all necessary
approvals from the SEC with respect thereto as soon as practicable.

       

      Section 3.2    
Prior to the Dividend Date, PHYH shall send, or shall cause to be sent, to each
holder of record of shares of PHYH instructions for use in securing each
holder’s Phyhealth stock certificate, or book-entry shares in uncertificated
form of Phyhealth stock, equal to 2% of the number of holder’s PHYH shares. To
facilitate recordkeeping, withholding and other obligations, PHYH and
Phyhealth agree to cooperate and share information following the Dividend in
order to carry out the purposes of this Agreement.

       

      Section 3.3    
Closing. The
closing of the Separation will take place on the Dividend Date and shall be
effective at 12:01 a.m. local time on the Dividend Date, unless the parties
hereto agree in writing to another time, date and place.

       

      
        
          
          

        

        
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      ARTICLE
IV

       

      CONDITIONS

       

      Section 4.1    
Conditions to the
Separation. The respective obligations of PHYH and Phyhealth to
consummate the Separation are subject to the satisfaction or waiver (to the
extent permitted by Applicable Law) of each of the following
conditions:

       

      (a)
    Business Separation.
The transfer of Phyhealth Assets to Phyhealth or a wholly owned Phyhealth
Subsidiary pursuant to Article II hereof, shall have been affected and all
of the conditions to the Dividend set forth in Article IV;

       

      (b)    
Separation
Documents. Each of PHYH and Phyhealth shall have executed and delivered
each of the Separation Documents;

       

      (c)    
Registration.
The Registration Statement shall have been declared effective under the
Securities Act and the Exchange Act, respectively, and shall not be the subject
of any stop order or proceeding to seek a stop order;

       

      (d)    
No Injunctions.
No order, injunction or decree issued by any Governmental Authority or other
legal restraint or prohibition preventing the consummation of the Separation,
the Dividend or any of the other transactions contemplated by this Agreement or
any other Separation Document shall be in effect.

       

      ARTICLE
V

       

      INTERCOMPANY
BUSINESS RELATIONSHIPS

      FOLLOWING THE
SEPARATION

       

      Section 5.1    
Transition
Services. Prior to or on the Dividend Date, PHYH and Phyhealth shall
(A) bear its proportionate share of any costs, expenses and Liabilities
arising out of or relating to the operation of such party’s
business.

       

      ARTICLE
VI

       

      EMPLOYEE
MATTERS

       

      Section 6.1    
Phyhealth and PHYH shall take all actions necessary so that Phyhealth has
established at or prior to the Dividend Date entered into, assumed or
amended any Employee Arrangements, in each case, as the parties deem necessary
and appropriate.

       

      Section 6.2    
Assumption and
Retention of Liabilities.

       

      (a)    
Except as otherwise expressly provided herein, Phyhealth shall assume and agree
to pay, perform, fulfill and discharge, and PHYH shall have no responsibility
for, (i) all Liabilities under any Employee Arrangements, (ii) all
employment or service-related Liabilities with respect to (A) all Phyhealth
Employees (and their dependents and beneficiaries), (B) former Phyhealth
Employees (and their dependents and beneficiaries) whose last employment with
PHYH related primarily to the Phyhealth Business and (C) any individual who
is, or was, an independent contractor, temporary employee, consultant, leased
employee, or non-payroll worker or in any other employment relationship
primarily connected to the Phyhealth Business, in each case, for periods during
which such individuals were employees of or primarily performed services for the
Phyhealth Business.

       

      
        
          
          

        

        
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      Section 6.3    
Payroll Taxes and
Reporting. PHYH and Phyhealth shall, to the extent practicable,
(i) treat Phyhealth as a “successor employer” and PHYH as a “predecessor,”
within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with
respect to Phyhealth Employees for purposes of taxes imposed under the United
States Federal Unemployment Tax Act or the United States Federal Insurance
Contributions Act, and (ii) cooperate with each other to avoid, to the
extent possible, the filing of more than one IRS Form W-2 with respect to each
Phyhealth Employee for the calendar year in which the Dividend occurs. PHYH and
Phyhealth shall each bear its responsibility for payroll tax obligations and for
the proper reporting to the appropriate Governmental Authorities of compensation
earned by their respective employees after the Dividend Date, including
compensation related to the exercise of options.

       

      Section 6.4    
No Third Party
Beneficiaries. Nothing contained in this Article VI, express or
implied: (i) shall be construed to establish, amend, or modify any benefit
plan, program, agreement or arrangement; (ii) shall alter or limit the
ability of PHYH or Phyhealth, or any of their respective Affiliates to amend,
modify or terminate any benefit plan, program, agreement or arrangement at any
time assumed, established, sponsored or maintained by any of them; (iii) is
intended to confer upon any current or former employee any right to employment
or continued employment for any period of time by reason of this
Article VI, or any right to a particular term or condition of employment;
or (iv) is intended to confer upon any Person (including employees,
retirees, or dependents or beneficiaries of employees or retirees) any right as
a third-party beneficiary of this Agreement.

       

      Section 6.5    
Non-Solicitation of
Employees. Without the prior written consent of PHYH, Phyhealth shall
not, and shall cause each Phyhealth Subsidiary not to, for a period of one
(1) year from and after the Dividend Date, either directly or indirectly,
solicit for employment any senior or key employee of PHYH. Without the prior
written consent of Phyhealth, PHYH shall not, for a period of one (1) year
from and after the Dividend Date, either directly or indirectly, solicit for
employment any senior or key employee of Phyhealth or any Phyhealth Subsidiary.
Nothing in this Section 6.13 shall prohibit PHYH, Phyhealth or any of their
respective Subsidiaries from hiring any such senior or key employees if such
employees unilaterally (i) approach PHYH or Phyhealth, as the case may be,
on an unsolicited basis or (ii) respond to a widely-published recruitment
advertisement directed at the public in general.

       

      ARTICLE
VII

       

      INSURANCE
MATTERS

       

      Section 7.1    
Policies to be
Transferred. On or prior to the Dividend Date, Phyhealth and PHYH shall
take all actions necessary to transfer to Phyhealth any Insurance Arrangements
listed applicable to Phyhealth’s business.

       

      Section 7.2    
Administration; Other
Matters. From and after the Dividend Date, PHYH, on the one hand, and
Phyhealth and the Phyhealth Subsidiaries, on the other hand, shall become
responsible for coverage, at its sole cost and expense.

       

      
        
          
          

        

        
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      Section 7.3    
Cooperation;
Disagreements. The parties shall use commercially reasonable efforts to
cooperate with respect to the various insurance matters contemplated by this
Agreement.

       

      ARTICLE
VIII

       

      TAX
MATTERS

       

      Section 8.1    
Tax Matters
Agreement.

       

      (a)    
On or before the Dividend Date, Phyhealth and PHYH shall enter into a Tax
Matters Agreement, substantially in the form of Exhibit I (the
“Tax Matters
Agreement”) providing for the allocation and payment, following the
Dividend Date, of any and all Liabilities relating to Taxes and other Tax
matters.

       

       (b)    
Except to the extent that this Section 8.1 or another provision of this
Agreement expressly indicates, this Agreement shall not govern any Tax matters,
and any and all Liabilities relating to Taxes shall be governed exclusively by
the Tax Matters Agreement.

       

      (c)    
Notwithstanding any other provision of the Tax Matters Agreement, all employment
Taxes (including, but not limited to federal and state withholding Taxes, FICA,
FUTA and state disability payments) for periods prior to the Dividend Date,
relating to the employment of Phyhealth Employees and PHYH Transferred
Employees, shall be obligations of Phyhealth and, to the extent any payments
with respect thereto are made by PHYH following the Redemption Date, Phyhealth
shall reimburse PHYH for such payments.

       

      ARTICLE
IX

       

      ADDITIONAL
COVENANTS

       

      Section 9.1    
Provision of Corporate
Minute Books and Corporate Seals. Prior to or as promptly as practicable
following the Dividend Date, PHYH shall deliver to Phyhealth each corporate
minute book and corporate seal in their possession that relates to Phyhealth or
any of the Phyhealth Subsidiaries. From and after the Dividend, each such
corporate minute book and corporate seal shall be the property of
Phyhealth.

       

      Section 9.2    
Access to Corporate
Records. Subject to the provisions hereof, from and after the date
hereof, PHYH shall afford to Phyhealth, Phyhealth Subsidiaries and its
Representatives reasonable access and duplicating rights, during normal business
hours and upon reasonable advance notice, to all books and records of the
Phyhealth, including, without limitation, stock ledgers and certificates of each
corporation and documentation relating to the capital stock and Phyhealth Assets
and Phyhealth Liabilities, including, in each case, all active agreements,
active litigation files and government filings, corporate minute books and
corporate seals.

       

      Section 9.3    
Retention of
Records. Except as otherwise agreed in writing, or as otherwise provided
in the Separation Documents, each of Phyhealth and PHYH shall use commercially
reasonable efforts to preserve and keep (at such party’s sole cost and expense)
all Information in such party’s possession or under its control relating
directly and primarily to the business, Assets or Liabilities of the other,
until the seventh anniversary of the Dividend Date, and 

       

      
        
          
          

        

        
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      until such time, shall not destroy any such Information without first using
commercially reasonable efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession of
such Information prior to such destruction.

       

      Section 9.4    
Access to
Information. From and after the Dividend Date, each of Phyhealth and PHYH
shall afford to the other and to the other’s Representatives reasonable access
and duplicating rights, during normal business hours and upon reasonable advance
notice, to all Information within the possession or control of such party
relating to the other party’s business, Assets or Liabilities or relating to or
arising in connection with the relationship between the parties on or prior to
the Dividend Date, insofar as such access is reasonably required for a
reasonable purpose, subject to the provisions below regarding Privileged
Information. Without limiting the foregoing and except as otherwise provided in
the Separation Documents, Information may be requested for audit, accounting,
claims, litigation and Tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations.

       

      In
furtherance of the foregoing:

       

      (a)    
Each party hereto acknowledges that:

       

      (i)    
Each of Phyhealth and PHYH has or may obtain Privileged
Information;

       

      (ii)    
there are a number of common matters affecting each or both of Phyhealth and
PHYH, and each have a common legal interest in the preservation of the
confidential status of the Proprietary Information relating to business of
Phyhealth or Information or relating to or arising in connection with the
relationship between the parties on or prior to the Dividend Date;
and

       

      (iv)    
both Phyhealth and PHYH intend that the Transactions contemplated hereby and by
the other Separation Documents and any transfer of Privileged Information in
connection therewith shall not operate as a waiver of any applicable
privilege.

       

      (b)    
Each of Phyhealth and PHYH agrees not to disclose or otherwise waive any
privilege attaching to any Privileged Information, or rights attaching to any
Proprietary Information relating to the business of Phyhealth and PHYH,
respectively, or relating to or arising in connection with the relationship
between Phyhealth and PHYH on or prior to the Dividend Date, without providing
prompt written notice to and obtaining the prior written consent of the other,
which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that
Phyhealth and PHYH may make such disclosure or waiver with respect to Privileged
Information, or rights any Proprietary Information if such Information relates
solely to the pre-Separation business of the other.

       

      Section 9.5    
Confidentiality. The
parties agree that with respect to Confidential Information, from and after the
Dividend Date, (i) each of Phyhealth and PHYH shall, and shall use
commercially reasonable efforts to cause its employees, Affiliates and
Representatives to, preserve the confidentiality of all such Confidential
Information obtained by it prior to the Dividend Date or furnished to it
pursuant to this Agreement or the other Separation Documents, (ii) neither
Phyhealth nor PHYH shall, and each of Phyhealth and PHYH shall use commercially
reasonable efforts to 

       

      
        
          
          

        

        
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      cause its employees, Affiliates and Representatives not to, disclose or use
such Confidential Information and (iii) Phyhealth shall not, and shall use
commercially reasonable efforts to cause its employees, Affiliates and
Representatives not to, disclose or use any such Confidential Information
obtained by it prior to the Dividend Date in connection with any Contract or
other arrangement subject to a confidentiality agreement or other non-disclosure
arrangement, which Contract or arrangement will not be assigned to or assumed by
Phyhealth pursuant to this Agreement, except, in each case, as is otherwise
expressly permitted pursuant to this Agreement or the other Separation
Documents. Notwithstanding anything in the foregoing to the contrary, both
Phyhealth and PHYH may use, but not disclose without written mutual agreement,
Corporate Information or Separation Information in carrying out the purposes of
this Agreement and in the ordinary course of their respective businesses.

       

      Section 9.6    
Cooperation with
Respect to Government Reports and Filings. PHYH on the one hand, and
Phyhealth, on the other hand, agree to provide the other or their respective
Affiliates, with such cooperation and Information as may be reasonably requested
by the other in connection with the preparation or filing of any government
report or other government filing contemplated by this Agreement or the other
Separation Documents or in conducting any other government proceeding relating
to the Transactions, or relating to or in connection with the relationship
between the Groups on or prior to the Dividend Date. Such cooperation and
Information shall include, without limitation, promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Governmental Authority which relate to the other. Each party shall make its
employees and facilities available during normal business hours and on
reasonable prior notice to provide an explanation of any documents or
Information provided hereunder. The reasonable out-of-pocket expenses incurred
in the provision of such cooperation and assistance, to the extent related to
filings with Governmental Authorities to effect the Separation, shall be borne
equally by Phyhealth and PHYH, and otherwise shall be paid by the party
requesting such assistance.

       

      Section 9.7    
Certain Limitations
with Respect to Information.

       

      (a)    
Any Information owned by PHYH, on the one hand, or Phyhealth or a Phyhealth
Subsidiary, on the other hand, that is provided to a requesting party pursuant
to this Agreement or any other Separation Document shall be deemed to remain the
property of the providing party. Unless specifically set forth herein, nothing
contained in this Agreement shall be construed as granting or conferring rights
of license or otherwise in any such Information.

       

      (b)    
A party providing Information hereunder or under any other Separation Document
shall be entitled to be reimbursed by the requesting party for the reasonable
out-of-pocket expenses, if any, of creating, gathering and copying such
Information, to the extent that such costs are incurred for the benefit of the
requesting party. Except as may be otherwise specifically provided elsewhere in
this Agreement or in any of the Separation Documents, such costs shall be
computed by the providing party using methodologies and procedures that bear a
reasonable relationship to the actual cost of providing such
Information.

       

      (c)    
The rights and obligations granted under this Article IX are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any other
Separation Document and in any applicable Contracts with third parties, as well
as any restrictions and obligations imposed by Applicable Law (including with
respect to medical and other information privacy rights of
individuals).

       

      
        
          
          

        

        
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      Section 9.8    
Protective
Arrangements. Subject hereto, in the event that Phyhealth or PHYH
receives any demand under lawful process or from any Governmental Authority to
disclose or provide Confidential Information, or relating to or arising in
connection with the relationship between the Groups on or prior to the Dividend
Date, that is subject to the confidentiality provisions hereof or otherwise
constitutes Privileged Information, such party shall notify the other party
prior to disclosing or providing such Confidential Information in order to
enable the other party to seek an appropriate protective order or other remedy,
or to take steps to resist or narrow the scope of such request or legal process,
and the Person that received such request shall cooperate at the expense of the
requesting party in seeking any reasonable protective arrangements requested by
such requesting party. If a protective order or other remedy is not obtained and
disclosure of such Confidential Information is required, the Person that
received such request may so disclose only that portion of such Confidential
Information that such Person has been advised by counsel is legally required. In
any such event the disclosing Person will use commercially reasonable efforts to
ensure that all such Confidential Information and other information that is so
disclosed will be afforded confidential treatment.

       

      Section 9.9    
Further
Assurances. In addition to the actions specifically provided for
elsewhere in this Agreement, each of the parties hereto shall use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things reasonably necessary, proper or advisable under Applicable
Laws, regulations and agreements to consummate and make effective the
Transactions contemplated by this Agreement and the other Separation Documents.
Without limiting the foregoing, each party hereto shall cooperate with the other
party, and execute and deliver, or use reasonable best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to obtain all Consents under any permit, license,
agreement, indenture or other instrument, and take all such other actions as
such party may reasonably be requested to take by the other party hereto from
time to time, consistent with the terms of this Agreement and the Separation
Documents, in order to effectuate the provisions and purposes of this Agreement
and the other Separation Documents and the transfers of Phyhealth Assets and the
other Transactions contemplated hereby and thereby. Without limiting the
foregoing, each party will, at the reasonable request of any other party, take
such other actions as may be reasonably necessary to vest in such other party
all of its right, title and interest in and to all Assets to be transferred to
such other party pursuant to the terms of this Agreement, free and clear of any
encumbrance, if and to the extent it is practicable to do so. Notwithstanding
the foregoing or anything in this Agreement or any other Separation Document to
the contrary, no Group shall be required to make any payment, incur or become
subject to any Liability, agree to any restriction, occur any event that would
be adverse to it in order to obtain any such Consent.

       

      Section 9.10    
Continuing
Indemnification Obligation. Following the Dividend Date, PHYH shall honor
the rights of any director, officer or employee of Phyhealth or a Phyhealth
Subsidiary to seek indemnification under any certificate of incorporation or
bylaws of PHYH or any of its predecessors or Subsidiaries, or under any
indemnification agreements or arrangements, arising out of or relating to
actions or inactions of such directors or officers prior to the Dividend
Date.

       

      
        
          
          

        

        
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      ARTICLE
X

       

      MUTUAL RELEASE – NO
REPRESENTATIONS OR WARRANTIES

       

      Section 10.1    
Mutual Release.
From and after the Dividend Date and except as specifically set forth in this
Agreement or any of the other Separation Documents, EACH OF PHYHEALTH, ON THE
ONE HAND, AND PHYH, ON THE OTHER HAND (ON ITS OWN BEHALF AND ON BEHALF OF ITS
RESPECTIVE SUBSIDIARIES, SUCCESSORS AND ASSIGNS), RELEASES AND FOREVER
DISCHARGES THE OTHER AND ITS AFFILIATES AND ITS AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, RECORD AND BENEFICIAL SECURITY HOLDERS (INCLUDING,
WITHOUT LIMITATION, TRUSTEES AND BENEFICIARIES OF TRUSTS HOLDING SUCH
SECURITIES), ADVISORS AND REPRESENTATIVES (IN THEIR RESPECTIVE CAPACITIES AS
SUCH) AND THEIR RESPECTIVE HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS AND
ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”),
OF AND FROM ALL DEBTS, DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, ACCOUNTS,
COVENANTS, CONTRACTS, AGREEMENTS, DAMAGES, CLAIMS (INCLUDING, WITHOUT
LIMITATION, CLAIMS FOR DIRECT, CONSEQUENTIAL, EXEMPLARY, TREBLE AND PUNITIVE
DAMAGES) AND LIABILITIES WHATSOEVER OF EVERY NAME AND NATURE, BOTH IN LAW AND IN
EQUITY, WHICH THE RELEASING PARTY HAS OR EVER HAD, WHICH ARISE OUT OF OR RELATE
TO, IN WHOLE OR IN PART, (A) THE BUSINESS, ASSETS, LIABILITIES AND
OPERATIONS OF THE OTHER PARTY AND ITS SUBSIDIARIES AND (B) EVENTS,
CIRCUMSTANCES OR ACTIONS, WHETHER KNOWN OR UNKNOWN, TAKEN BY SUCH OTHER PARTY
OCCURRING OR FAILING TO OCCUR, OR ANY CONDITIONS EXISTING, ON OR PRIOR TO THE
DIVIDEND DATE; provided, however, that the
foregoing general release shall not apply to (a) any party’s rights to
enforce this Agreement or the other Separation Documents or any of the
instruments delivered pursuant to this Agreement or the other Separation
Documents; (b) any Liability the release of which would result in the
release of any Person other than a Released Party (provided that the
parties agree not to bring suit or permit any of their Affiliates to bring suit
against any Released Party with respect to any Liability to the extent such
Released Party would be released with respect to such Liability by this
Section 10.1 but for this clause (b)); (c) any Liability for the
unpaid purchase price for the sale, lease, construction or receipt of goods,
property or services purchased, obtained or used in the ordinary course of
business by one Group from the other Group prior to the Dividend Date;
(d) any Liability for unpaid amounts for products or services or refunds
owing on products or services due on a value-received basis for work done by one
Group at the request or on behalf of the other Group; or (e) any Liability
that the parties may have with respect to indemnification or contribution
pursuant to this Agreement for claims brought against the parties by third
Persons, which Liability shall be governed by the provisions of Article XI
and, if applicable, the appropriate provisions of the other Separation
Documents. The parties hereto acknowledge that the foregoing general release
shall not apply to any Liabilities or obligations assigned by the parties to
third parties prior to the Dividend Date. Nothing in this Agreement shall impair
any of the rights of any directors, officers or employees of PHYH or Phyhealth,
or any of their respective Subsidiaries, to seek indemnification under any
certificate of incorporation or bylaws of PHYH or any of its predecessors or
Subsidiaries, or under any indemnification agreements, arising out of or
relating to actions or inactions of such directors, officers or employees prior
to the Dividend Date.

       

      
        
          
          

        

        
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      Section 10.2    
Waiver of
Conflict. The parties acknowledge that each of Phyhealth and the
Phyhealth Subsidiaries, on the one hand, and PHYH, on the other hand, are both
currently represented by attorneys and patent agents employed by PHYH. Each of
Phyhealth (on behalf of itself and the Phyhealth Subsidiaries), on the one hand,
and PHYH (on behalf of itself and the Phyhealth Subsidiaries), on the other
hand, waives any conflict with respect to such common representation that may
arise before, at or after the Dividend Date.

       

      Section 10.3
    No Representations or
Warranties. Phyhealth agrees and acknowledges that neither PHYH nor any
of the Phyhealth Subsidiaries nor any of their respective Affiliates is, in this
Agreement or in any other agreement or document, making any representation or
warranty to Phyhealth or any of the Phyhealth Subsidiaries as to any aspect of
Phyhealth, Phyhealth Assets or Phyhealth Liabilities or as to any Consents, it
being understood and agreed that Phyhealth and the Phyhealth Subsidiaries shall
take Phyhealth Assets, and shall assume, perform and discharge Phyhealth
Liabilities, on an “AS IS, WHERE IS” basis. PHYH agrees and acknowledges that
neither Phyhealth nor any of the Phyhealth Subsidiaries nor any of their
respective Affiliates is, in this Agreement or in any other agreement or
document, making any representation or warranty to PHYH or any of the Phyhealth
Subsidiaries as to any Consents. Phyhealth and the Phyhealth Subsidiaries shall
bear the economic and legal risk that any conveyance of Phyhealth Assets
contemplated hereby shall be insufficient to convey anything more than all of
PHYH’s or the applicable Phyhealth Subsidiary’s right, title and interest to the
applicable Phyhealth Assets.

       

      ARTICLE
XI

       

      INDEMNIFICATION

       

      Section 11.1    
Phyhealth’s Agreement
to Indemnify PHYH. Subject to the terms and conditions set forth in this
Agreement, from and after the Dividend Date, Phyhealth shall indemnify, defend
and hold harmless PHYH and the Phyhealth Subsidiaries and their respective
successors and assigns (collectively, the “PHYH Corporate Indemnified
Parties”) from, against and in respect of any and all Indemnifiable
Losses of the PHYH Corporate Indemnified Parties arising out of, relating to or
resulting from, directly or indirectly:

       

      (a)    
the failure of Phyhealth, any Phyhealth Subsidiary or any other Person to pay,
perform, satisfy or otherwise promptly discharge any Phyhealth Group Liabilities
in accordance with their respective terms, whether prior to or after the
Dividend Date or the date hereof;

       

      (b)    
Phyhealth, any Phyhealth Group Liability, and any Phyhealth Group
Asset;

       

      (c)    
Phyhealth’s failure to observe from and after the Dividend Date its obligations
under this Agreement or any of the other Separation Documents;

       

      (d)    
Any and all Liabilities arising out of or relating to the Separation, the
Dividend, and/or the Registration Statement including, without limitation, any
amounts it is required to pay to the Indemnified Parties pursuant to
Section 11.3 hereof (together, the “Transaction
Liabilities”) and (ii) all amounts PHYH is required to pay to
directors of Phyhealth pursuant to the Indemnification Agreements (in addition
to any indemnification provided for in Section 11.1(c) above, but only to
the extent not arising out of or relating to an PHYH Indemnified Party’s failure
to perform its obligations arising out of or relating thereto);

       

      
        
          
          

        

        
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      (e)    
Liabilities arising out of or relating to the oversight and/or management of the
businesses and affairs of PHYH or one or both of the Groups (collectively, the
“PHYH Management
Activities”) prior to the Dividend Date; provided, that
Phyhealth’s responsibility for any such Liabilities shall be based on an
equitable allocation of such Liabilities between Phyhealth and PHYH, based on
the extent to which, as applicable: (i) such Liabilities arose out of or
relate to the Phyhealth Business, Phyhealth Assets, and/or Phyhealth Liabilities
prior to the Dividend Date, on the one hand, and the PHYH Business, the PHYH
Assets, and/or the PHYH Liabilities prior to the Dividend Date, on the other
hand, and/or (ii) Phyhealth or PHYH, as the case may be, benefited from the
relevant PHYH Management Activities prior to the Dividend Date.

       

      Section 11.2    
PHYH’s Agreement to
Indemnify Phyhealth. Subject to the terms and conditions set forth in
this Agreement, from and after the Dividend Date, PHYH shall indemnify, defend
and hold harmless Phyhealth and the Phyhealth Subsidiaries and their respective
successors and assigns (collectively, the “Phyhealth Corporate
Indemnified Parties”) from, against and in respect of any and all
Indemnifiable Losses of the Phyhealth Corporate Indemnified Parties arising out
of, relating to or resulting from, directly or indirectly:

       

      (a)    
the failure of PHYH to pay, perform, satisfy or otherwise promptly discharge any
Phyhealth Liabilities in accordance with their respective terms, whether prior
to or after the Dividend Date or the date hereof;

       

      (b)    
the Phyhealth Group, and any Phyhealth Asset;

       

      (c)    
PHYH’s failure to observe from and after the Dividend Date its obligations under
this Agreement or any of the other Separation Documents;

       

      (d)    
Liabilities arising out of or relating to the PHYH Management Activities prior
to the Dividend Date; provided, that PHYH’s
responsibility for any such Liabilities shall be based on an equitable
allocation of such Liabilities between Phyhealth and PHYH, based on the extent
to which, as applicable: (i) such Liabilities arose out of or relate to the
Phyhealth Business, Phyhealth Assets, and/or Phyhealth Liabilities prior to the
Dividend Date, on the one hand, and the PHYH Business, the PHYH Assets, and/or
the PHYH Liabilities prior to the Dividend Date, on the other hand, and/or
(ii) Phyhealth or PHYH as the case may be, benefited from the relevant PHYH
Management Activities prior to the Dividend Date.

       

      Section 11.3    
Agreement to Indemnify
Officers, Directors and Others. From and after the Dividend Date, each of
PHYH and Phyhealth shall jointly and severally indemnify, defend and hold
harmless each of the officers, directors, employees, agents and advisors of
PHYH, Phyhealth, and the Phyhealth Subsidiaries, and their respective successors
and assigns (such PHYH indemnified parties, collectively with the PHYH Corporate
Indemnified Parties, the “PHYH Indemnified
Parties”, and such Phyhealth indemnified parties, collectively with the
Phyhealth Corporate Indemnified Parties, the “Phyhealth Indemnified
Parties”) from, against and in respect of any and all Indemnifiable
Losses arising out of, relating to or resulting from, directly or indirectly,
the Transaction Liabilities.

       

      Section 11.4    
Other
Liabilities. This Article XI shall not be applicable to: any
Indemnifiable Losses relating to, arising out of or due to any breach of the
provisions of any other Contract (other than this Agreement or the other
Separation Documents) between or among PHYH, on the one hand, and Phyhealth and
any of the Phyhealth Subsidiaries, on the other hand, which shall be governed by
the terms of such other Contract.

       

      
        
          
          

        

        
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      ARTICLE
XII

       

      TERMINATION
AND AMENDMENT

       

      Section 12.1    
Termination at any
Time by Board Approval. This Agreement may be terminated and the
Transactions, including, without limitation, the Separation and the Dividend,
may be abandoned, in the sole discretion of the Board, at any time prior to the
date of first mailing of the Notice of Dividend. Thereafter, this Agreement may
be terminated upon the issuance by a Governmental Authority of an effective stop
order with respect to the Registration Statement or an order, injunction or
decree that shall prohibit or prevent the consummation of the Separation and the
transactions contemplated hereunder. In the event of such termination, no party
hereto or to any other Separation Document shall have any Liability to any
Person by reason of this Agreement or any other Separation
Document.

       

      Section 12.2    
Amendment.
Prior to the Dividend, this Agreement may be amended, modified or supplemented
at any time as determined by the Board, and shall be evidenced by a written
agreement signed by all of the parties hereto. Following the Dividend, this
Agreement may be amended, modified or supplemented at any time only by the
parties hereto through a written agreement signed by all of the parties
hereto.

       

      ARTICLE
XIII

       

      DISPUTE
RESOLUTION

       

      Section 13.1    
Dispute Resolution
Procedures. If a controversy, claim or dispute of whatever nature arising
out of or relating to this Agreement or any of the other Separation Documents or
the breach, termination, enforceability or validity thereof which has not been
resolved in the normal course of business arises between the parties (a “Dispute”), the
parties agree to use and follow the dispute resolution procedures of this
Article XIII, except where an injunction, specific performance or other
equitable relief is sought. At such time as the Dispute is resolved under this
Article XIII, interest (at a rate per annum, compounded daily, equal to the
Prime Rate) shall be paid to the party receiving any disputed monies to
compensate for the lapsed time between the date such disputed amount originally
was paid or should have been paid through the date monies are paid in settlement
of the Dispute.

       

      Section 13.2    
Mediation. If
any Dispute has not been resolved by the parties, the parties agree that such
Dispute shall be referred to mediation. Unless the parties agree otherwise, the
mediation shall be conducted in accordance with the CPR Institute for Dispute
Resolution Model Procedure for Mediation of Business Disputes in effect on the
date of this Agreement by a mediator mutually selected by the parties. Within
fifteen (15) Business Days after the mediator has been selected as provided
above, both parties and their respective attorneys shall meet with the mediator
for one mediation session of at least four (4) hours, it being agreed that
each party representative attending such mediation session shall be a Senior
Party Representative or member of the board of directors with authority to
settle the Dispute. If the Dispute cannot be settled at such mediation session
or at any mutually agreed continuation thereof, either party may give the other
and the mediator a written notice declaring the mediation process at an
end.

       

      
        
          
          

        

        
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      Section 13.3    
Arbitration. If
the Dispute has not been resolved by the dispute resolution procedures described
in Section 13.2 above, the parties agree that any such Dispute shall be
settled by binding arbitration before the American Arbitration Association
(“AAA”) in San
Francisco, California pursuant to the Commercial Rules of the AAA. Any Dispute
subject to arbitration pursuant to this Section 13.7 shall be heard and
determined by three (3) arbitrators. Each of PHYH and Phyhealth shall
appoint one arbitrator within fifteen (15) Business Days of the referral of
such Dispute to arbitration. The two party-appointed arbitrators shall have ten
(10) Business Days from the appointment of the second arbitrator to agree
on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not
timely appointed by either PHYH or Phyhealth shall be appointed by the AAA. If
any appointed arbitrator declines, resigns, becomes incapacitated, or otherwise
refuses or fails to serve or to continue to serve as an arbitrator, the party or
arbitrators entitled to appoint such arbitrator shall promptly appoint a
successor. Any arbitrators selected to resolve the Dispute shall be bound
exclusively by the laws of the State of Delaware without regard to its choice of
law rules. Any decisions of award of the arbitrators shall be in writing and
will be final and binding upon the parties and may be entered as a judgment by
the parties hereto. Any rights to appeal or review such award by any court or
tribunal are hereby waived to the extent permitted by law.

       

      Section 13.3    
Costs. The
costs of any mediation or arbitration pursuant to this Article XIII shall
be shared equally between PHYH and Phyhealth; provided, however, that each
party shall be responsible for its own costs and expenses, including without
limitation, legal fees incurred in connection therewith.

       

      Section 13.4    
Confidentiality.  All
negotiations, conferences, discussions, mediation and arbitration shall be
Confidential Information. All negotiations, conferences, discussions and
mediation shall be treated as compromise and settlement negotiations. Nothing
said or disclosed, nor any document produced, in the course of such
negotiations, conferences, discussions and mediation that is not otherwise
independently discoverable, shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future mediation,
arbitration, litigation or any other judicial or administrative
proceeding.

       

      ARTICLE
XIV

       

      GENERAL
PROVISIONS

       

      Section 14.1    
Expenses.
Except to the extent otherwise provided for in the Separation Documents, all
out-of-pocket costs and expenses with respect to the Transactions contemplated
hereby and by the other Separation Documents (i) incurred on or prior to
the Dividend Date, shall be borne by Phyhealth, and (ii) incurred following
the Dividend Date, shall be borne by the party incurring such
expense.

       

      Section 14.2    
Late Payments.
Except as expressly provided to the contrary in this Agreement or in any other
Separation Document, any amount not paid when due pursuant to this Agreement or
any other Separation Document (and any amounts billed or otherwise invoiced or
demanded and properly payable that are not paid within thirty (30) days of
such bill, invoice or other demand) shall accrue interest at a rate per annum,
compounded daily, equal to the Prime Rate.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      Section 14.3    
Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of Delaware, without reference to choice of law principles, including matters of
construction, validity and performance.

       

      Section 14.4
    Notices. All notices,
requests, demands, waivers and communications required or permitted to be given
under this Agreement shall be in writing (which shall include notice by telecopy
or like transmission) and shall be deemed given (i) on the day delivered
(or if that day is not a Business Day, on the first following Business Day) when
(x) delivered personally against receipt or (y) sent by overnight
courier, (ii) on the day when transmittal confirmation is received if sent
by telecopy (or if that day is not a Business Day, on the first following
Business Day) and (iii) on the third Business Day after mailed by certified
or registered first-class mail to the parties at the parties’ business addresses
(or to such other addresses as a party may have specified by notice given to the
other parties hereto pursuant to this provision).

       

      Section 14.5    
Third-Party
Beneficiaries. Except as provided herein with respect to indemnification
of Phyhealth Indemnified Parties and PHYH Indemnified Parties hereunder, nothing
in this Agreement shall confer any rights upon any Person or entity other than
the parties hereto and their respective heirs, successors and permitted
assigns.

       

      Section 14.6    
Entire
Agreement. This Agreement and the other Separation Documents, together
with the Disclosure Letter and all schedules, appendices, certificates,
instruments and agreements delivered pursuant hereto and thereto, contain the
entire understanding of the parties hereto and thereto with respect to the
subject matter contained herein and therein, and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter.

       

      Section 14.7    
Headings. The
article, section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to “Articles”,
“Sections”, or “Appendices” shall be deemed to be references to Articles or
Sections hereof or Appendices hereto unless otherwise indicated. All references
herein to “Sections” of the Disclosure Letter shall be deemed to be references
to the Disclosure Letter unless otherwise indicated.

       

      Section 14.8    
Schedules. The
Disclosure Letter and all Exhibits referenced in this Agreement and attached
hereto are incorporated into this Agreement by reference and made a part hereof.
The parties hereto shall be entitled to supplement or amend the Disclosure
Letter at any time prior to the Dividend Date.

       

      Section 14.9    
Counterparts.
This Agreement may be executed in one or more counterparts, which may be
delivered by facsimile, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

       

      Section 14.10    
Parties in Interest;
Assignment; Successors. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement shall inure to the benefit of and be binding
upon Phyhealth and PHYH and their respective Subsidiaries, successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies under or by reason of this
Agreement.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Section 14.11    
Severability;
Enforcement. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, each party agrees that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by
law, and each party hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such
restriction.

       

      Section 14.12    
Remedies. The
parties agree that money damages or other remedy at law would not be a
sufficient or adequate remedy for any breach or violation of, or a default
under, this Agreement by them and that in addition to all other remedies
available to them, each of them shall be entitled to the fullest extent
permitted by law to an injunction restraining such breach, violation or default
or threatened breach, violation or default and to any other equitable relief,
including specific performance, without bond or other security being
required.

       

      Section 14.13    
Force Majeure.
No party shall be deemed in default of this Agreement or any other Separation
Document to the extent that any delay or failure in the performance of its
obligations under this Agreement or any other Separation Document results from
any cause beyond its reasonable control and without its fault or negligence,
such as acts of God, acts of civil or military authority, embargoes, epidemics,
war, riots, insurrections, fires, explosions, earthquakes, floods, unusually
severe weather conditions, power failures, communication failures including
internet disruptions, equipment failures, labor problems or unavailability of
parts. In the event of any such excused delay, the time for performance shall be
extended for a period equal to the time lost by reason of the
delay.

       

      Section 14.14    
Waivers of
Default. Waiver by any party of any default by any other party of any
provision of this Agreement or any other Separation Document (a) shall be
effective only if in writing; and (b) if given, shall not be deemed a
waiver by the waiving party of any subsequent or other default, nor shall it
prejudice the rights of the other party.

       

      Section 14.15    
Interpretation.
In the event of a conflict between a provision of this Agreement and any
provision of any other Separation Document, any specific provision of the
applicable Separation Document shall control. Words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other gender as the context requires. The terms “hereof,”
“herein,” and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement taken as a whole (including all
of the Schedules, Exhibits and Appendices hereto) and not to any particular
provision of this Agreement. Article, Section, Exhibit, Schedule and
Appendix references are to the Articles, Sections, Exhibits, Schedules and
Appendices to this Agreement unless otherwise specified. The word “including”
and words of similar import when used in this Agreement shall mean “including,
without limitation,” unless the context otherwise requires or unless otherwise
specified. The word “or” shall not be exclusive. The term “dollars” and “$”
shall mean United States dollar.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF, each of
the parties has caused this Separation Agreement to be duly executed on its
behalf by its officers thereunto duly authorized, all as of the day and year
first above written.

       

      
        	 
      	 
      	 
      	 
      
	
                PHYSICIANS
      HEALTHCARE MANAGEMENT GROUP, INC.

              	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	 /s/
      Robert L. Trinka	
                
                   

                   

                

              
	
                Name:

              	 
      	
                Robert
      L. Trinka

              
	
                Title:

              	 
      	
                President

              
	 
      	 
      
	
                PHYHEALTH
      CORPORATION

              	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	 /s/
      Robert L. Trinka	
                
                   

                   

                

              
	
                Name:

              	 
      	
                Robert
      L. Trinka

              
	
                Title:

              	 
      	
                President

              

      

      

      

        
          
             

          

          
            24Unassociated Document

    
      
        

        

      

      EXHIBIT
10.19

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      TAX
MATTERS AGREEMENT BETWEEN THE REGISTRANT

      AND
PHYHEALTH CORPORATION

      

       

       

       

       

       

       

      
 

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      

       

      TAX
MATTERS AGREEMENT

       

       

      by and
among

       

       

      PHYSICIANS
HEALTHCARE MANAGEMENT GROUP, INC.

       

       

      AND
ITS AFFILIATES,

       

      and

       

      PHYHEALTH
CORPORATION

       

      AND
ITS AFFILIATES,

       

       

       

       

       

       

       

       

       

       

       

      DATED
AS OF

       

      October
31, 2009

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      TAX
MATTERS AGREEMENT

       

      THIS TAX
MATTERS AGREEMENT (this “Agreement”) dated as of October 31, 2009, by and
between Physicians Healthcare Management Group, Inc., a Nevada corporation
(“PHYH”) and Phyhealth Corporation, a Delaware corporation (“Phyhealth”),
(collectively, the “Parties”) is entered into in connection with the Split-Off,
as per the Separation Agreement, between the same Parties, of the same date, to
which this Agreement is attached.

       

      W I T N E S S E T H:

       

      WHEREAS,
as of the date hereof, PHYH and its direct and indirect domestic subsidiaries
are members of an Affiliated Group, of which PHYH is the common
parent;

       

      WHEREAS,
PHYH, acting through its direct and indirect subsidiaries, currently conducts a
number of businesses, including (i) the PHYH Business, and (ii) the
Phyhealth Business;

       

      WHEREAS,
the Board of Directors of PHYH has determined that it is appropriate, desirable
and in the best interests of PHYH and its stockholders to separate PHYH into two
separate, independent and publicly traded companies, (i) one comprising the
Phyhealth Business, which shall be owned and conducted, directly or indirectly,
by Phyhealth, and (ii) one comprising the PHYH Business which shall
continue to be owned and conducted, directly or indirectly, by
PHYH;

       

      WHEREAS,
in order to effect such separation, (i) PHYH will contribute to the capital
of Phyhealth the assets of the Phyhealth Business, and (ii) stock of
Phyhealth will be issued as a dividend (the “Split-Off”).

       

      WHEREAS,
PHYH and Phyhealth have determined that it is necessary and desirable, as part
of the Split-Off, to allocate, transfer, retain or assign to Phyhealth, the
Phyhealth Group Assets; and

       

      WHEREAS,
in contemplation of the Split-Off, pursuant to which the Phyhealth Group will
cease to be members of the Affiliated Group of which PHYH is the parent, the
Parties have determined to enter into this Agreement, setting forth their
agreement with respect to certain tax matters.

       

      AGREEMENT

       

      NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the Parties hereby agree as follows:

       

      
        	
                Section 1.

              	
                Definitions.

              

      

       

      “Affiliated Group” means an
affiliated group of corporations within the meaning of section 1504(a)(1) of the
Code that files a consolidated return for United States federal Income Tax
purposes.

       

      “After Tax Amount” means any
additional amount necessary to reflect the hypothetical Tax consequences of the
receipt or accrual of any payment required to be made under this Agreement
(including payment of an additional amount or amounts hereunder and the effect
of the deductions available for interest paid or accrued and for Taxes such as
state and local Income Taxes), determined by using the highest applicable
statutory corporate Income Tax rate (or rates, in the case of an item that
affects more than one Tax) for the relevant taxable period (or portion
thereof).

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Agreement” shall have the
meaning set forth in the preamble hereto.

       

      “PHYH” shall have the meaning
set forth in the preamble hereto.

       

      “PHYH Affiliate” means any
corporation or other entity directly or indirectly “controlled” by PHYH where
“control” means the ownership of fifty percent (50%) of the ownership
interests of such corporation or other entity (by vote or value) or the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such corporation or other entity, but
at all times excluding Phyhealth and all Phyhealth Affiliates.

       

      “PHYH Business” means all of
the businesses and operations conducted by PHYH and the PHYH Affiliates,
excluding the Phyhealth Business at any time, whether prior to, or after the
Split-Off Date.

       

      “PHYH Group” means the
Affiliated Group, or similar group of entities as defined under corresponding
provisions of the laws of other jurisdictions, of which PHYH is the common
parent corporation, and any corporation or other entity which may be, may have
been or may become a member of such group from time to time, but excluding any
member of the Phyhealth Group.

       

       “Audit” means any audit,
assessment of Taxes, other examination by any Taxing Authority, proceeding, or
appeal of such a proceeding relating to Taxes, whether administrative or
judicial, including proceedings relating to competent authority
determinations.

       

       “Carryback Period” shall
have the meaning set forth in Section 3.05.

       

      “Phyhealth” shall have the
meaning set forth in the preamble hereto.

       

      “Phyhealth Affiliate” means
any corporation or other entity directly or indirectly “controlled” by Phyhealth
at the time in question, where “control” means the ownership of fifty percent
(50%) of the ownership interests of such corporation or other entity (by
vote or value) or the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such corporation or
other entity.

       

      “Phyhealth Group Assets” shall
mean the assets of Phyhealth after the Split-Off Date, as determined under the
Separation Agreement by and among the Parties.

       

      “Phyhealth Business” means the
business and operations conducted by Phyhealth and the Phyhealth Affiliates as
such business and operations will continue after the Split-Off
Date.

       

      “Phyhealth Business Records”
shall have the meaning set forth in Section 9.02(b).

       

      “Phyhealth Group” means the
Affiliated Group, or similar group of entities as defined under corresponding
provisions of the laws of other jurisdictions, of which Phyhealth will be the
common parent corporation immediately after the Split-Off and including any
corporation or other entity which may become a member of such group from time to
time.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Phyhealth Group Liabilities”
shall mean the liabilities of Phyhealth after the Split-Off Date, if any, as
determined under the Separation Agreement by and among the Parties.

       

       “Phyhealth Separate Tax Amount”
shall mean with respect to any Tax Return, the amount of Taxes
attributable to a Post-Split-Off Period that Phyhealth and each Phyhealth
Affiliate would have incurred if they had filed a consolidated return, combined
return or a separate return, as the case may be, separate from the members of
the PHYH Group, for the relevant Tax period, and such amount shall be computed
by PHYH in a manner consistent with (i) general Tax accounting principles,
(ii) the Code and the Treasury regulations promulgated thereunder, and
(iii) past practice.

       

      “Phyhealth Sharing Percentage”
means as of the close of business on the first trading day after the Split-Off
Date, the percentage of Phyhealth’s market capitalization as compared to the
combined market capitalization of PHYH and Phyhealth.

       

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

       

      “Combined Return” means any
Tax Return, other than with respect to United States federal Income Taxes, filed
on a consolidated, combined (including nexus combination, worldwide combination,
domestic combination, line of business combination or any other form of
combination) or unitary basis wherein Phyhealth or one or more Phyhealth
Affiliates join in the filing of such Tax Return (for any taxable period or
portion thereof) with PHYH or one or more PHYH Affiliates.

       

      “Consolidated Return” means
any Tax Return with respect to United States federal Income Taxes filed on a
consolidated basis wherein Phyhealth or one or more Phyhealth Affiliates join in
the filing of such Tax Return (for any taxable period or portion thereof) with
PHYH or one or more PHYH Affiliates.

       

      “Contribution” shall have the
meaning set forth in the recitals hereto.

       

       “Estimated Tax Installment
Date” means, with respect to United States federal Income Taxes, the
estimated Tax installment due dates prescribed in section 6655(c) of the Code
and, in the case of any other Tax, means any other date on which an installment
payment of an estimated amount of such Tax is required to be made.

       

       “Filing Party” shall
have the meaning set forth in Section 8.01.

       

      “Final Determination” means
the final resolution of liability for any Tax for any taxable period, by or as a
result of (i) a final and unappealable decision, judgment, decree or other
order by any court of competent jurisdiction; (ii) a final settlement with
the IRS, a closing agreement or accepted offer in compromise under section 7121
or section 7122 of the Code, or a comparable agreement under the laws of other
jurisdictions, which resolves the entire Tax liability for any taxable period;
(iii) any allowance of a refund or credit in respect of an overpayment of
Tax, but only after the expiration of all periods during which such refund may
be recovered by the jurisdiction imposing the Tax; or (iv) any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.

       

      “Income Tax” means any
federal, state, local or foreign Tax determined (in whole or in part) by
reference to net income, net worth, gross receipts or capital, or any such Taxes
imposed in lieu of such a Tax. For the avoidance of doubt, the term “Income Tax”
includes any franchise Tax, net worth, gross receipts, capital or any such Taxes
imposed in lieu of such a Tax.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      “Income Tax Return” means any
Tax Return relating to any Income Tax.

       

       “IRS” means the United
States Internal Revenue Service or any successor thereto, including its agents,
representatives, and attorneys.

       

       “Non-Income Tax Return”
means any Tax Return relating to any Tax other than an Income Tax.

       

      “Officer’s Certificate” means
a letter executed by an officer of PHYH or Phyhealth and provided to Tax Counsel
as a condition for the completion of a Tax Opinion or Supplemental Tax
Opinion.

       

      “Owed Party” shall have the
meaning set forth in Section 7.05.

       

      “Owing Party” shall have the
meaning set forth in Section 7.05.

       

       “Parties” shall have the
meaning set forth in the preamble hereto.

       

       “Ruling” means any
private letter ruling issued by the IRS in connection with the Split-Off in
response to a request for such a private letter ruling filed by PHYH (or any
PHYH Affiliate).

       

      “Ruling Documents” means
(i) the request for a Ruling filed with the IRS, together with any
supplemental filings or other materials subsequently submitted on behalf of
PHYH, the PHYH Affiliates and PHYH’s shareholders to the IRS, the appendices and
exhibits thereto, and any Ruling issued by the IRS to PHYH (or any PHYH
Affiliate) in connection with the Split-Off and (ii) any similar filings
submitted to, or rulings issued by, any other Taxing Authority in connection
with the Split-Off.

       

      “Separation Agreement” means
the separation agreement by and between PHYH and Phyhealth.

       

      “Sole Responsibility Item”
means any Tax Item for which the non-Filing Party has the entire economic
liability under this Agreement.

       

      “Split-Off” shall have the
meaning set forth in the recitals hereto.

       

      “Split-Off Date” means the
close of business on the date which the Split-Off is effected.

       

       “Supplemental Tax Opinion”
shall have the meaning set forth in Section 4.02(d).

       

      “Tax Asset” means any Tax Item
that has accrued for Tax purposes, but has not been realized during the taxable
period in which it has accrued, and that could reduce a Tax in another taxable
period, including a net operating loss, net capital loss, research and
development tax credit, investment tax credit, foreign tax credit, charitable
deduction or credit related to alternative minimum tax or any other Tax
credit.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       “Tax Benefit” means a
reduction in the Tax liability (or increase in refund or credit or any item of
deduction or expense) of a taxpayer (or of the Affiliated Group, or similar
group of entities as defined under corresponding provisions of the laws of any
other jurisdiction, of which it is a member) for any taxable period. Except as
otherwise provided in this Agreement, a Tax Benefit shall be deemed to have been
realized or received from a Tax Item in a taxable period only if and to the
extent that the Tax liability of the taxpayer (or of the Affiliated Group, or
similar group of entities as defined under corresponding provisions of the laws
of any other jurisdiction, of which it is a member) for such period, after
taking into account the effect of the Tax Item on the Tax liability of such
taxpayer (or of the Affiliated Group, or similar group of entities as defined
under corresponding provisions of the laws of any other jurisdiction, of which
it is a member) in the current period and all prior periods, is less than it
would have been had such Tax liability been determined without regard to such
Tax Item.

       

      “Tax Counsel” means a
nationally recognized law firm selected by PHYH to provide a Tax
Opinion.

       

      “Tax Detriment” means an
increase in the Tax liability (or reduction in refund or credit or any item of
deduction or expense) of a taxpayer (or of the Affiliated Group, or similar
group of entities as defined under corresponding provisions of the laws of any
other jurisdiction, of which it is a member) for any taxable period. Except as
otherwise provided in this Agreement, a Tax Detriment shall be deemed to have
been realized or incurred from a Tax Item in a taxable period only if and to the
extent that the Tax liability of the taxpayer (or of the Affiliated Group, or
similar group of entities as defined under corresponding provisions of the laws
of any other jurisdiction, of which it is a member) for such period, after
taking into account the effect of the Tax Item on the Tax liability of such
taxpayer (or of the Affiliated Group, or similar group of entities as defined
under corresponding provisions of the laws of any other jurisdiction, of which
it is a member) in the current period and all prior periods, is more than it
would have been had such Tax liability been determined without regard to such
Tax Item.

       

      “Tax Item” means any item of
income, gain, loss, deduction, expense or credit, or other attribute that may
have the effect of increasing or decreasing any Tax.

       

      “Tax Opinion” means an opinion
issued by Tax Counsel as one of the conditions to completing the Split-Off
addressing certain United States federal Income Tax consequences of the
Split-Off under section 355 of the Code.

       

      “Tax Return” means any return,
report, certificate, form or similar statement or document (including any
related or supporting information or schedule attached thereto and any
information return, amended tax return, claim for refund or declaration of
estimated Tax) required to be supplied to, or filed with, a Taxing Authority in
connection with the determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative requirements relating
to any Tax.

       

      “Taxes” means all federal,
state, local or foreign taxes, charges, fees, duties, levies, imposts, rates or
other assessments, including income, gross receipts, excise, property, sales,
use, license, capital stock, transfer, franchise, payroll, withholding, social
security, value added or other taxes, (including any interest, penalties or
additions attributable thereto) and a “Tax” shall mean any one of such
Taxes.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      “Taxing Authority” means any
governmental authority or any subdivision, agency, commission or authority
thereof or any quasi-governmental or private body having jurisdiction over the
assessment, determination, collection or imposition of any Tax (including the
IRS).

       

      
        	
                Section 2.

              	
                Preparation
      and Filing of Tax Returns.

              

      

       

      2.01.
PHYH’s
Responsibility. Subject to the other applicable provisions of this
Agreement, PHYH shall have sole and exclusive responsibility for the preparation
and filing of:

       

      (a) all
Consolidated Returns and all Combined Returns for any taxable period up to and
including the Dividend Date;

       

      (b) all
Income Tax Returns (other than Consolidated Returns and Combined Returns) with
respect to PHYH and/or any PHYH Affiliate for any taxable period;

       

      (c) all
Non-Income Tax Returns with respect to PHYH, any PHYH Affiliate, or the PHYH
Business or any part thereof for any taxable period; and

       

      (d) all
Non-Income Tax Returns with respect to Phyhealth, any Phyhealth Affiliate, or
the Phyhealth Business or any part thereof, that are required to be filed
(taking into account any extension of time which has been requested or received)
on or prior to the Split-Off Date.

       

      2.02.
Phyhealth’s
Responsibility. Phyhealth shall have sole and exclusive responsibility
for the preparation and filing of:

       

      (a) all
Income Tax Returns (other than Consolidated Returns and Combined Returns) with
respect to Phyhealth and/or any Phyhealth Affiliate for any taxable period that
are required to be filed after the Split-Off Date; and

       

      (b) all
Non-Income Tax Returns with respect to Phyhealth, any Phyhealth Affiliate, or
the Phyhealth Business or any part thereof, that are required to be filed
(taking into account any extension of time which has been requested or received)
after the Split-Off Date.

       

      2.03.
Agent. Subject
to the other applicable provisions of this Agreement, Phyhealth hereby
irrevocably designates, and agrees to cause each Phyhealth Affiliate to so
designate, PHYH as its sole and exclusive agent and attorney-in-fact to take
such action (including execution of documents) as PHYH, in its sole discretion,
may deem appropriate in any and all matters (including Audits) relating to any
Tax Return described in Section 2.01, subject, however, to the joint
control provisions and control by a non-Filing Party provisions in
Section 8.

       

      2.04.
Manner of Tax Return
Preparation.

       

      (a)
Unless otherwise required by a Taxing Authority, the Parties hereby agree to
prepare and file all Tax Returns, and to take all other actions, in a manner
consistent with (1) this Agreement, (2) any Tax Opinion, (3) any
Supplemental Tax Opinion, and (4) any Ruling. All Tax Returns shall be
filed on a timely basis (taking into account applicable extensions) by the Party
responsible for filing such returns under this Agreement.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (b)
Subject to the other applicable provisions of this Agreement, PHYH shall have
the exclusive right, in its sole discretion, with respect to any Tax Return
described in Section 2.01, to determine (1) the manner in which such
Tax Return shall be prepared and filed, including the elections, method of
accounting, positions, conventions and principles of taxation to be used and the
manner in which any Tax Item shall be reported, (2) whether any extensions
shall be requested, (3) the elections that will be made by PHYH, any PHYH
Affiliate, Phyhealth, and/or any Phyhealth Affiliate on such Tax Return,
(4) whether any amended Tax Returns shall be filed, (5) whether any
claims for refund shall be made, (6) whether any refunds shall be paid by
way of refund or credited against any liability for the related Tax, and
(7) whether to retain outside firms to prepare and/or review such Tax
Returns.

       

      
        	
                Section 3.

              	
                Liability
      for Ordinary Course Taxes.

              

      

       

      3.01.
PHYH’s Liability for
Ordinary Course Taxes. Except as provided in Sections 4.01 and 4.03, PHYH
shall be liable for the following Taxes, and shall be entitled to receive and
retain all refunds of:

       

      (a) all
Taxes attributable to the PHYH Group or the PHYH Business, in each case for any
and all periods,

       

      (b) all
Taxes attributable to Phyhealth, Phyhealth Assets or the Phyhealth Business, in
each case for any and all Pre-Split-Off Periods,

       

      (c) all
Taxes for which Phyhealth may be liable by virtue of any agreement or
arrangement with respect to Taxes (other than pursuant to this Agreement or any
other agreements entered into in connection with the Split-Off) entered into on
or prior to the Split-Off Date.

       

      3.02.
Phyhealth’s Liability
for Ordinary Course Taxes. Except as provided in Sections 4.01 and 4.03,
Phyhealth and each Phyhealth Affiliate shall be jointly and severally liable for
(i) all Taxes attributable to any and all members of Phyhealth or Phyhealth
Assets or the Phyhealth Business, in each case for any and all Post-Split-Off
Periods.

       

      3.03.
Straddle
Periods. For purposes of Sections 3.01 and 3.02, in the case of any
Straddle Period, (i) property taxes and exemptions, allowances or
deductions that are calculated on an annualized basis shall be apportioned
between the Pre-Split-Off Period and the Post-Split-Off Period on a daily
pro-rata basis and (ii) all other Taxes shall be apportioned between the
Pre-Split-Off Period and the Post-Split-Off Period on a closing of the books
basis as of the close of business on the Split-Off Date.

      

      3.04.
Refunds. The
amount or economic benefit of any refunds, credits or offsets of Taxes relating
to (i) Phyhealth, Phyhealth Assets or the Phyhealth Business for a
Pre-Split-Off Period shall be for the account of PHYH, (ii) Phyhealth,
Phyhealth Assets or the Phyhealth Business for a Post-Split-Off Period shall be
for the account of Phyhealth, and (iii) the PHYH Group, the Phyhealth Group
Assets or the PHYH Business shall for the account of PHYH.

       

      
        
          
          

        

        
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      3.05.
Carryback.
Notwithstanding Section 3.04, to the extent permitted by law, Phyhealth
shall elect to forego a carryback of any net operating losses, capital losses,
credits or other Tax benefits to a taxable period, or portion thereof, ending on
or before the Split-Off Date unless PHYH otherwise elects, in its sole
discretion, to allow such carryback. To the extent that Phyhealth is required
under law to carry back Tax Assets described in this section, PHYH agrees to pay
to Phyhealth the United States federal Income Tax Benefit from the use in any
Pre-Split-Off Period (the “Carryback Period”) of a carryback of any such Tax
Asset of Phyhealth from a Post-Split-Off Period (other than a carryback of any
Tax Asset attributable to Exchange Taxes for which the liability is borne by
PHYH or any PHYH Affiliate). If subsequent to the payment by PHYH to Phyhealth
of the United States federal Income Tax Benefit of a carryback of a Tax Asset of
Phyhealth, there shall be a Final Determination which results in a
(1) change to the amount of the Tax Asset so carried back or
(2) change to the amount of such United States federal Income Tax Benefit,
Phyhealth shall repay to PHYH, or PHYH shall repay to Phyhealth, as the case may
be, any amount which would not have been payable to such other Party pursuant to
this Section 3.05 had the amount of the benefit been determined in light of
these events. Nothing in this Section 3.05 shall require PHYH to file an
amended Tax Return or claim for refund of United States federal Income Taxes;
provided, however, that PHYH
shall use its commercially reasonable efforts to use any carryback of a Tax
Asset of Phyhealth that is carried back under this
Section 3.05.

       

      3.06.
Phyhealth Tax Assets
on PHYH Post-Split-Off Period Returns. With respect to any Post-Split-Off
Period, to the extent that any Tax Assets relating to the Phyhealth Business
attributable to Pre-Split-Off Periods remain with the PHYH Group after the
Split-Off: (i) to the extent that Phyhealth generates sufficient income or
recognizes sufficient gains in a given Tax period that Phyhealth would have been
able to utilize such Tax Assets (that were not already utilized by PHYH pursuant
to clause (ii)) on a pro-forma basis, PHYH shall compensate Phyhealth for such
utilizable amount on a pro-forma basis, and (ii) to the extent that
(A) Phyhealth Group does not generate sufficient income or recognize
sufficient gains in such Tax period and (B) PHYH utilizes such Tax Assets
on its Tax Returns for such Tax Period, then PHYH shall not be required to
compensate Phyhealth for PHYH’s utilization of such Tax Assets. For the
avoidance of doubt, this section is intended to provide that Phyhealth is
compensated for a Phyhealth-related Tax Asset that remains with the PHYH Group
after the Split-Off Date only if and to the extent that Phyhealth would have
been able to utilize such Tax Asset on or before the time that the PHYH Group
actually utilizes such Tax Asset. For the avoidance of doubt, this section shall
apply to any gain related to Exchange Taxes in the same manner as it applies to
any other income or gains.

       

      3.07.
Payment of Tax
Liability. If one Party is liable or responsible for Taxes, under
Sections 3.01 through 3.06, with respect to Tax Returns for which another party
is responsible for preparing and/or filing, or with respect to Taxes that are
paid by another Party, then the liable or responsible Party shall pay the Taxes
(or a reimbursement of such Taxes) to the other Party pursuant to
Section 7.05.

       

      

      3.08.
Computation.
With respect to any Tax Return filed by PHYH for which Phyhealth is liable for
Taxes under this Section 3, PHYH shall provide Phyhealth with a written
calculation in reasonable detail (including copies of work sheets and other
materials used in preparation thereof) setting forth the amount of any Phyhealth
Separate Tax Amount or estimated Phyhealth Separate Tax Amount (for purposes of
Section 7.01). Phyhealth shall have the right to review and comment on such
calculation. Any dispute with respect to such calculation shall be resolved
pursuant to Section 9.03; provided, however, that,
notwithstanding any dispute with respect to any such calculation, in no event
shall any payment attributable to the amount of any Phyhealth Separate Tax
Amount or estimated Phyhealth Separate Tax Amount be paid later than the date
provided in Section 7.

      

      
        
          
          

        

        
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                Section 4.

              	
                Exchange
      Taxes, Contribution Taxes and
Deconsolidation.

              

      

       

      4.01.
Exchange
Taxes.

       

      (a) PHYH’s Liability for
Exchange Taxes. Notwithstanding Sections 3.01 through 3.03, PHYH and each
PHYH Affiliate shall be jointly and severally liable for any Exchange Taxes
attributable to, caused by, or resulting from, one or more of the
following:

       

      (i) any
action or omission by PHYH (or any PHYH Affiliate) inconsistent with any
material, information, covenant or representation related to PHYH, any PHYH
Affiliate, or the PHYH Business in an Officer’s Certificate, Tax Opinion,
Supplemental Tax Opinion, Ruling Documents or Ruling (for the avoidance of
doubt, disclosure of any action or fact that is inconsistent with any material,
information, covenant or representation submitted to Tax Counsel, the IRS, or
other Taxing Authority, as applicable, in connection with an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents or Ruling
shall not relieve PHYH (or any PHYH Affiliate) of liability under this
Agreement);

       

      (ii) any
acquisition of any stock or assets of PHYH (or any PHYH Affiliate) by one or
more other persons (other than Phyhealth or a Phyhealth Affiliate) prior to or
following the Split-Off; or

       

      (iii) any
issuance of stock by PHYH (or any PHYH Affiliate), including any issuance
pursuant to the exercise of employee stock options or other employment related
arrangements or the exercise of warrants, or change in ownership of stock in
Phyhealth (or any Phyhealth Affiliate).

      

      (b) Phyhealth’s Liability for
Exchange Taxes. Notwithstanding Sections 3.01 through 3.03, Phyhealth and
each Phyhealth Affiliate shall be jointly and severally liable for any Exchange
Taxes attributable to, caused by, or result from, one or more of the
following:

       

      (i) any
action or omission by Phyhealth (or any Phyhealth Affiliate) after the Split-Off
at any time, that is inconsistent with any material, information, covenant or
representation related to Phyhealth, any Phyhealth Affiliate, or the Phyhealth
Business in an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion,
Ruling Documents or Ruling (for the avoidance of doubt, disclosure by Phyhealth
(or any Phyhealth Affiliate) to PHYH (or any PHYH Affiliate) of any action or
fact that is inconsistent with any material, information, covenant or
representation submitted to Tax Counsel, the IRS, or other Taxing Authority, as
applicable, in connection with an Officer’s Certificate, Tax Opinion,
Supplemental Tax Opinion, Ruling Documents or Ruling shall not relieve Phyhealth
(or any Phyhealth Affiliate) of liability under this Agreement);

       

      (ii) any
acquisition of any stock or assets of Phyhealth (or any Phyhealth Affiliate) by
one or more other persons (other than PHYH or any PHYH Affiliate) following the
Split-Off; or

       

      (iii) any
issuance of stock by Phyhealth (or any Phyhealth Affiliate) after the Split-Off,
including any issuance pursuant to the exercise of employee stock options or
other employment related arrangements or the exercise of warrants, or change in
ownership of stock in Phyhealth (or any Phyhealth Affiliate) after the
Split-Off.

       

      
        
          
          

        

        
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      (c) Joint Liability for
Remaining Exchange Taxes. PHYH and each PHYH Affiliate shall be liable
for the PHYH Sharing Percentage and Phyhealth and each Phyhealth Affiliate shall
be jointly and severally liable for the Phyhealth Sharing Percentage of any
Exchange Taxes (including costs related or attributable to such Exchange Taxes)
not otherwise allocated by Sections 4.01(a) or (b) (e.g., because of a
retroactive change in law).

       

      (d) Representation. Each
of PHYH and Phyhealth represents that, as of the date of this Agreement, neither
it nor its Affiliates know of any fact (other than the Proposed Merger) that may
cause the Exchange to fail to qualify under section 355 or section 368(a)(1)(D)
of the Code.

       

      4.02.
Continuing
Covenants.

      

      (a) In General. Each of
PHYH (for itself and each PHYH Affiliate) and Phyhealth (for itself and each
Phyhealth Affiliate) agrees (1) not to take any action reasonably expected
to result in an increased Tax liability to the other, a reduction in a Tax Asset
of the other or an increased liability to the other under this Agreement, and
(2) to take any action reasonably requested by the other that would
reasonably be expected to result in a Tax Benefit or avoid a Tax Detriment to
the other, provided, in either such case, that the taking or refraining to take
such action does not result in any additional cost not fully compensated for by
the other Party or any other adverse effect to such Party. The Parties hereby
acknowledge that the preceding sentence is not intended to limit, and therefore
shall not apply to, the rights of the Parties with respect to matters otherwise
covered by this Agreement.

       

      (b) Phyhealth
Restrictions. Phyhealth agrees that it will not knowingly take or fail to
take, or permit any Phyhealth Affiliate to knowingly take or fail to take, any
action where such action or failure to act would be inconsistent with any
material, information, covenant or representation that relates to facts or
matters related to Phyhealth (or any Phyhealth Affiliate) or within the control
of Phyhealth and is contained in an Officer’s Certificate, Tax Opinion,
Supplemental Tax Opinion, Ruling Documents or Ruling (except where such
material, information, covenant or representation was not previously disclosed
to Phyhealth) other than as permitted by this Section 4.02. For this
purpose an action is considered inconsistent with a representation if the
representation states that there is no plan or intention to take such
action.

       

      (c) PHYH Restrictions.
PHYH agrees that it will not knowingly take or fail to take, or permit any PHYH
Affiliate to knowingly take or fail to take, any action where such action or
failure to act would be inconsistent with any material, information, covenant or
representation that relates to facts or matters related to PHYH (or any PHYH
Affiliate) or within the control of PHYH and is contained in an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents or Ruling
other than as permitted by this Section 4.02. For this purpose an action is
considered inconsistent with a representation if the representation states that
there is no plan or intention to take such action.

       

      
        
          
          

        

        
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      4.04.
Allocation of Tax
Items. All Tax computations for (1) any Pre-Split-Off Periods ending
on the Split-Off Date and (2) the immediately following taxable period of
Phyhealth or any Phyhealth Affiliate, shall be made pursuant to the principles
of section 1.1502-76(b) of the Treasury Regulations or of a corresponding
provision under the laws of other jurisdictions, as reasonably determined by
PHYH, taking into account all reasonable suggestions made by Phyhealth with
respect thereto.

       

      4.05.
Allocation of Tax
Assets. In connection with the Split-Off, each of PHYH and Phyhealth
agrees that each shall prepare all Tax Returns in a manner consistent with the
allocations as set forth herein, unless otherwise required by law.

      

      
        	
                Section 6.

              	
                Indemnification.

              

      

       

      6.01.
In General.
PHYH and each member of the PHYH Group shall jointly and severally indemnify
Phyhealth, each Phyhealth Affiliate, and their respective directors, officers
and employees, and hold them harmless from and against any and all Taxes for
which PHYH or any PHYH Affiliate is liable under this Agreement and any loss,
cost, damage or expense, including reasonable attorneys’ fees and costs, that is
attributable to, or results from, the failure of PHYH, any PHYH Affiliate or any
director, officer or employee to make any payment required to be made under this
Agreement. Phyhealth and each member of Phyhealth shall jointly and severally
indemnify PHYH, each PHYH Affiliate, and their respective directors, officers
and employees, and hold them harmless from and against any and all Taxes for
which Phyhealth or any Phyhealth Affiliate is liable under this Agreement and
any loss, cost, damage or expense, including reasonable attorneys’ fees and
costs, that is attributable to, or results from, the failure of Phyhealth, any
Phyhealth Affiliate or any director, officer or employee to make any payment
required to be made under this Agreement.

       

      6.02.
Inaccurate or
Incomplete Information. PHYH and each member of the PHYH Group shall
jointly and severally indemnify Phyhealth, each Phyhealth Affiliate, and their
respective directors, officers and employees, and hold them harmless from and
against any cost, fine, penalty, or other expense of any kind attributable to
the failure of PHYH or any PHYH Affiliate in supplying Phyhealth or any
Phyhealth Affiliate with inaccurate or incomplete information, in connection
with the preparation of any Tax Return. Phyhealth and each member of Phyhealth
shall jointly and severally indemnify PHYH, each PHYH Affiliate, and their
respective directors, officers and employees, and hold them harmless from and
against any cost, fine, penalty, or other expenses of any kind attributable to
the failure of Phyhealth or any Phyhealth Affiliate in supplying PHYH or any
PHYH Affiliate with inaccurate or incomplete information, in connection with the
preparation of any Tax Return.

       

      6.03.
No Indemnification for
Tax Items. Nothing in this Agreement shall be construed as a guarantee of
the existence or amount of any loss, credit, carryforward, basis or other Tax
Item, whether past, present or future, of PHYH, any PHYH Affiliate, Phyhealth or
any Phyhealth Affiliate. In addition, for the avoidance of doubt, for purposes
of determining any amount owed between the Parties hereto, all such
determinations shall be made without regard to any financial accounting tax
asset or liability or other financial accounting items.

       

      
        	
                Section 7.

              	
                Payments.

              

      

       

      
        
          
          

        

        
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      7.01.
Estimated Tax
Payments. Not later than ten (10) business days after any Estimated
Tax Installment Date with respect to a taxable period for which a Consolidated
Return or a Combined Return that includes a Phyhealth Separate Tax Amount may be
filed, Phyhealth shall pay to PHYH on behalf of Phyhealth an amount equal to the
amount of any estimated Phyhealth Separate Tax Amount.

       

      7.02.
True-Up
Payments. Not later than ten (10) business days after filing a Tax
Return, Phyhealth shall pay to PHYH, or PHYH shall pay to Phyhealth, as
appropriate, an amount equal to the difference, if any, between the Phyhealth
Separate Tax Amount and the aggregate amount paid by Phyhealth with respect to
such period under Section 7.01.

       

      7.03.
Redetermination
Amounts. In the event of a redetermination of any Tax Item reflected on
any Consolidated Return or Combined Return (other than Tax Items relating to
Exchange Taxes), as a result of a refund of Taxes paid, a Final Determination or
any settlement or compromise with any Taxing Authority which in any such case
would affect the Phyhealth Separate Tax Amount, PHYH shall prepare a revised pro
forma Tax Return in accordance with Section 2.04(b) for the relevant
taxable period reflecting the redetermination of such Tax Item as a result of
such refund, Final Determination, settlement or compromise. Phyhealth shall pay
to PHYH, or PHYH shall pay to Phyhealth, as appropriate, an amount equal to the
difference, if any, between the Phyhealth Separate Tax Amount reflected on such
revised pro forma Tax Return and the Phyhealth Separate Tax Amount for such
period as originally computed pursuant to this Agreement.

       

      7.04.
Payments of Refunds
and Credits. If one Party receives a refund or credit of any Tax to which
the other Party is entitled pursuant to Section 3.04, the Party receiving
such refund or credit shall pay to the other Party the amount of such refund or
credit pursuant to Section 7.05.

       

      7.05.
Payments Under This
Agreement. In the event that one Party (the “Owing Party”) is required to
make a payment to another Party (the “Owed Party”) pursuant to this Agreement,
then such payments shall be made according to this
Section 7.05.

       

      (a) In General. All
payments shall be made to the Owed Party or to the appropriate Taxing Authority
as specified by the Owed Party within the time prescribed for payment in this
Agreement, or if no period is prescribed, within ten (10) days after
delivery of written notice of payment owing together with a computation of the
amounts due.

       

      (b) Treatment of
Payments. Unless otherwise required by any Final Determination, the
Parties agree that any payments made by one Party to another Party pursuant to
this Agreement (other than (i) payments for the Phyhealth Separate Tax
Amount for the Post-Split-Off Period, (ii) payments of After Tax Amounts
pursuant to Section 7.05(d), and (iii) payments of interest pursuant
to Section 7.05(e)) shall be treated for all Tax purposes as nontaxable
payments (dividend distributions or capital contributions, as the case may be)
made immediately prior to the Split-Off and, accordingly, as not includible in
the taxable income of the recipient or as deductible by the payor.

       

      (c) Prompt Performance.
All actions required to be taken (including payments) by any Party under this
Agreement shall be performed within the time prescribed for performance in this
Agreement, or if no period is prescribed, such actions shall be performed
promptly.

       

      (d) After Tax Amounts. If
pursuant to a Final Determination it is determined that the receipt or accrual
of any payment made under this Agreement (other than payments of interest
pursuant to Section 7.05(e)) is subject to any Tax, the Party making such
payment shall be liable for (a) the After Tax Amount with respect to such
payment and (b) interest at the rate described in Section 7.05(e) on
the amount of such Tax from the date such Tax accrues through the date of
payment of such After Tax Amount. A Party making a demand for a payment pursuant
to this Agreement and for a payment of an After Tax Amount with respect to such
payment shall separately specify and compute such After Tax Amount. However, a
Party may choose not to specify an After Tax Amount in a demand for payment
pursuant to this Agreement without thereby being deemed to have waived its right
subsequently to demand an After Tax Amount with respect to such
payment.

       

      (e) Interest. Payments
pursuant to this Agreement that are not made within the period prescribed in
this Agreement (the “Payment Period”) shall bear interest for the period from
and including the date immediately following the last date of the Payment Period
through and including the date of payment at a per annum rate equal to the
applicable rate under Section 6621 of the Code. Such interest will be
payable at the same time as the payment to which it relates and shall be
calculated on the basis of a year of three hundred sixty-five (365) days
and the actual number of days for which due.

       

      7.06.
Cooperation and
Exchange of Information.

       

      (a) Cooperation.
Phyhealth and PHYH shall each cooperate fully (and each shall cause its
respective affiliates to cooperate fully) with all reasonable requests from
another party for information and materials not otherwise available to the
requesting party in connection with the preparation and filing of Tax Returns,
claims for refund, and Audits concerning issues or other matters covered by this
Agreement or in connection with the determination of a liability for Taxes or a
right to a refund of Taxes. Such cooperation shall include:

       

      (i) the
retention until the expiration of the applicable statute of limitations, and the
provision upon request, of copies of all Tax Returns, books, records (including
information regarding ownership and Tax basis of property), documentation and
other information relating to the Tax Returns, including accompanying schedules,
related work papers, and documents relating to rulings or other determinations
by Taxing Authorities;

       

      (ii) the
execution of any document that may be necessary or reasonably helpful in
connection with any Tax Proceeding, or the filing of a Tax Return or refund
claim by a member of the PHYH Group or Phyhealth, including certification, to
the best of a Party’s knowledge, of the accuracy and completeness of the
information it has supplied; and

       

      (iii) the
use of the Party’s commercially reasonable efforts to obtain any documentation
that may be necessary or reasonably helpful in connection with any of the
foregoing. Each Party shall make its employees and facilities available on a
reasonable and mutually convenient basis in connection with the foregoing
matters.

       

      
        
          
          

        

        
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        (b) Retention of Records.
Any Party that is in possession of documentation of PHYH (or any PHYH Affiliate)
or Phyhealth (or any Phyhealth Affiliate) relating to the Phyhealth Business,
including books, records, Tax Returns and all supporting schedules and
information relating thereto (the “Phyhealth Business Records”) shall retain
such Phyhealth Business Records for a period of seven (7) years
following the Exchange Date. Thereafter, any Party wishing to dispose of
Phyhealth Business Records in its possession (after the expiration of the
applicable statute of limitations), shall provide written notice to the other
Party describing the documentation proposed to be destroyed or disposed of sixty
(60) business days prior to taking such action. The other Party may arrange
to take delivery of any or all of the documentation described in the notice at
its expense during the succeeding sixty (60) day period.

      

       

      ARTICLE
VIII

       

      GENERAL
PROVISIONS

       

      Section 8.1    
Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of Delaware, without reference to choice of law principles, including matters of
construction, validity and performance.

       

      Section 8.2
    Notices. All notices,
requests, demands, waivers and communications required or permitted to be given
under this Agreement shall be in writing (which shall include notice by telecopy
or like transmission) and shall be deemed given (i) on the day delivered
(or if that day is not a Business Day, on the first following Business Day) when
(x) delivered personally against receipt or (y) sent by overnight
courier, (ii) on the day when transmittal confirmation is received if sent
by telecopy (or if that day is not a Business Day, on the first following
Business Day) and (iii) on the third Business Day after mailed by certified
or registered first-class mail to the parties at the parties’ business addresses
(or to such other addresses as a party may have specified by notice given to the
other parties hereto pursuant to this provision).

       

      Section 8.3    
Entire
Agreement. This Agreement and the Separation Agreement, together with all
schedules, appendices, certificates, instruments and agreements delivered
pursuant hereto and thereto, contain the entire understanding of the parties
hereto and thereto with respect to the subject matter contained herein and
therein, and supersede and cancel all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.

       

      Section 8.4    
Headings. The
article, section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All references herein to “Articles”,
“Sections”, or “Appendices” shall be deemed to be references to Articles or
Sections hereof or Appendices hereto unless otherwise indicated. All references
herein to “Sections” of the Disclosure Letter shall be deemed to be references
to the Disclosure Letter unless otherwise indicated.

       

      Section 8.5    
Counterparts.
This Agreement may be executed in one or more counterparts, which may be
delivered by facsimile, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

       

      Section 8.6    
Parties in Interest;
Assignment; Successors. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement shall inure to the benefit of and be binding
upon Phyhealth and PHYH and their respective Subsidiaries, successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies under or by reason of this
Agreement.

       

      
        
          
          

        

        
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      Section 8.7    
Severability;
Enforcement. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, each party agrees that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by
law, and each party hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such
restriction.

       

      Section 8.8    
Force Majeure.
No party shall be deemed in default of this Agreement to the extent that any
delay or failure in the performance of its obligations under this Agreement
results from any cause beyond its reasonable control and without its fault or
negligence, such as acts of God, acts of civil or military authority, embargoes,
epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods,
unusually severe weather conditions, power failures, communication failures
including internet disruptions, equipment failures, labor problems or
unavailability of parts. In the event of any such excused delay, the time for
performance shall be extended for a period equal to the time lost by reason of
the delay.

      

      IN WITNESS WHEREOF, each of
the parties has caused this Separation Agreement to be duly executed on its
behalf by its officers thereunto duly authorized, all as of the day and year
first above written.

       

      
        	 
      	 
      	 
      	 
      
	
                PHYSICIANS
      HEALTHCARE MANAGEMENT GROUP, INC.

              	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	
                
                  /s/
      Robert L. Trinka

                   

                

              
	
                Name:

              	 
      	
                Robert
      L. Trinka

              
	
                Title:

              	 
      	
                President

              
	 
      	 
      
	
                PHYHEALTH
      CORPORATION

              	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	
                
                  /s/
      Robert L. Trinka

                   

                

              
	
                Name:

              	 
      	
                Robert
      L. Trinka

              
	 	 	Title:           President

      

       

      
        
           

        

        
          16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]