Document:

Common Stock Purchase Agreement

 Exhibit 10.1 
 COMMON STOCK PURCHASE AGREEMENT 
 Dated March 14, 2007 
 by and between 
 TITAN
PHARMACEUTICALS, INC. 
 and 
 AZIMUTH OPPORTUNITY LTD. 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
	Article I PURCHASE AND SALE OF COMMON STOCK	  	1
	    Section 1.1	 	Purchase and Sale of Stock	  	1
	    Section 1.2	 	Effective Date; Settlement Dates	  	1
	    Section 1.3	 	The Shares	  	2
	    Section 1.4	 	Current Report; Prospectus Supplement	  	2
		
	Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT	  	2
	    Section 2.1	 	Fixed Request Notice	  	2
	    Section 2.2	 	Fixed Requests	  	3
	    Section 2.3	 	Share Calculation	  	4
	    Section 2.4	 	Limitation of Fixed Requests	  	4
	    Section 2.5	 	Reduction of Commitment	  	4
	    Section 2.6	 	Below Threshold Price	  	4
	    Section 2.7	 	Settlement	  	5
	    Section 2.8	 	Reduction of Pricing Period	  	5
	    Section 2.9	 	Optional Amount	  	6
	    Section 2.10	 	Calculation of Optional Amount Shares	  	6
	    Section 2.11	 	Exercise of Optional Amount	  	7
	    Section 2.12	 	Aggregate Limit	  	7
		
	Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR	  	8
	    Section 3.1	 	Organization and Standing of the Investor	  	8
	    Section 3.2	 	Authorization and Power	  	8
	    Section 3.3	 	No Conflicts	  	8
	    Section 3.4	 	Information	  	9
		
	Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY	  	9
	    Section 4.1	 	Organization, Good Standing and Power	  	9
	    Section 4.2	 	Authorization, Enforcement	  	9
	    Section 4.3	 	Capitalization	  	10
	    Section 4.4	 	Issuance of Shares	  	10
	    Section 4.5	 	No Conflicts	  	11
	    Section 4.6	 	Commission Documents, Financial Statements	  	11
	    Section 4.7	 	Subsidiaries	  	12
	    Section 4.8	 	No Material Adverse Effect	  	13
	    Section 4.9	 	Indebtedness	  	13
	    Section 4.10	 	Title To Assets	  	13
	    Section 4.11	 	Actions Pending	  	13
	    Section 4.12	 	Compliance With Law	  	13
	    Section 4.13	 	Certain Fees	  	14
	    Section 4.14	 	Operation of Business	  	14

  

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	    Section 4.15	 	Environmental Compliance	  	16
	    Section 4.16	 	Material Agreements	  	16
	    Section 4.17	 	Transactions With Affiliates	  	17
	    Section 4.18	 	Securities Act; NASD Conduct Rules	  	17
	    Section 4.19	 	Employees	  	19
	    Section 4.20	 	Use of Proceeds	  	19
	    Section 4.21	 	Public Utility Holding Company Act and Investment Company Act Status	  	19
	    Section 4.22	 	ERISA	  	19
	    Section 4.23	 	Taxes	  	20
	    Section 4.24	 	Insurance	  	20
	    Section 4.25	 	Acknowledgement Regarding Investor’s Purchase of Shares	  	20
		
	Article V COVENANTS	  	20
	    Section 5.1	 	Securities Compliance	  	20
	    Section 5.2	 	Registration and Listing	  	20
	    Section 5.3	 	Compliance with Laws.	  	21
	    Section 5.4	 	Keeping of Records and Books of Account; Foreign Corrupt Practices Act	  	21
	    Section 5.5	 	Limitations on Holdings and Issuances	  	22
	    Section 5.6	 	Other Agreements and Other Financings.	  	22
	    Section 5.7	 	Stop Orders	  	23
	    Section 5.8	 	Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses	  	23
	    Section 5.9	 	Prospectus Delivery	  	24
	    Section 5.10	 	Selling Restrictions.	  	25
	    Section 5.11	 	Effective Registration Statement	  	26
	    Section 5.12	 	Non-Public Information	  	26
	    Section 5.13	 	Broker/Dealer	  	26
	    Section 5.14	 	Update of Disclosure Schedule	  	26
		
	 Article VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES
	  	26
	    Section 6.1	 	Opinion of Counsel and Certificate	  	26
	    Section 6.2	 	Conditions Precedent to the Obligation of the Company	  	26
	    Section 6.3	 	Conditions Precedent to the Obligation of the Investor	  	28
		
	Article VII TERMINATION	  	30
	    Section 7.1	 	Term, Termination by Mutual Consent	  	30
	    Section 7.2	 	Other Termination	  	30
	    Section 7.3	 	Effect of Termination	  	31
		
	Article VIII INDEMNIFICATION	  	31
	    Section 8.1	 	General Indemnity.	  	31
	    Section 8.2	 	Indemnification Procedures	  	33
		
	Article IX MISCELLANEOUS	  	34
	    Section 9.1	 	Fees and Expenses.	  	34
	    Section 9.2	 	Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial	  	35

  

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	    Section 9.3	 	Entire Agreement; Amendment	  	36
	    Section 9.4	 	Notices	  	36
	    Section 9.5	 	Waivers	  	37
	    Section 9.6	 	Headings	  	37
	    Section 9.7	 	Successors and Assigns	  	37
	    Section 9.8	 	Governing Law	  	37
	    Section 9.9	 	Survival	  	37
	    Section 9.10	 	Counterparts	  	37
	    Section 9.11	 	Publicity	  	38
	    Section 9.12	 	Severability	  	38
	    Section 9.13	 	Further Assurances	  	38
	Annex A. Definitions	  	

  

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 COMMON STOCK PURCHASE AGREEMENT 
 This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 14th day of March 2007 (this “Agreement”), by and between Azimuth Opportunity Ltd., an international business
company incorporated under the laws of the British Virgin Islands (the “Investor”), and Titan Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”).

 RECITALS 
 WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company may issue and sell to the Investor and the Investor shall thereupon purchase from the Company up to $25,000,000 worth of
newly issued shares of the Company’s common stock, $0.001 par value (“Common Stock”), subject, in all cases, to the Trading Market Limit; and 
 WHEREAS, the offer and sale of the shares of Common Stock hereunder have been registered by the Company in the Registration Statement, which has been declared effective by order of the Commission under the
Securities Act; 
 NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 
 ARTICLE I 
 PURCHASE AND SALE OF
COMMON STOCK 
 Section 1.1 Purchase and Sale of Stock. Upon the terms and subject to the conditions of this
Agreement, during the Investment Period the Company in its discretion may issue and sell to the Investor up to $25,000,000 (the “Total Commitment”) worth of duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock (subject in all cases to the Trading Market Limit, the “Aggregate Limit”), by (i) the delivery to the Investor of not more than 30 separate Fixed Request Notices (unless the Investor and the Company mutually agree
that a different number of Fixed Request Notices may be delivered) as provided in Article II hereof and (ii) the exercise by the Investor of Optional Amounts, which the Company may in its discretion grant to the Investor and which may be
exercised by the Investor, in whole or in part, as provided in Article II hereof. The aggregate of all Fixed Request Amounts and Optional Amount Dollar Amounts shall not exceed the Aggregate Limit. 
 Section 1.2 Effective Date; Settlement Dates. This Agreement shall become effective and binding upon delivery of counterpart
signature pages of this Agreement executed by each of the parties hereto, and by delivery of an opinion of counsel and a certificate of the Company as provided in Section 6.1 hereof, to the offices of Greenberg Traurig, LLP, 200 Park Avenue,
New York, New York 10166, at l0:00 a.m., New York time, on the Effective Date. In consideration of and in express reliance upon the representations, warranties and covenants, and otherwise upon the terms and subject to the conditions, of this
Agreement, from and after the Effective Date and during the Investment Period (i) the Company shall issue and sell to the Investor, and the Investor agrees to purchase from the Company, the Shares in respect of each Fixed Request and
(ii) the Investor may in its discretion elect to purchase Shares in respect 

 
of each Optional Amount. The issuance and sale of Shares to the Investor pursuant to any Fixed Request or Optional Amount shall occur on the applicable
Settlement Date in accordance with Sections 2.7 and 2.9 (or on such Trading Day in accordance with Section 2.8, as applicable), provided in each case that all of the conditions precedent thereto set forth in Article VI theretofore shall have
been fulfilled or (to the extent permitted by applicable law) waived. 
 Section 1.3 The Shares. The Company shall duly
authorize and reserve for issuance, free of all preemptive and other similar rights, at all times during the Investment Period, the requisite aggregate number of authorized but unissued shares of its Common Stock to timely effect the issuance, sale
and delivery in full to the Investor of all Shares to be issued in respect of all Fixed Requests and Optional Amounts under this Agreement. 
 Section 1.4 Current Report; Prospectus Supplement. As soon as practicable, but in any event not later than 5:30 p.m. (New York time) on the second Trading Day immediately following the Effective Date, the Company shall
file with the Commission a report on Form 8-K relating to the transactions contemplated by, and describing the material terms and conditions of, this Agreement and disclosing all information relating to the transactions contemplated hereby required
to be disclosed in the Registration Statement and the Base Prospectus (but which permissibly has been omitted therefrom in accordance with the Securities Act), including, without limitation, information required to be disclosed in the section
captioned “Plan of Distribution” in the Base Prospectus (the “Current Report”). The Current Report shall include a copy of this Agreement as an exhibit. To the extent applicable, the Current Report shall be incorporated by
reference in the Registration Statement in accordance with the provisions of Rule 430B under the Securities Act. The Company heretofore has provided the Investor a reasonable opportunity to comment on a draft of such Current Report and has given due
consideration to such comments. The Company shall file a final Base Prospectus pursuant to Rule 424(b) under the Securities Act on or prior to the second Trading Day immediately following the Effective Date. Pursuant to Section 5.9 and subject
to the provisions of Section 5.8, on the first Trading Day immediately following the last Trading Day of each Pricing Period, the Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities Act
disclosing the number of Shares to be issued and sold to the Investor thereunder, the total purchase price therefor and the net proceeds to be received by the Company therefrom and, to the extent required by the Securities Act, identifying the
Current Report. 
 ARTICLE II 
 FIXED REQUEST TERMS; OPTIONAL AMOUNT 
 Subject to the satisfaction of the conditions set forth in this Agreement, the
parties agree (unless otherwise mutually agreed upon by the parties in writing) as follows: 
 Section 2.1 Fixed Request
Notice. Upon two Trading Days’ prior written notice to the Investor, the Company may, from time to time in its sole discretion, provide a notice to the Investor of a Fixed Request before 9:30 a.m. (New York time) on the first
Trading Day of the Pricing Period (the “Fixed Request Notice”), substantially in the form attached hereto as Exhibit A. The Fixed Request Notice shall specify the Fixed Amount Requested, establish the Threshold Price for such
Fixed Request, designate the first Trading Day of the Pricing Period and specify the Optional Amount, if any, that the Company elects to grant to the Investor during the Pricing 

  

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Period and the applicable Threshold Price for such Optional Amount (the “Optional Amount Threshold Price”). The Threshold Price and the
Optional Amount Threshold Price established by the Company in a Fixed Request Notice may be the same or different, in the Company’s sole discretion. Upon the terms and subject to the conditions of this Agreement, the Investor is obligated to
accept each Fixed Request Notice prepared and delivered in accordance with the provisions of this Agreement. 
 Section 2.2 Fixed
Requests. From time to time during the Investment Period, the Company may in its sole discretion deliver to the Investor a Fixed Request Notice for a specified Fixed Amount Requested, and the applicable discount price (the
“Discount Price”) shall be determined, in accordance with the price and share amount parameters as set forth below or such other parameters mutually agreed upon by the Investor and the Company, and upon the terms and subject to the
conditions of this Agreement, the Investor shall purchase from the Company the Shares subject to such Fixed Request Notice; provided, however, that (i) if an ex-dividend date is established by the Trading Market in respect of the
Common Stock on or between the first Trading Day of the applicable Pricing Period and the applicable Settlement Date, the Discount Price shall be reduced by the per share dividend amount and (ii) the Company may not deliver any single Fixed
Request Notice for a Fixed Amount Requested in excess of the lesser of (a) the amount in the applicable Fixed Amount Requested column below and (b) 2.5% of the Market Capitalization: 
  

					
	 Threshold Price
	  	 Fixed Amount Requested
	  	 Discount Price

	 Equal to or greater than $10.00
	  	Not to exceed $4,750,000	  	95.50% of the VWAP
	 Equal to or greater than $9.00 and less than $10.00
	  	Not to exceed $4,250,000	  	95.25% of the VWAP
	 Equal to or greater than $8.00 and less than $9.00
	  	Not to exceed $3,750,000	  	95.00% of the VWAP
	 Equal to or greater than $7.00 and less than $8.00
	  	Not to exceed $3,250,000	  	94.75% of the VWAP
	 Equal to or greater than $6.00 and less than $7.00
	  	Not to exceed $2,750,000	  	94.75% of the VWAP
	 Equal to or greater than $5.00 and less than $6.00
	  	Not to exceed $2,250,000	  	94.50% of the VWAP
	 Equal to or greater than $4.50 and less than $5.00
	  	Not to exceed $2,000,000	  	94.40% of the VWAP
	 Equal to or greater than $4.00 and less than $4.50
	  	Not to exceed $1,750,000	  	94.30% of the VWAP
	 Equal to or greater than $3.50 and less than $4.00
	  	Not to exceed $1,500,000	  	94.20% of the VWAP
	 Equal to or greater than $3.00 and less than $3.50
	  	Not to exceed $1,250,000	  	94.10% of the VWAP
	 Equal to or greater than $2.50 and less than $3.00
	  	Not to exceed $1,000,000	  	94.00% of the VWAP
	 Equal to or greater than $2.00 and less than $2.50
	  	Not to exceed $750,000	  	93.50% of the VWAP
	 Equal to or greater than $1.50 and less than $2.00
	  	Not to exceed $500,000	  	93.00% of the VWAP

  

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 Anything to the contrary in this Agreement notwithstanding, at no time shall the Investor be required to
purchase more than $4,750,000 worth of Common Stock in respect of any Pricing Period (not including Common Stock subject to any Optional Amount). The date on which the Company delivers any Fixed Request Notice in accordance with this
Section 2.2 hereinafter shall be referred to as a “Fixed Request Exercise Date”. 
 Section 2.3 Share
Calculation. Subject to Section 2.6, the number of Shares to be issued by the Company to the Investor pursuant to a Fixed Request shall equal the aggregate sum of each quotient (calculated for each Trading Day during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold Price) determined pursuant to the following equation (rounded to the nearest whole Share): 
  

					
	N	 	=	 	(A x B)/C, where:
			
	N	 	=	 	the number of Shares to be issued by the Company to the Investor in respect of a Trading Day during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price,
			
	A	 	=	 	0.10 (the “Multiplier”); provided, however, that if the number of Trading Days constituting a Pricing Period is decreased as set forth in Section 2.8 hereof,
then the Multiplier correspondingly shall be increased to equal the decimal equivalent (in 10-millionths) of a fraction, the numerator of which is one and the denominator of which equals the number of Trading Days in the Pricing Period as so
decreased,
			
	B	 	=	 	the Fixed Amount Requested, and
			
	C	 	=	 	the applicable Discount Price.

 Section 2.4 Limitation of Fixed Requests. The Company shall not make more than one
Fixed Request in each Pricing Period. Not less than five Trading Days shall elapse between the end of one Pricing Period and the commencement of any other Pricing Period during the Investment Period. There shall be permitted a maximum of 30 Fixed
Requests during the Investment Period. Each Fixed Request automatically shall expire immediately following the last Trading Day of each Pricing Period. 
 Section 2.5 Reduction of Commitment. On the last Trading Day of each Pricing Period, the Investor’s Total Commitment under this Agreement automatically (and without the need for any amendment
to this Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount of the Fixed Request Amount and the Optional Amount Dollar Amount, if any, for such Pricing Period paid to the Company at the Settlement Date. 
 Section 2.6 Below Threshold Price. If the VWAP on any Trading Day in a Pricing Period is lower than the Threshold Price, then for
each such Trading Day the total amount of the Fixed Amount Requested shall be reduced, on a dollar-for-dollar basis, by an amount equal to the product of (x) the Multiplier and (y) the original Fixed Amount Requested, and no Shares shall
be purchased or sold with respect to such Trading Day, except as provided below. If trading in the Common Stock on AMEX (or any national securities exchange on which the Common Stock is then listed) is suspended for any reason for more than three
hours on any 

  

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Trading Day, the Investor may at its option deem the price of the Common Stock to be lower than the Threshold Price for such Trading Day and, for each such
Trading Day, the total amount of the Fixed Amount Requested shall be reduced as provided in the immediately preceding sentence, and no Shares shall be purchased or sold with respect to such Trading Day, except as provided below. For each Trading Day
during a Pricing Period on which the VWAP is (or is deemed to be) lower than the Threshold Price, the Investor may in its sole discretion elect to purchase such U.S. dollar amount of Shares equal to the amount by which the Fixed Amount Requested has
been reduced in accordance with this Section 2.6, at the Threshold Price multiplied by the applicable percentage determined in accordance with the price and share amount parameters set forth in Section 2.2. The Investor shall inform the
Company via facsimile transmission not later than 8:00 p.m. (New York time) on the last Trading Day of such Pricing Period as to the number of Shares, if any, the Investor elects to purchase as provided in this Section 2.6. 
 Section 2.7 Settlement. The payment for, against simultaneous delivery of, Shares in respect of each Fixed Request shall be settled on the
second Trading Day next following the last Trading Day of each Pricing Period, or on such earlier date as the parties may mutually agree (the “Settlement Date”). On each Settlement Date, the Company shall deliver the Shares
purchased by the Investor to the Investor or its designees via DTC’s Deposit Withdrawal Agent Commission (DWAC) system, against simultaneous payment therefor to the Company’s designated account by wire transfer of immediately available
funds, provided that if the Shares are received by the Investor later than 1:00 p.m. (New York time), payment therefor shall be made with next day funds. As set forth in Section 9.1(ii), a failure by the Company to deliver such Shares shall
result in the payment of liquidated damages by the Company to the Investor. 
 Section 2.8 Reduction of Pricing Period. If
during a Pricing Period the Company elects to reduce the number of Trading Days in such Pricing Period (and thereby amend its previously delivered Fixed Request Notice), the Company shall so notify the Investor before 9:00 a.m. (New York time) on
any Trading Day during a Pricing Period (a “Reduction Notice”) and the last Trading Day of such Pricing Period shall be the Trading Day immediately preceding the Trading Day on which the Investor received such Reduction Notice;
provided, however, that if the Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a Trading Day during a Pricing Period, then the last Trading Day of such Pricing Period instead shall be the Trading Day on
which the Investor received such Reduction Notice. 
 Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in
respect of each Trading Day in such reduced Pricing Period for which the VWAP equals or exceeds the Threshold Price in accordance with Section 2.3 hereof; (ii) may elect to purchase the Shares in respect of any Trading Day in such reduced
Pricing Period for which the VWAP is (or is deemed to be) lower than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to exercise all or any portion of an Optional Amount on any Trading Day during such reduced
Pricing Period in accordance with Sections 2.10 and 2.11 hereof. 
 In addition, upon receipt of a Reduction Notice, the Investor may elect
to purchase such U.S. dollar amount of additional Shares equal to the quotient determined pursuant to the following equation: 
  

					
	D	 	=	 	A/B x (B – C), where:
			
	D	 	=	 	the U.S. dollar amount of additional Shares to be purchased,

  

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	A	 	=	 	the Fixed Amount Requested,
	B	 	=	 	10 or, for purposes of this Section 2.8, such lesser number of Trading Days as the parties may mutually agree to, and
	C	 	=	 	the number of Trading Days in the reduced Pricing Period,

 at a per Share price equal to (x) the Fixed Amount Requested attributable to the reduced Pricing Period
divided by (y) the number of Shares to be purchased during such reduced Pricing Period pursuant to clause (i) of the immediately preceding paragraph. 
 The Investor may also elect to exercise any portion of the applicable Optional Amount which was unexercised during the reduced Pricing Period by issuing an Optional Amount Notice to the Company not later than 10:00
a.m. (New York time) on the first Trading Day next following the last Trading Day of the reduced Pricing Period. The number of Shares to be issued upon exercise of such Optional Amount shall be calculated pursuant to the equation set forth in
Section 2.10 hereof, except that “C” shall equal the greater of (i) the VWAP for the Common Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional Amount Threshold Price. 
 The payment for, against simultaneous delivery of, Shares to be purchased and sold in accordance with this Section 2.8 shall be settled on the
second Trading Day next following the Trading Day on which the Investor receives a Reduction Notice. 
 Section 2.9 Optional
Amount. With respect to any Pricing Period, the Company may in its sole discretion grant to the Investor the right to exercise, from time to time during the Pricing Period (but not more than once on any Trading Day), all or any portion of an
Optional Amount. The maximum Optional Amount Dollar Amount and the Optional Amount Threshold Price shall be set forth in the Fixed Request Notice. If an ex-dividend date is established by the Trading Market in respect of the Common Stock on or
between the first Trading Day of the applicable Pricing Period and the applicable Settlement Date, the applicable exercise price in respect of the Optional Amount shall be reduced by the per share dividend amount. Each daily Optional Amount exercise
shall be aggregated during the Pricing Period and settled on the next Settlement Date. The Optional Amount Threshold Price designated by the Company in its Fixed Request Notice shall apply to each Optional Amount during the applicable Pricing
Period. 
 Section 2.10 Calculation of Optional Amount Shares. The number of shares of Common Stock to be issued in connection
with the exercise of an Optional Amount shall be the quotient determined pursuant to the following equation (rounded to the nearest whole Share): 
  

					
	O	 	=	 	A/(B x C), where:
			
	O	 	=	 	the number of shares of Common Stock to be issued in connection with such Optional Amount exercise,

  

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	A	 	=	 	the Optional Amount Dollar Amount with respect to which the Investor has delivered an Optional Amount Notice,
			
	B	 	=	 	the applicable percentage determined in accordance with the price and shares amount parameters set forth in Section 2.2 (with the Optional Amount Threshold Price serving as the Threshold
Price for such purposes), and
			
	C	 	=	 	the greater of (i) the VWAP for the Common Stock on the day the Investor delivers the Optional Amount Notice or (ii) the Optional Amount Threshold Price.

 Section 2.11 Exercise of Optional Amount. If granted by the Company to the Investor
with respect to a Pricing Period, all or any portion of the Optional Amount may be exercised by the Investor on any Trading Day during the Pricing Period, subject to the limitations set forth in Section 2.9. As a condition to each exercise of
an Optional Amount pursuant to this Section 2.11, the Investor shall issue an Optional Amount Notice to the Company no later than 8:00 p.m. (New York time) on the day of such Optional Amount exercise. If the Investor does not exercise an
Optional Amount in full by 8:00 p.m. (New York time) on the last Trading Day of the applicable Pricing Period, such unexercised portion of the Investor’s Optional Amount with respect to that Pricing Period automatically shall lapse and
terminate. 
 Section 2.12 Aggregate Limit. Notwithstanding anything to the contrary contained in this Agreement, in no event
may the Company issue a Fixed Request Notice or grant an Optional Amount to the extent that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request Notices and Optional Amounts issued hereunder, and as liquidated damages pursuant
to Section 9.1(ii), would cause the Company to sell or the Investor to purchase Shares which in the aggregate are in excess of the Aggregate Limit. If the Company issues a Fixed Request Notice or Optional Amount that otherwise would permit the
Investor to purchase shares of Common Stock which would cause the aggregate purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed Request Notice or Optional Amount shall be void ab initio to the extent of the amount by
which the dollar value of shares or number of shares, as the case may be, of Common Stock otherwise issuable pursuant to such Fixed Request Notice or Optional Amount together with the dollar value of shares or number of shares, as the case may be,
of all other Common Stock purchased by the Investor pursuant hereto would exceed the Aggregate Limit. The Company hereby represents, warrants and covenants that neither it nor any of its Subsidiaries (i) has effected any transaction or series
of transactions, (ii) is a party to any pending transaction or series of transactions or (iii) shall enter into any contract, agreement, agreement-in-principle, arrangement or understanding with respect to, or shall effect, any Other
Financing which, in any of such cases, may be integrated with the transactions contemplated by this Agreement for purposes of determining whether approval of the Company’s stockholders is required under any bylaw, listed securities maintenance
standards or other rules of the Trading Market; provided, however, that the Company shall be permitted to take any action referred to in clause (iii) above if the Company has timely provided the Investor with an Integration Notice
as provided in Section 5.6(ii) hereof. 
 At the Company’s sole discretion, and effective automatically upon receipt by the
Investor of notice thereof from the Company, this Agreement may be amended by the Company from time to time to reduce the Aggregate Limit by a specified dollar amount of Common Stock 

  

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which shall be no greater than is required to enable the Company to utilize the Registration Statement to consummate an underwritten public offering of
Common Stock or a registered direct public offering of Common Stock during the Investment Period); provided, however, that any such amendment of this Agreement (and any such purported amendment) shall be void and of no force and effect
if the effect thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform its obligations under this Agreement, including, without limitation, the obligation of the Company to deliver Shares to
the Investor in respect of a Fixed Request or Optional Amount on the applicable Settlement Date. In the event the Company shall have elected to reduce the Aggregate Limit as provided in the immediately preceding sentence, at the Company’s sole
discretion, and effective automatically upon receipt by the Investor of notice thereof from the Company, the Company may subsequently amend this Agreement to increase the Aggregate Limit; provided, however, that in no event shall the
Aggregate Limit thereby be increased to an amount greater than the amount obtained by subtracting (x) the aggregate of all Fixed Request Amounts and Optional Amount Dollar Amounts (including any amounts paid as liquidated damages pursuant to
Section 9.1(ii) hereunder) covered by all Fixed Requests and Optional Amounts theretofore issued or granted by the Company in respect of which a settlement has occurred pursuant to Section 2.7 from (y) $25,000,000, subject in all
cases to the Trading Market Limit. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR 
 The Investor hereby makes the following
representations and warranties to the Company: 
 Section 3.1 Organization and Standing of the Investor. The Investor is an
international business company duly organized, validly existing and in good standing under the laws of the British Virgin Islands. 
 Section 3.2 Authorization and Power. The Investor has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to purchase the Shares in accordance with the terms hereof.
The execution, delivery and performance of this Agreement by the Investor and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further consent or authorization of the
Investor, its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Investor. This Agreement constitutes a valid and binding obligation of the Investor enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement of,
creditor’s rights and remedies or by other equitable principles of general application. 
 Section 3.3 No Conflicts. The
execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated herein do not and shall not (i) result in a violation of such Investor’s charter documents, bylaws
or other applicable organizational instruments, (ii) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration
or cancellation of, any material agreement, mortgage, deed 

  

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of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a party or is bound, (iii) create or impose
any lien, charge or encumbrance on any property of the Investor under any agreement or any commitment to which the Investor is party or under which the Investor is bound or under which any of its properties or assets are bound, or (iv) result
in a violation of any federal, state, local or foreign statute, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets are bound or affected,
except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Investor to enter into and perform its obligations under this Agreement in any material respect. The Investor is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Shares in accordance with the terms hereof. 
 Section 3.4 Information. The Investor and its advisors have been furnished with all materials relating to the business, financial
condition, management and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by the Investor. The Investor and its advisors have been afforded the opportunity to ask questions of
representatives of the Company. The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares. The Investor understands that it (and
not the Company) shall be responsible for its own tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement. 
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 Except as set forth in the disclosure schedule delivered by the Company to the Investor (which is hereby incorporated by reference in, and constitutes an
integral part of, this Agreement) (the “Disclosure Schedule”), the Company hereby makes the following representations and warranties to the Investor: 
 Section 4.1 Organization, Good Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company and each Subsidiary is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except for any jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect.

 Section 4.2 Authorization, Enforcement. The Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue and sell the Shares in accordance with the terms hereof. Except for approvals of the Company’s Board of Directors or a committee thereof as may be required in connection with any issuance and sale of Shares
to the Investor hereunder (which approvals shall be obtained prior to the delivery of any Fixed Request 

  

 9 

 
Notice), the execution, delivery and performance by the Company of this Agreement and the consummation by it of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application. 
 Section 4.3 Capitalization. The authorized capital stock of the Company and the shares thereof issued and outstanding are as set forth in
the Commission Documents as of the dates reflected therein. All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth in the Commission Documents, as of the
Effective Date, no shares of Common Stock were entitled to preemptive rights or registration rights and there were no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any shares of capital stock of the Company. Except as set forth in the Commission Documents, there were no contracts, commitments, understandings, or arrangements by which the Company is or
may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into or exchangeable for any shares of capital stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company to sell restricted securities or as set forth in the Commission Documents, as of the Effective Date, the Company was not a party to, and it had no knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock of the Company. Except as set forth in the Commission Documents, the offer and sale of all capital stock, convertible or exchangeable securities, rights, warrants or options of the Company issued prior to the
Effective Date complied with all applicable federal and state securities laws, and no stockholder has any right of rescission or damages or any “put” or similar right with respect thereto which would have a Material Adverse Effect. The
Company has furnished or made available to the Investor via the Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) true and correct copies of the Company’s Certificate of Incorporation as in
effect on the Effective Date (the “Charter”), and the Company’s Bylaws as in effect on the Effective Date (the “Bylaws”), and true and correct copies (redacted as appropriate) of all executed resolutions of the
Company’s Board of Directors (and committees thereof), if any, relating to the capital stock of the Company (and transactions in respect thereof) since September 1, 2006 (except with respect to issuances of shares of capital stock of the
Company to directors or employees of the Company as fees or compensation that were duly approved by the Company’s Board of Directors or a committee thereof). 
 Section 4.4 Issuance of Shares. The Shares to be issued under this Agreement have been or will be duly authorized by all necessary corporate action and, when paid for or issued in accordance with the
terms hereof, the Shares shall be validly issued and outstanding, fully paid and nonassessable, and, when the Shares have been issued to the Investor, the Investor shall be entitled to all rights accorded to a holder and beneficial owner of Common
Stock. 
  

 10 

 Section 4.5 No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated herein do not and shall not (i) result in a violation of any provision of the Company’s Charter or Bylaws, (ii) conflict with, constitute a default (or an
event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its Significant Subsidiaries is a party or is bound (including, without limitation, any listing agreement with the Trading Market), (iii) create or impose a lien, charge
or encumbrance on any property of the Company or any of its Significant Subsidiaries under any agreement or any commitment to which the Company or any of its Significant Subsidiaries is a party or under which the Company or any of its Significant
Subsidiaries is bound or under which any of their respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The Company is not required under federal, state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, or to issue and sell the Shares to the Investor in
accordance with the terms hereof (other than any filings which may be required to be made by the Company with the Commission or the Trading Market subsequent to the Effective Date, including but not limited to a Prospectus Supplement under Sections
1.4 and 5.9 of this Agreement, and any registration statement, prospectus or prospectus supplement which has been or may be filed pursuant to this Agreement). 
 Section 4.6 Commission Documents, Financial Statements. (a) The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except as disclosed in the Commission
Documents, as of the Effective Date the Company had timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all Commission Documents. The Company has delivered or made available to the Investor
via EDGAR or otherwise true and complete copies of the Commission Documents filed with the Commission prior to the Effective Date (including, without limitation, the 2006 Form 10-K) and has delivered or made available to the Investor via EDGAR or
otherwise true and complete copies of all of the Commission Documents heretofore incorporated by reference in the Registration Statement and the Prospectus. The Company has not provided to the Investor any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement. As of its filing date, each Commission Document filed with
the Commission and incorporated by reference in the Registration Statement and the Prospectus (including, without limitation, the 2006 Form 10-K) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and other federal, state and local laws, rules and regulations applicable to it, and, as of its filing date, such Commission Document did not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each Commission 

  

 11 

 
Document to be filed with the Commission after the Effective Date and incorporated by reference in the Registration Statement, the Prospectus and any
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof during the Investment Period (including, without limitation, the Current Report), when such document becomes effective or is filed with the Commission, as the case
may be, shall comply in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it, and shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 
 (b) The financial statements, together with the related notes and schedules, of the Company included in the Commission Documents comply as to form in all
material respects with all applicable accounting requirements and the published rules and regulations of the Commission and all other applicable rules and regulations with respect thereto. Such financial statements, together with the related notes
and schedules, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial condition of the Company and its consolidated Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). 
 (c) The Company has timely filed with the Commission and made available to the Investor via EDGAR or otherwise all certifications and statements required
by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect to all relevant Commission Documents. The Company is in
compliance in all material respects with the provisions of SOXA applicable to it as of the date hereof. The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning the Company and its Subsidiaries is made known on a timely basis to the individuals responsible for the timely and accurate preparation of the Company’s Commission
filings and other public disclosure documents. As used in this Section 4.6(c), the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to
the Commission. 
 (d) Each of Odenberg, Ullakko, Muranishi & Co. LLP and Ernst & Young LLP, who have expressed their
opinions on the audited financial statements and related schedules included or incorporated by reference in the Registration Statement and the Base Prospectus, is with respect to the Company, an independent registered public accounting firm as
required by the rules of the Public Company Accounting Oversight Board. 
 Section 4.7 Subsidiaries. The 2006 Form 10-K sets
forth each Subsidiary of the Company as of the Effective Date, showing its jurisdiction of incorporation or organization and the percentage of the Company’s ownership of the outstanding capital stock or other ownership interests of such
Subsidiary, and the Company does not have any other Subsidiaries as of the Effective Date. 
  

 12 

 Section 4.8 No Material Adverse Effect. Since December 31, 2005, the Company has not
experienced or suffered any Material Adverse Effect, and there exists no current state of facts, condition or event which would have a Material Adverse Effect, except (i) as disclosed in any Commission Documents filed since December 31,
2005 or (ii) continued losses from operations. 
 Section 4.9 Indebtedness. The Company’s Quarterly Report on Form
10-Q for its fiscal quarter ended September 30, 2006 sets forth, as of September 30, 2006, all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments
through such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $10,000,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness of others in excess of $10,000,000, whether or not the same are or should be reflected in the Company’s balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $10,000,000
due under leases required to be capitalized in accordance with GAAP. There is no existing or continuing default or event of default in respect of any Indebtedness of the Company or any of its Subsidiaries. 
 Section 4.10 Title To Assets. Each of the Company and its Subsidiaries has good and marketable title to all of their respective real and
personal property reflected in the Commission Documents, free of mortgages, pledges, charges, liens, security interests or other encumbrances, except for those indicated in the Commission Documents or those that would not have a Material Adverse
Effect. All real property leases of the Company are valid and subsisting and in full force and effect in all material respects. 
 Section
4.11 Actions Pending. There is no action, suit, claim, investigation or proceeding pending, or to the knowledge of the Company threatened, against the Company or any Subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant hereto or thereto. Except as set forth in the Commission Documents, there is no action, suit, claim, investigation or proceeding pending, or to the knowledge of the Company
threatened, against or involving the Company, any Subsidiary or any of their respective properties or assets, or involving any officers or directors of the Company or any of its Subsidiaries, including, without limitation, any securities class
action lawsuit or stockholder derivative lawsuit, in each case which, if determined adversely to the Company, its Subsidiary or any officer or director of the Company or its Subsidiaries, would have a Material Adverse Effect. With respect to each of
those certain actions under the caption “Item 3. Legal Proceedings” in the 2006 Form 10-K, there has been no event or change required to be disclosed in a filing under the Exchange Act that has not been so disclosed. 
 Section 4.12 Compliance With Law. The business of the Company and the Subsidiaries has been and is presently being conducted in compliance
with all applicable federal, 
  

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state, local and foreign governmental laws, rules, regulations and ordinances, except as set forth in the Commission Documents and except for such
non-compliance which, individually or in the aggregate, would not have a Material Adverse Effect. 
 Section 4.13 Certain
Fees. Except for the placement fee payable by the Company to Trout Capital LLC, Member NASD/SIPC (“Trout”), which shall be set forth in a separate placement agency agreement between the Company and Trout (a true and
complete fully executed copy of which has heretofore been provided to the Investor), no brokers, finders or financial advisory fees or commissions shall be payable by the Company or any Subsidiary (or any of their respective affiliates) with respect
to the transactions contemplated by this Agreement. 
 Section 4.14 Operation of Business. (a) The Company or one
or more of its Subsidiaries possesses such permits, licenses, approvals, consents and other authorizations (including licenses, accreditation and other similar documentation or approvals of any local health departments) (collectively,
“Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies, including, without limitation, the United States Food and Drug Administration (“FDA”), necessary to
conduct the business now operated by it, except where the failure to possess such Governmental Licenses, individually or in the aggregate, would not have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms
and conditions of all such Governmental Licenses and all applicable FDA rules and regulations, guidelines and policies, and all applicable rules and regulations, guidelines and policies of any governmental authority exercising authority comparable
to that of the FDA (including any non-governmental authority whose approval or authorization is required under foreign law comparable to that administered by the FDA), except where the failure to so comply, individually or in the aggregate, would
not have a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse Effect. As to each product that is subject to FDA regulation or similar legal provisions in any foreign jurisdiction that is developed, manufactured, tested, packaged, labeled,
marketed, sold, distributed and/or commercialized by the Company or any of its Subsidiaries, each such product is being developed, manufactured, tested, packaged, labeled, marketed, sold, distributed and/or commercialized in compliance with all
applicable requirements of the FDA (and any non-governmental authority whose approval or authorization is required under foreign law comparable to that administered by the FDA), including, but not limited to, those relating to investigational use,
investigational device exemption, premarket notification, premarket approval, good clinical practices, good manufacturing practices, record keeping, filing of reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material Adverse Effect. As to each product or product candidate of the Company or any of its Subsidiaries subject to FDA regulation or similar legal provision in any foreign
jurisdiction, all manufacturing facilities of the Company and its Subsidiaries are operated in compliance with the FDA’s Quality System Regulation requirements at 21 C.F.R. Part 820, as applicable, except where such non-compliance, individually
or in the aggregate, would not have a Material Adverse Effect. Except as set forth in the Commission Documents or the Registration Statement, neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such 

  

 14 

 
Governmental Licenses or relating to a potential violation of, failure to comply with, or request to produce additional information under, any FDA rules and
regulations, guidelines or policies which, if the subject of any unfavorable decision, ruling or finding, individually or in the aggregate, would have a Material Adverse Effect. Except as set forth in the Commission Documents or the Registration
Statement, neither the Company nor any of its Subsidiaries has received any correspondence, notice or request from the FDA, including, without limitation, notice that any one or more products or product candidates of the Company or any of its
Subsidiaries failed to receive approval from the FDA for use for any one or more indications, and neither the Company nor any of its Subsidiaries knows of any basis therefor. This Section 4.14 does not relate to environmental matters, such
items being the subject of Section 4.15. 
 (b) The Company or one or more of its Subsidiaries owns or possesses adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, trade dress, logos,
copyrights and other intellectual property, including, without limitation, all of the intellectual property described in the Commission Documents as being owned or licensed by the Company (collectively, “Intellectual Property”),
necessary to carry on the business now operated by it. Except as set forth in the Commission Documents, there are no actions, suits or judicial proceedings pending, or to the Company’s knowledge threatened, relating to patents or proprietary
information to which the Company or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is subject, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware
of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which could render any Intellectual Property invalid or inadequate to protect the interest of the Company
and its Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would have a Material Adverse Effect. 
 (c) All pre-clinical and clinical trials conducted by, or on behalf of, the Company or any of its Subsidiaries, or in which the Company or any of its
Subsidiaries has participated that are described in the Registration Statement or the Commission Documents, or the results of which are referred to in the Registration Statement or the Commission Documents, if any, are the only pre-clinical and
clinical trials currently being conducted by or on behalf of the Company and its Subsidiaries. All such pre-clinical and clinical trials conducted, supervised or monitored by, or on behalf of, the Company or any of its Subsidiaries have been
conducted in compliance with all applicable federal, state, local and foreign laws, and the regulations and requirements of any applicable governmental entity, including, but not limited to, FDA good clinical practice and good laboratory practice
requirements. Except as set forth in the Registration Statement or the Commission Documents, neither the Company nor any of its Subsidiaries has received any notices or correspondence from the FDA or any other governmental agency requiring the
termination, suspension, delay or modification of any pre-clinical or clinical trials conducted by, or on behalf of, the Company or any of its Subsidiaries or in which the Company or any of its Subsidiaries has participated that are described in the
Registration Statement or the Commission Documents, if any, or the results of which are referred to in the Registration Statement or the Commission Documents. All pre-clinical and clinical trials previously conducted by, or on behalf of, the Company
or any of its Subsidiaries while 

  

 15 

 
conducted by or on behalf of the Company or any of its Subsidiaries, were conducted in compliance with all applicable federal, state, local and foreign laws,
and the regulations and requirements of any applicable governmental entity, including, but not limited to, FDA good clinical practice and good laboratory practice requirements. 
 Section 4.15 Environmental Compliance. Except as disclosed in the Commission Documents, the Company and each of its Subsidiaries
have obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws,
except for any approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations the failure of which to obtain does not or would not have a Material Adverse Effect. “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in
nature. Except for such instances as would not, individually or in the aggregate, have a Material Adverse Effect, to the best of the Company’s knowledge, there are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries that violate or could reasonably be expected to violate any Environmental Law after the Effective Date or that could reasonably be expected to give rise to any
environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution,
use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance. 
 Section 4.16 Material Agreements. Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the
Company is a party to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to an annual report on Form 10-K (collectively,
“Material Agreements”). The Company and each of its Subsidiaries have performed in all material respects all the obligations required to be performed by them under the Material Agreements, have received no notice of default or an
event of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the best knowledge of the Company, any other contracting party
thereto are in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect. Each of the Material Agreements is in full force and effect, and constitutes a legal, valid and binding obligation
enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

  

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 Section 4.17 Transactions With Affiliates. Except as set forth in the Commission
Documents, there are no loans, leases, agreements, contracts, royalty agreements, management contracts, service arrangements or other continuing transactions exceeding $120,000 between (a) the Company or any Subsidiary, on the one hand, and
(b) any person or entity who would be covered by Item 404(a) of Regulation S-K, on the other hand. Except as disclosed in the Commission Documents, there are no outstanding amounts payable to or receivable from, or advances by the Company
or any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries is otherwise a creditor of or debtor to, any beneficial owner of more than 5% of the outstanding shares of Common Stock, or any director, employee or affiliate of the
Company or any of its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred on behalf of the Company or any of its Subsidiaries or (ii) as part of the normal and customary terms of such persons’ employment or
service as a director with the Company or any of its Subsidiaries. 
 Section 4.18 Securities Act; NASD Conduct Rules.
The Company has complied with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Shares hereunder. 
 (i) The Company has prepared and filed with the Commission in accordance with the provisions of the Securities Act the Registration Statement, including a base prospectus relating to the Shares. The Registration
Statement was declared effective by order of the Commission on February 14, 2007, and Post-Effective Amendment No. 1 to the Registration Statement was declared effective by order of the Commission on March 12, 2007. As of the date
hereof, no stop order suspending the effectiveness of the Registration Statement has been issued by the Commission or is continuing in effect under the Securities Act and no proceedings therefor are pending before or, to the Company’s
knowledge, threatened by the Commission. No order preventing or suspending the use of the Prospectus or any Permitted Free Writing Prospectus has been issued by the Commission. 
 (ii) The Company meets the requirements for the use of Form S-3 under the Securities Act. The Commission has not notified the Company of any objection to
the use of the form of the Registration Statement. The Registration Statement complied in all material respects on the date on which it was declared effective by the Commission and on the Effective Date of this Agreement, and will comply in all
material respects on each applicable Fixed Request Exercise Date and on each applicable Settlement Date, with the requirements of the Securities Act and the Registration Statement (including the documents incorporated by reference therein) did not
on the date it was declared effective by the Commission and on the Effective Date of this Agreement and shall not on each applicable Fixed Request Exercise Date and on each applicable Settlement Date contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that this representation and warranty does not apply to statements in or omissions from the Registration
Statement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. The Registration Statement, as of the Effective Date, meets
the requirements set forth in Rule 415(a)(1)(x) under the Securities Act. The Base Prospectus complied in all 

  

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material respects on its date and on the Effective Date, and will comply in all material respects on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, with the requirements of the Securities Act and did not on its date and on the Effective Date and shall not on each applicable Fixed Request Exercise Date and on each applicable Settlement Date contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation and
warranty does not apply to statements in or omissions from the Base Prospectus made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use
therein. 
 (iii) The offering of the Shares pursuant to this Agreement has been registered with the Commission on Form S-3 under the
Securities Act pursuant to the standards for Form S-3 in effect prior to October 21, 1992, and the Shares are being offered pursuant to Rule 415 promulgated under the Securities Act. 
 (iv) Each Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof, on its date and on the applicable Settlement Date, shall
comply in all material respects with the provisions of the Securities Act and shall not on its date and on the applicable Settlement Date contain an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, except that this representation and warranty does not apply to statements in or omissions from any Prospectus Supplement made
in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. 
 (v) At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2) under the Securities Act) relating to the Shares, the Company was not and is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company be considered an Ineligible Issuer. Each Permitted Free Writing Prospectus (a) shall conform in all material respects to the requirements of the Securities Act on the date of its
first use, (b) when considered together with the Prospectus on each applicable Fixed Request Exercise Date and on each applicable Settlement Date, shall not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and (c) shall not include any information that conflicts with the information contained in
the Registration Statement, including any document incorporated by reference therein and any Prospectus Supplement deemed to be a part thereof that has not been superseded or modified. The immediately preceding sentence does not apply to statements
in or omissions from any Permitted Free Writing Prospectus made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. 

(vi) Prior to the Effective Date, the Company has not distributed any offering material in connection with the offering and sale of the Shares. From
and after the Effective 

  

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Date and prior to the completion of the distribution of the Shares, the Company shall not distribute any offering material in connection with the offering
and sale of the Shares, other than the Registration Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted Free Writing Prospectus. 
 Section 4.19 Employees. As of the Effective Date, neither the Company nor any Subsidiary of the Company has any collective bargaining arrangements or agreements covering any of its employees,
except as set forth in the Commission Documents. As of the Effective Date, except as disclosed in the Registration Statement or the Commission Documents, no officer, consultant or key employee of the Company or any Subsidiary whose termination,
either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the
Company or any Subsidiary. 
 Section 4.20 Use of Proceeds. The proceeds from the sale of the Shares shall be used by the
Company and its Subsidiaries as set forth in the Base Prospectus and any Prospectus Supplement filed pursuant to Sections 1.4 and 5.9. 
 Section 4.21 Public Utility Holding Company Act and Investment Company Act Status. The Company is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended. The Company is not, and as a result of the consummation of the transactions contemplated by this Agreement and the application of the proceeds from the sale of the Shares as set forth in the Base Prospectus
and any Prospectus Supplement shall not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. 
 Section 4.22 ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the Company or
any of its Subsidiaries which has had or would have a Material Adverse Effect. No “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) or “accumulated funding deficiency” (as defined
in Section 203 of ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred with respect to any Plan which has had or would have a Material Adverse Effect, and the execution and delivery of this Agreement and the
issuance and sale of the Shares hereunder shall not result in any of the foregoing events. Each Plan is in compliance in all material respects with applicable law, including ERISA and the Code; the Company has not incurred and does not expect to
incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any Plan; and each Plan for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualifications. As used in this Section 4.22, the term “Plan” shall mean an “employee
pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code. 
  

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 Section 4.23 Taxes. The Company (i) has filed all necessary federal, state and foreign
income and franchise tax returns or has duly requested extensions thereof, except for those the failure of which to file would not have a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due and payable for
which it is liable, except to the extent that any such taxes are being contested in good faith and by appropriate proceedings, except for such taxes the failure of which to pay would not have a Material Adverse Effect, and (iii) does not have
any tax deficiency or claims outstanding or assessed or, to the best of the Company’s knowledge, proposed against it which would have a Material Adverse Effect. 
 Section 4.24 Insurance. The Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its and its Subsidiaries’ businesses and the value
of their respective properties and as is customary for companies engaged in similar businesses in similar industries. 
 Section 4.25
Acknowledgement Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder, and
any advice given by the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares. 
 ARTICLE V 
 COVENANTS 

The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of
the other party, during the Investment Period: 
 Section 5.1 Securities Compliance. The Company shall notify the Commission and
the Trading Market, as applicable, in accordance with their respective rules and regulations, of the transactions contemplated by this Agreement, and shall take all necessary action, undertake all proceedings and obtain all registrations, permits,
consents and approvals for the legal and valid issuance of the Shares to the Investor in accordance with the terms of this Agreement. 
 Section 5.2 Registration and Listing. The Company shall take all action necessary to cause the Common Stock to continue to be registered as a class of securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply
with its reporting and filing obligations under the Exchange Act, and shall not take any action or file any document (whether or not permitted by the Securities Act) to terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company shall take all action necessary to continue the listing and trading of its Common Stock and the listing of the Shares purchased by Investor
hereunder on the Trading Market, and shall comply with the Company’s reporting, filing and other obligations under the bylaws, listed securities maintenance standards and other rules of the Trading Market. 
  

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 Section 5.3 Compliance with Laws. 
 (i) The Company shall comply, and cause each Subsidiary to comply, (a) with all laws, rules, regulations and orders applicable to the business and
operations of the Company and its Subsidiaries except as would not have a Material Adverse Effect and (b) with all applicable provisions of the Securities Act, the Exchange Act and the listing standards of the Trading Market. Without limiting
the generality of the foregoing, neither the Company nor any of its officers, directors or affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the
Company, or which caused or resulted in, or which would in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company. 
 (ii) The Investor shall comply with all laws, rules, regulations and orders applicable to the performance by it of its obligations under this Agreement
and its investment in the Shares, except as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Investor to enter into and perform its obligations under this Agreement in any material respect. Without
limiting the foregoing, the Investor shall comply with all applicable provisions of the Securities Act and the Exchange Act. 
 Section
5.4 Keeping of Records and Books of Account; Foreign Corrupt Practices Act. 
 (i) The Company shall keep and cause each Subsidiary
to keep adequate records and books of account, in which complete entries shall be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made. The Company shall maintain a system of internal accounting controls which are sufficient to
provide reasonable assurance that (a) transactions are executed with management’s authorization; (b) transactions are recorded as necessary to permit preparation of the consolidated financial statements of the Company and to maintain
accountability for the Company’s consolidated assets; (c) access to the Company’s assets is permitted only in accordance with management’s authorization; and (d) the reporting of the Company’s assets is compared with
existing assets at regular intervals. 
 (ii) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company, any of
their respective directors, officers, agents, employees or any other persons acting on their behalf shall, in connection with the operation of the Company’s and its Subsidiaries’ respective businesses, (a) use any corporate funds for
unlawful contributions, payments, gifts or entertainment or to make any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, (b) pay, accept or receive any
unlawful contributions, payments, expenditures or gifts, or (c) violate or operate in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign laws and regulations.

 (iii) Subject to the requirements of Section 5.12 of this Agreement, from time to time from and after the period beginning with the
second Trading Day immediately preceding 

  

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each Fixed Request Exercise Date through and including the applicable Settlement Date, the Company shall make available for inspection and review by the
Investor, customary documentation allowing the Investor and/or its appointed counsel or advisors to conduct due diligence. 
 Section 5.5
Limitations on Holdings and Issuances. At no time during the term of this Agreement shall the Investor directly or indirectly own more than 9.9% of the then issued and outstanding shares of Common Stock. The Company shall not be obligated
to issue and the Investor shall not be obligated to purchase any shares of Common Stock which would result in the issuance under this Agreement to the Investor at any time of Shares which, when aggregated with all other shares of Common Stock then
owned beneficially by the Investor, would result in the beneficial ownership by the Investor of more than 9.9% of the then issued and outstanding shares of the Common Stock. 
 Section 5.6 Other Agreements and Other Financings. 
 (i) The Company shall not enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or
impair the ability or right of the Company or any Subsidiary to perform its obligations under this Agreement, including, without limitation, the obligation of the Company to deliver Shares to the Investor in respect of a Fixed Request or Optional
Amount on the applicable Settlement Date. 
 (ii) The Company shall notify the Investor, within 48 hours, if it enters into any agreement,
plan, arrangement or transaction with a third party, the principal purpose of which is to obtain during a Pricing Period an Other Financing not constituting an Acceptable Financing (an “Other Financing Notice”); provided,
however, that the Company shall notify the Investor immediately (an “Integration Notice”) if it enters into any agreement, plan, arrangement or transaction with a third party, the principal purpose of which is to obtain at
any time during the Investment Period an Other Financing which may be integrated with the transactions contemplated by this Agreement for purposes of determining whether approval of the Company’s stockholders is required under any bylaw, listed
securities maintenance standards or other rules of the Trading Market and, if required under applicable law, including, without limitation, Regulation FD promulgated by the Commission, or under the applicable rules and regulations of the Trading
Market, the Company shall simultaneously publicly disclose such information in accordance with Regulation FD and the applicable rules and regulations of the Trading Market. For purposes of this Section 5.6(ii), any press release issued by, or
Commission Document filed by, the Company shall constitute sufficient notice, provided that it is issued or filed, as the case may be, within the time requirements set forth in the first sentence of this Section 5.6(ii) for an Other Financing
Notice or an Integration Notice, as applicable. During any Pricing Period in which the Company is required to provide an Other Financing Notice pursuant to the first sentence of this Section 5.6(ii), the Investor shall (i) have the option
to purchase the Shares subject to the Fixed Request at (x) the price therefor in accordance with the terms of this Agreement or (y) the third party’s per share purchase price in connection with the Other Financing, net of such third
party’s discounts, Warrant Value and fees, or (ii) the Investor may elect to not purchase any Shares subject to the Fixed Request for that Pricing Period. An “Other Financing” shall mean (x) the issuance of Common
Stock for a purchase price less than, or the 

  

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issuance of securities convertible into or exchangeable for Common Stock at an exercise or conversion price (as the case may be) less than, the then Current
Market Price of the Common Stock (in each case, after all fees, discounts, Warrant Value and commissions associated with the transaction) (a “Below Market Offering”); (y) the implementation by the Company of any mechanism in
respect of any securities convertible into or exchangeable for Common Stock for the reset of the purchase price of the Common Stock to below the then Current Market Price of the Common Stock (including, without limitation, any antidilution or
similar adjustment provisions in respect of any Company securities, but specifically excluding customary adjustments for stock splits, stock dividends, stock combinations and similar events); or (z) the issuance of options, warrants or similar
rights of subscription in each case not constituting an Acceptable Financing. “Acceptable Financing” shall mean the issuance by the Company of: (1) shares of Common Stock or securities convertible into or exchangeable for
Common Stock other than in connection with a Below Market Offering; (2) shares of Common Stock or securities convertible into or exchangeable for Common Stock in connection with awards under the Company’s benefit and equity plans and
arrangements and the issuance of shares of Common Stock upon the conversion, exercise or exchange thereof; (3) shares of Common Stock issuable upon the conversion or exchange of convertible or exchangeable securities outstanding as of the
Effective Date; (4) shares of Common Stock or securities convertible into or exchangeable for Common Stock or similar rights to subscribe for the purchase of shares of Common Stock in connection with technology sharing, licensing, research and
joint development agreements (or amendments thereto) with third parties, and the issuance of shares of Common Stock upon the conversion, exercise or exchange thereof; and (5) shares of Common Stock and/or warrants or similar rights to subscribe
for the purchase of shares of Common Stock issued in connection with equipment financings and/or real property leases (or amendments thereto) and the issuance of shares of Common Stock upon the exercise thereof. 
 Section 5.7 Stop Orders. The Company shall advise the Investor immediately and shall confirm such advice in writing: (i) of the
Company’s receipt of notice of any request by the Commission for amendment of or a supplement to the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or for any additional information; (ii) of the
Company’s receipt of notice of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) of the Company becoming aware of the happening of any event, which makes any statement of a material fact made in the Prospectus or any Permitted Free Writing Prospectus untrue or which
requires the making of any additions to or changes to the statements then made in the Prospectus or any Permitted Free Writing Prospectus in order to state a material fact required by the Securities Act to be stated therein or necessary in order to
make the statements then made therein, in light of the circumstances under which they were made, not misleading, or of the necessity to amend the Registration Statement or supplement the Prospectus or any Permitted Free Writing Prospectus to comply
with the Securities Act or any other law. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company shall use commercially reasonable efforts to obtain the withdrawal of such
order at the earliest possible time. 
  

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 Section 5.8 Amendments to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses. 
 (i) Except as provided in this Agreement and other than periodic reports required to be filed pursuant to the
Exchange Act, the Company shall not file with the Commission any amendment to the Registration Statement that relates to the Investor, the Agreement or the transactions contemplated hereby or file with the Commission any Prospectus Supplement that
relates to the Investor, this Agreement or the transactions contemplated hereby with respect to which (a) the Investor shall not previously have been advised, (b) the Company shall not have given due consideration to any comments thereon
received from the Investor or its counsel, or (c) the Investor shall reasonably object after being so advised, unless it is necessary to amend the Registration Statement or make any supplement to the Prospectus to comply with the Securities Act
or any other applicable law or regulation, in which case the Company shall immediately so inform the Investor, the Investor shall be provided with a reasonable opportunity to review and comment upon any disclosure relating to the Investor and the
Company shall expeditiously furnish to the Investor an electronic copy thereof. In addition, for so long as, in the reasonable opinion of counsel for the Investor, the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the
Securities Act) is required to be delivered in connection with any purchase of Shares by the Investor, the Company shall not file any Prospectus Supplement with respect to the Shares without delivering or making available a copy of such Prospectus
Supplement, together with the Base Prospectus, to the Investor promptly. 
 (ii) The Company agrees that, unless it obtains the prior written
consent of the Investor, it has not made and will not make an offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a Free Writing Prospectus required to be filed by the Company or
the Investor with the Commission or retained by the Company or the Investor under Rule 433 under the Securities Act. The Investor agrees that, unless it obtains the prior written consent of the Company, it has not made and will not make an offer
relating to the Shares that would constitute a Free Writing Prospectus required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act. Any such Issuer Free Writing Prospectus or other Free
Writing Prospectus consented to by the Investor or the Company is referred to in this Agreement as a “Permitted Free Writing Prospectus.” The Company agrees that (x) it has treated and will treat, as the case may be, each
Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending and record keeping. 
 Section 5.9 Prospectus
Delivery. The Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities Act on the first Trading Day immediately following the last Trading Day of each Pricing Period. The Company shall
provide the Investor a reasonable opportunity to comment on a draft of each such Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due consideration to all such comments and, subject to the provisions of Section 5.8
hereof, shall deliver or make available to the Investor, without charge, an electronic copy of each form of Prospectus Supplement, together with the Base Prospectus, and any Permitted Free Writing Prospectus on each applicable Settlement Date. The
Company consents to the use of the Prospectus (and of any Prospectus Supplement thereto) in accordance with the provisions of the Securities Act and with the securities or “blue sky” laws of the jurisdictions in which the Shares may be
sold by the Investor, in connection with the offering and sale of the Shares and for such period of time thereafter as the Prospectus (or in lieu 

  

 24 

 
thereof, the notice referred to in Rule 173(a) under the Securities Act) is required by the Securities Act to be delivered in connection with sales of the
Shares. If during such period of time any event shall occur that in the judgment of the Company and its counsel is required to be set forth in the Prospectus or any Permitted Free Writing Prospectus or should be set forth therein in order to make
the statements made therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Prospectus or any Permitted Free Writing Prospectus to comply with the Securities Act or any
other applicable law or regulation, the Company shall forthwith prepare and, subject to Section 5.8 above, file with the Commission an appropriate Prospectus Supplement to the Prospectus (or supplement to the Permitted Free Writing Prospectus)
and shall expeditiously furnish or make available to the Investor an electronic copy thereof. 
 Section 5.10 Selling
Restrictions. 
 (i) The Investor covenants that from and after the date hereof
through and including the 90th day next following the termination of this Agreement (the “Restricted
Period”), neither the Investor nor any of its affiliates (within the meaning of the Exchange Act) nor any entity managed or controlled by the Investor shall, directly or indirectly, sell any securities of the Company, except the Shares that
it owns or has the right to purchase as provided in a Fixed Request Notice. During the Restricted Period, neither the Investor or any of its affiliates nor any entity managed or controlled by the Investor shall sell any shares of Common Stock of the
Company it does not “own” or have the unconditional right to receive under the terms of this Agreement (within the meaning of Rule 200 of Regulation SHO promulgated by the Commission under the Exchange Act), including Shares in any account
of the Investor or in any account directly or indirectly managed or controlled by the Investor or any of its affiliates or any entity managed or controlled by the Investor. Without limiting the generality of the foregoing, prior to and during the
Restricted Period, neither the Investor nor any of its affiliates nor any entity managed or controlled by the Investor or any of its affiliates shall enter into a short position with respect to shares of Common Stock of the Company, including in any
account of the Investor’s or in any account directly or indirectly managed or controlled by the Investor or any of its Affiliates or any entity managed or controlled by the Investor, except that the Investor may sell Shares that it is obligated
to purchase under a pending Fixed Request Notice but has not yet taken possession of so long as the Investor (or the Broker-Dealer, as applicable) covers any such sales with the Shares purchased pursuant to such Fixed Request Notice;
provided, however, that the Investor (or the Broker-Dealer, as applicable) shall not be required to cover any such sales with the Shares purchased pursuant to such Fixed Request Notice if (a) the Fixed Request is terminated by
mutual agreement of the Company and the Investor and, as a result of such termination, no Shares are delivered to the Investor under this Agreement or (b) the Company otherwise fails to deliver such Shares to the Investor on the applicable
Settlement Date upon the terms and subject to the provisions of this Agreement. Prior to and during the Restricted Period, the Investor shall not grant any option to purchase or acquire any right to dispose or otherwise dispose for value of any
shares of Common Stock or any securities convertible into or exercisable or exchangeable for, or warrants to purchase, any shares of Common Stock, or enter into any swap, hedge or other agreement that transfers, in whole or in part, the economic
risk of ownership of the Common Stock, except for such sales expressly permitted by this Section 5.10(i). 
  

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 (ii) In addition to the foregoing, in connection with any sale of the Company’s securities
(including any sale permitted by paragraph (i) above), the Investor shall comply in all respects with all applicable laws, rules, regulations and orders, including, without limitation, the requirements of the Securities Act and the Exchange
Act. 
 Section 5.11 Effective Registration Statement. During the Investment Period, the Company shall use its best efforts to
maintain the continuous effectiveness of the Registration Statement under the Securities Act. 
 Section 5.12 Non-Public
Information. Neither the Company nor any of its directors, officers or agents shall disclose any material non-public information about the Company to the Investor, unless a simultaneous public announcement thereof is made by the Company in
the manner contemplated by Regulation FD. 
 Section 5.13 Broker/Dealer. The Investor shall use one or more broker-dealers to
effectuate all sales, if any, of the Shares that it may purchase from the Company pursuant to this Agreement which (or whom) shall be unaffiliated with the Investor and not then currently engaged or used by the Company (collectively, the
“Broker-Dealer”). The Investor shall provide the Company with all information regarding the Broker-Dealer reasonably requested by the Company. The Investor shall be solely responsible for all fees and commissions of the
Broker-Dealer. 
 Section 5.14 Update of Disclosure Schedule. During the Investment Period, the Company shall from time to time
update the Disclosure Schedule as may be required to satisfy the condition set forth in Section 6.3(i). For purposes of this Section 5.14, any disclosure made in a schedule to the Compliance Certificate substantially in the form attached
hereto as Exhibit D shall be deemed to be an update of the Disclosure Schedule. Notwithstanding anything in this Agreement to the contrary, no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure any breach of a
representation or warranty of the Company contained in this Agreement and shall not affect any of the Investor’s rights or remedies with respect thereto. 
 ARTICLE VI 
 OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND 
 PURCHASE OF THE SHARES 
 Section 6.1
Opinion of Counsel and Certificate. Simultaneously with the execution and delivery of this Agreement, the Investor has received and relied upon (i) an opinion of outside counsel to the Company, dated the Effective Date, in the form
mutually agreed to by the parties hereto, and (ii) a certificate from the Company, dated the Effective Date, in the form of Exhibit C hereto. 
 Section 6.2 Conditions Precedent to the Obligation of the Company. The obligation hereunder of the Company to issue and sell the Shares to the Investor under any Fixed Request or Optional Amount is
subject to the satisfaction or (to the extent permitted by applicable law) waiver of each of the conditions set forth below. These conditions are for the Company’s sole benefit and (to the extent permitted by applicable law) may be waived by
the Company at any time in its sole discretion. 
  

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 (i) Accuracy of the Investor’s Representations and Warranties. The representations and
warranties of the Investor contained in this Agreement (i) that are not qualified by “materiality” shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the
applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations
and warranties shall be true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” shall have been true and correct when made and shall be true and correct as of the applicable Fixed
Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties
shall be true and correct as of such other date. 
 (ii) Registration Statement. The Registration Statement is effective and
neither the Company nor the Investor shall have received notice that the Commission has issued or intends to issue a stop order with respect to the Registration Statement. The Company shall have a maximum dollar amount certain of Shares registered
under the Registration Statement which are in an amount (A) as of the Effective Date, not less than the Total Commitment and (B) as of the applicable Fixed Request Exercise Date, not less than the maximum dollar amount worth of Shares
issuable pursuant to the applicable Fixed Request Notice and applicable Optional Amount, if any. The Current Report shall have been filed with the Commission, as required pursuant to Section 1.4, and all Prospectus Supplements shall have been
filed with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares prior to each Settlement Date, as applicable. Any other material required to be filed by the Company or any other offering participant
pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433 under the Securities Act. 
 (iii) Performance by the Investor. The Investor shall have performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the applicable Fixed Request Exercise Date and the applicable Settlement Date. 
 (iv) No Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by this Agreement. 
 (v) No Suspension, Etc. Trading in the Common Stock shall not have been suspended by the Commission or the Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the applicable Fixed Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date, none of the events described in clauses (i), (ii) and (iii) of Section 5.7 shall have occurred, trading in securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or 

  

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other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial market which, in each
case, in the reasonable judgment of the Company, makes it impracticable or inadvisable to issue the Shares. 
 (vi) No Proceedings or
Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or
threatened, against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in
connection with such transactions. 
 (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof. 
 Section 6.3 Conditions Precedent to the
Obligation of the Investor. The obligation hereunder of the Investor to accept a Fixed Request Notice or Optional Amount grant and to acquire and pay for the Shares is subject to the satisfaction or (to the extent permitted by applicable
law) waiver, at or before each Fixed Request Exercise Date and each Settlement Date, of each of the conditions set forth below. These conditions are for the Investor’s sole benefit and (to the extent permitted by applicable law) may be waived
by the Investor at any time in its sole discretion. 
 (i) Accuracy of the Company’s Representations and Warranties. The
representations and warranties of the Company contained in this Agreement (i) that are not qualified by “materiality” or “Material Adverse Effect” shall have been true and correct in all material respects when made and shall
be true and correct in all material respects as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as
of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” shall
have been true and correct when made and shall be true and correct as of the applicable Fixed Request Exercise Date and the applicable Settlement Date with the same force and effect as if made on such dates, except to the extent such representations
and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date. 
 (ii) Registration Statement. The Registration Statement is effective and neither the Company nor the Investor shall have received notice that the Commission has issued or intends to issue a stop order with respect to the
Registration Statement. The Company shall have a maximum dollar amount certain of Shares registered under the Registration Statement which are in an amount (A) as of the Effective Date, not less than the Total Commitment and (B) as of the
applicable Fixed Request Exercise Date, not less than the maximum dollar amount worth of Shares issuable pursuant to the applicable Fixed Request Notice and applicable Optional Amount, if any. The Current Report shall have been filed with the
Commission, as required pursuant to Section 1.4, and all Prospectus Supplements shall have been filed with the Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the 

  

 28 

 
Shares prior to each Settlement Date, as applicable, and an electronic copy of each such Prospectus Supplement together with the Base Prospectus shall have
been delivered or made available to the Investor in accordance with Section 5.9 hereof. Any other material required to be filed by the Company or any other offering participant pursuant to Rule 433(d) under the Securities Act shall have been
filed with the Commission within the applicable time periods prescribed for such filings by Rule 433 under the Securities Act. 
 (iii)
No Suspension. Trading in the Common Stock shall not have been suspended by the Commission or the Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated
prior to the applicable Fixed Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed Request Exercise Date and applicable Settlement Date, none of the events described in clauses (i), (ii) and
(iii) of Section 5.7 shall have occurred, trading in securities generally as reported on the Trading Market shall not have been suspended or limited, nor shall a banking moratorium have been declared either by the United States or New York
State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial market
which, in each case, in the reasonable judgment of the Investor, makes it impracticable or inadvisable to purchase the Shares. 
 (iv)
Performance of the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the applicable Fixed Request Exercise Date and the applicable Settlement Date and shall have delivered to the Investor on the applicable Settlement Date the Compliance Certificate substantially in the form attached hereto as
Exhibit D. 
 (v) No Injunction. No statute, rule, regulation, order, decree, writ, ruling or injunction shall have been
enacted, entered, promulgated, threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by this
Agreement. 
 (vi) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or
governmental authority shall have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or threatened, against the Company or any Subsidiary, or any of the officers, directors or
affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions. 
 (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such Fixed Request Notice or Optional Amount shall not
violate Sections 2.2, 2.12 and 5.5 hereof. 
 (viii) Shares Authorized. The Shares issuable pursuant to such Fixed Request
Notice or Optional Amount shall have been duly authorized by all necessary corporate action of the Company. 
  

 29 

 (ix) Notification of Listing of Shares. If required, the Company shall have submitted to
the Trading Market a notification form of listing of additional shares related to the Shares issuable pursuant to such Fixed Request or Optional Amount in accordance with the bylaws, listed securities maintenance standards and other rules of the
Trading Market. 
 (x) Opinions of Counsel; Bring-Down. Subsequent to the filing of the Current Report pursuant to
Section 1.4 and prior to the first Fixed Request Exercise Date, the Investor shall have received an opinion from outside counsel to the Company in the form mutually agreed to by the parties hereto. On each Settlement Date, the Investor shall
have received an opinion “bring down” from outside counsel to the Company in the form mutually agreed to by the parties hereto. 
 (xi) Payment of Investor’s Counsel Fees; Due Diligence Expenses. On the
Effective Date, the Company shall have paid by wire transfer of immediately available funds to an account designated by the Investor’s counsel, the fees and expenses of the Investor’s counsel in accordance with the proviso to the first
sentence of Section 9.1(i) of this Agreement. On the 30th day of the third month in each calendar quarter
during the Investment Period, the Company shall have paid by wire transfer of immediately available funds (a) to an account designated by the Investor, the due diligence expenses incurred by the Investor and (b) to an account designated by
the Investor’s counsel, the fees and expenses of the Investor’s counsel, in each case, in accordance with the provisions of the second sentence of Section 9.1(i) of this Agreement. 
 ARTICLE VII 
 TERMINATION

 Section 7.1 Term, Termination by Mutual Consent. Unless earlier terminated as provided hereunder, this Agreement
shall terminate automatically on the earliest of (i) the first day of the month next following the 24-month anniversary of the Effective Date (the “Investment Period”), (ii) the date that the entire dollar amount of Shares
registered under the Registration Statement have been issued and sold and (iii) the date the Investor shall have purchased the Total Commitment of shares of Common Stock (subject in all cases to the Trading Market Limit). The Company may
terminate this Agreement effective upon three Trading Days’ prior written notice to the Investor under Section 9.4; provided, however, that such termination shall not occur during a Pricing Period or prior to a Settlement
Date. This Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent, it being hereby acknowledged and agreed that
the Investor may not consent to such termination during a Pricing Period or prior to a Settlement Date in the event the Investor has instructed the Broker-Dealer to effect an open-market sale of Shares which are subject to a pending Fixed Request
Notice but which have not yet been physically delivered by the Company (and/or credited by book-entry) to the Investor in accordance with the terms and subject to the conditions of this Agreement. 
 Section 7.2 Other Termination. If the Company provides the Investor with an Other Financing Notice (other than in respect of an
underwritten public offering of equity securities of the Company or a registered direct public offering of equity securities of the Company) or an Integration Notice, in each case pursuant to Section 5.6(ii) of this Agreement, or if the Company
otherwise enters into any agreement, plan, arrangement or transaction with a third party, the 

  

 30 

 
principal purpose of which is to obtain outside a Pricing Period, but otherwise during the Investment Period, an Other Financing not constituting an
Acceptable Financing (other than in respect of an underwritten public offering of equity securities of the Company or a registered direct public offering of equity securities of the Company), in which latter case the Company shall so notify the
Investor within 48 hours thereof, then in all such cases the Investor shall have the right to terminate this Agreement within the subsequent 30-day period (the “Event Period”), effective upon one Trading Day’s prior written
notice delivered to the Company in accordance with Section 9.4 at any time during the Event Period. The Company shall immediately notify the Investor (and, if required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of the Trading Market, the Company shall simultaneously publicly disclose such information in accordance with Regulation FD and the applicable rules and regulations of the
Trading Market), and the Investor shall have the right to terminate this Agreement at any time after receipt of such notification, if: (i) any condition, occurrence, state of facts or event constituting a Material Adverse Effect has occurred;
(ii) a Material Change in Ownership has occurred or the Company enters into a definitive agreement providing for a Material Change in Ownership; or (iii) a default or event of default has occurred and is continuing under the terms of any
agreement, contract, note or other instrument to which the Company or any of its Subsidiaries is a party with respect to any indebtedness for borrowed money representing more than 10% of the Company’s consolidated assets, in any such case, upon
one Trading Day’s prior written notice delivered to the Company in accordance with Section 9.4 hereof. 
 Section 7.3 Effect
of Termination. In the event of termination by the Company or the Investor, written notice thereof shall forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become void and of no further force and effect, except as provided in Section 9.9 hereof.
Nothing in this Section 7.3 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement, or to impair the rights of the Company and the Investor to compel specific performance by the other party
of its obligations under this Agreement. 
 ARTICLE VIII 
 INDEMNIFICATION 
 Section 8.1 General Indemnity. 
 (i) Indemnification by the Company. The Company shall indemnify and hold harmless the Investor, the Broker-Dealer, each affiliate, employee,
representative and advisor of and to the Investor and the Broker-Dealer, and each person, if any, who controls the Investor or the Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of defense and investigation and all attorneys’ fees) to which the Investor, the Broker-Dealer and each such other person may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (i) any violation of law (including United States federal securities laws)
in connection with the transactions contemplated by this Agreement by 

  

 31 

 
the Company or any of its Subsidiaries, affiliates, officers, directors or employees, (ii) any untrue statement or alleged untrue statement of a
material fact contained, or incorporated by reference, in the Registration Statement or any amendment thereto or any omission or alleged omission to state therein, or in any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein not misleading, or (iii) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer information” (as defined in Rule 433 under the Securities Act) of the Company, which “issuer information” is required to be, or is, filed with the
Commission or otherwise contained in any Free Writing Prospectus, or any amendment or supplement thereto, or any omission or alleged omission to state therein, or in any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that (A) the Company shall not be liable under this Section 8.1(i) to
the extent that a court of competent jurisdiction shall have determined by a final judgment (from which no further appeals are available) that such loss, claim, damage, liability or expense resulting directly and solely from any such acts or
failures to act, undertaken or omitted to be taken by the Investor or such person through its bad faith or willful misconduct, (B) the foregoing indemnity shall not apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Investor expressly for use
in the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment thereof or supplement thereto, and (C) with respect to the Prospectus, the foregoing indemnity shall not inure to the benefit of the
Investor or any such person from whom the person asserting any loss, claim, damage, liability or expense purchased Common Stock, if copies of all Prospectus Supplements required to be filed pursuant to Section 1.4 and 5.9, together with the
Base Prospectus, were timely delivered or made available to the Investor pursuant hereto and a copy of the Base Prospectus, together with a Prospectus Supplement (as applicable), was not sent or given by or on behalf of the Investor or any such
person to such person, if required by law to have been delivered, at or prior to the written confirmation of the sale of the Common Stock to such person, and if delivery of the Base Prospectus, together with a Prospectus Supplement (as applicable),
would have cured the defect giving rise to such loss, claim, damage, liability or expense. 
 The Company shall reimburse the Investor, the
Broker-Dealer and each such controlling person promptly upon demand (with accompanying presentation of documentary evidence) for all legal and other costs and expenses reasonably incurred by the Investor, the Broker-Dealer or such indemnified
persons in investigating, defending against, or preparing to defend against any such claim, action, suit or proceeding with respect to which it is entitled to indemnification. 
 (ii) Indemnification by the Investor. The Investor shall indemnify and hold harmless the Company, each of its directors and officers, and
each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all attorneys fees) to which the Company and each such other person may become subject, under the Securities Act or otherwise, insofar as 

  

 32 

 
such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (i) any violation of law
(including United States federal securities laws) in connection with the transactions contemplated by this Agreement by the Investor or any of its affiliates, officers, directors or employees, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, to the extent, but only to the extent, the untrue statement, alleged untrue statement,
omission or alleged omission was made in reliance upon, and in conformity with, written information furnished by the Investor to the Company expressly for inclusion in the Current Report or such Prospectus Supplement or Permitted Free Writing
Prospectus, or any amendment thereof or supplement thereto. 
 The Investor shall reimburse the Company and each such director, officer or
controlling person promptly upon demand for all legal and other costs and expenses reasonably incurred by the Company or such indemnified persons in investigating, defending against, or preparing to defend against any such claim, action, suit or
proceeding with respect to which it is entitled to indemnification. 
 Section 8.2 Indemnification Procedures. Promptly after a
person receives notice of a claim or the commencement of an action for which the person intends to seek indemnification under Section 8.1, the person will notify the indemnifying party in writing of the claim or commencement of the action, suit
or proceeding; provided, however, that failure to notify the indemnifying party will not relieve the indemnifying party from liability under Section 8.1, except to the extent it has been materially prejudiced by the failure to
give notice. The indemnifying party will be entitled to participate in the defense of any claim, action, suit or proceeding as to which indemnification is being sought, and if the indemnifying party acknowledges in writing the obligation to
indemnify the party against whom the claim or action is brought, the indemnifying party may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it. After an indemnifying party
notifies an indemnified party that the indemnifying party wishes to assume the defense of a claim, action, suit or proceeding, the indemnifying party will not be liable for any legal or other expenses incurred by the indemnified party in connection
with the defense against the claim, action, suit or proceeding except that if, in the opinion of counsel to the indemnifying party, one or more of the indemnified parties should be separately represented in connection with a claim, action, suit or
proceeding, the indemnifying party will pay the reasonable fees and expenses of one separate counsel for the indemnified parties. Each indemnified party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in
all reasonable respects with the indemnifying party in the defense of any action or claim as to which indemnification is sought. No indemnifying party will be liable for any settlement of any action effected without its prior written consent.
Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested (by written notice provided in accordance with Section 9.4) an indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated hereby effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying 

  

 33 

 
party shall have received written notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party will, without the prior written consent of the indemnified party, effect any settlement
of a pending or threatened action with respect to which an indemnified party is, or is informed that it may be, made a party and for which it would be entitled to indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of the pending or threatened action. 
 If for any reason the
indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss or liability referred to in Section 8.1 as to which such indemnified party is entitled to
indemnification thereunder, each indemnifying party shall, in lieu of indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of such loss or liability, (i) in the proportion which is
appropriate to reflect the relative benefits received by the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the sale of Shares which is the subject of the claim, action, suit or proceeding which resulted
in the loss or liability or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the
relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss or
liability, as well as any other relevant equitable considerations. 
 The remedies provided for in Section 8.1 and this Section 8.2
are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity. 
 ARTICLE IX 
 MISCELLANEOUS 
 Section 9.1 Fees and Expenses. 
 (i) Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; provided, however, that the Company shall pay, by wire transfer of immediately available funds to an account
designated by the Investor’s counsel, promptly following the receipt of an invoice therefor, all reasonable attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by the Investor, up to an aggregate
of $35,000, in connection with the preparation, negotiation, execution and delivery of this Agreement, legal due diligence of the Company and review of the Registration Statement, the Base Prospectus, the Current Report, any Permitted Free Writing
Prospectus and all other related transaction documentation. In addition, the Company shall pay, on the 30th day of
the third month in each calendar quarter during the Investment Period, promptly following the receipt of an invoice therefor, up to $12,500, representing (x) the due diligence expenses incurred by the Investor during the Investment Period and
(y) the attorneys’ fees and expenses incurred by the Investor in connection with ongoing legal due diligence of the Company, any amendments, modifications or waivers of this Agreement and review of Prospectus Supplements, 

  

 34 

 
Permitted Free Writing Prospectuses, opinion “bring downs” and all other related documents to be delivered by the Company and its counsel in
connection with a Fixed Request Exercise Date and the applicable Settlement Date. The Company shall pay all U.S. federal, state and local stamp and other similar transfer and other taxes and duties levied in connection with issuance of the Shares
pursuant hereto. 
 (ii) If the Company issues a Fixed Request Notice and fails to deliver the Shares to the Investor on the applicable
Settlement Date and such failure continues for 10 Trading Days, the Company shall pay the Investor, in cash (or, at the option of the Investor, in shares of Common Stock which have not been registered under the Securities Act), as liquidated damages
for such failure and not as a penalty, an amount equal to 2.0% of the payment required to be paid by the Investor on such Settlement Date (i.e., the sum of the Fixed Amount Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an additional 2.0% for each additional 30-day period thereafter until the Shares have been delivered, which amount shall be prorated for such periods less than thirty 30 days
(subject in all cases to the Trading Market Limit). 
 Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury
Trial. 
 (i) The Company and the Investor acknowledge and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof this being in addition to any other remedy to which either party may be entitled by law or equity. 
 (ii) Each of the Company and the Investor (a) hereby irrevocably submits to the jurisdiction of the United States District Court and other courts of
the United States sitting in the State of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Investor
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing in this Section 9.2 shall affect or limit any right to serve process in any other manner permitted by law. 
 (iii) Each of the Company and the Investor hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each of the Company and the Investor (a) certifies that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 9.2. 
  

 35 

 Section 9.3 Entire Agreement; Amendment. This Agreement, together with the exhibits
referred to herein and the Disclosure Schedule, represents the entire agreement of the parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by either party relative to subject
matter hereof not expressly set forth herein. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto. The Disclosure Schedule and all exhibits to this Agreement are hereby incorporated by
reference in, and made a part of, this Agreement as if set forth in full herein. 
 Section 9.4 Notices. Any notice, demand,
request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or facsimile (with facsimile machine confirmation of delivery received) at the address or
number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The
address for such communications shall be: 
  

			
	If to the Company:	 	 Titan Pharmaceuticals, Inc.
 400 Oyster Point Blvd.,
Suite 505
 South San Francisco, California 94080
 Telephone
Number: (650) 244-4990
 Fax: (650) 244-0715
 Attention: Robert E.
Farrell

		
	With copies to:	 	 Loeb & Loeb LLP
 345 Park Avenue
 New York, New York 10154
 Telephone Number: (212) 407-4000
 Fax: (212) 214-0706
 Attention: Fran Stoller, Esq.

		
	If to the Investor:	 	 Azimuth Opportunity Ltd.
 c/o Fortis Prime Fund
Solutions (BVI) Limited
 P.O. Box 761, 1st Floor
 James Frett
Building
 Road Town, Tortola
 British Virgin Islands

Telephone Number: (284) 494-6046
 Fax: (284) 494-6898
 Attention: Becky McGinnis

  

 36 

			
		
	With copies to:	 	 Greenberg Traurig, LLP
 The MetLife
Building
 200 Park Avenue
 New York, NY 10166
 Telephone Number: (212) 801-9200
 Fax: (212) 801-6400
 Attention: Clifford E. Neimeth, Esq.
 Anthony J. Marsico,
Esq.

 Either party hereto may from time to time change its address for notices by giving at least 10
days advance written notice of such changed address to the other party hereto. 
 Section 9.5 Waivers. No waiver by either
party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. No provision of this Agreement may be waived other than in a written instrument signed by the party against whom
enforcement of such waiver is sought. 
 Section 9.6 Headings. The article, section and subsection headings in this Agreement
are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. 
 Section 9.7 Successors and Assigns. The Investor may not assign this Agreement to any person without the prior consent of the Company, in the Company’s sole discretion. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and assigns. The assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of such party under this Agreement. 
 Section 9.8 Governing Law. This Agreement shall be governed by and construed in accordance with the internal procedural and substantive
laws of the State of New York, without giving effect to the choice of law provisions of such state. 
 Section 9.9 Survival.
The representations and warranties of the Company and the Investor contained in Articles III and IV and the covenants contained in Article V shall survive the execution and delivery hereof until the termination of this Agreement, and the agreements
and covenants set forth in Article VIII of this Agreement shall survive the execution and delivery hereof. 
 Section 9.10
Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute one and the same original and binding instrument and shall become effective when all counterparts have been signed by each party
and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart. In the event any signature is delivered by facsimile transmission, the party using such means of delivery shall cause four
additional executed signature pages to be physically delivered to the other parties within five days of the execution and delivery hereof. 
  

 37 

 Section 9.11 Publicity. On or after the Effective Date, the Company may issue a press
release or otherwise make a public statement or announcement with respect to this Agreement or the transactions contemplated hereby or the existence of this Agreement (including, without limitation, by filing a copy of this Agreement with the
Commission); provided, however, that prior to issuing any such press release, or making any such public statement or announcement, the Company shall consult with the Investor on the form and substance of such press release or other
disclosure. 
 Section 9.12 Severability. The provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible. 
 Section 9.13 Further
Assurances. From and after the date of this Agreement, upon the request of the Investor or the Company, each of the Company and the Investor shall execute and deliver such instrument, documents and other writings as may be reasonably necessary
or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. 
 [Signature Page Follows]

  

 38 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officer as of the date first above written. 
  

			
	TITAN PHARMACEUTICALS, INC.:
		
	By:	 	 /s/ Louis R. Bucalo

	Name:	 	Louis R. Bucalo, M.D.
	Title:	 	Chairman, President and CEO
	
	AZIMUTH OPPORTUNITY LTD.:
		
	By:	 	 /s/ Deirdre M. McCoy

	Name:	 	Deirdre M. McCoy
	Title:	 	Director

  

 39 

 ANNEX A TO THE 
 COMMON STOCK PURCHASE AGREEMENT 
 DEFINITIONS 
 (a) “Acceptable Financing” shall have the meaning assigned to such term in Section 5.6(ii) hereof. 
 (b) “Aggregate Limit” shall have the meaning assigned to such term in Section 1.1 hereof. 
 (c) “AMEX” means the American Stock Exchange or any successor thereto. 
 (d) “Base Prospectus” shall mean the Company’s prospectus, dated February 14, 2007, a preliminary form of which is included in
the Registration Statement, including the documents incorporated by reference therein. 
 (e) “Below Market Offering” shall
have the meaning assigned to such term in Section 5.6(ii) hereof. 
 (f) “Broker-Dealer” shall have the meaning
assigned to such term in Section 5.13 hereof. 
 (g) “Bylaws” shall have the meaning assigned to such term in
Section 4.3 hereof. 
 (h) “Charter” shall have the meaning assigned to such term in Section 4.3 hereof.

 (i) “Code” shall mean the Internal Revenue Code of 1986, as amended. 
 (j) “Commission” shall mean the Securities and Exchange Commission or any successor entity. 
 (k) “Commission Documents” shall mean (1) all reports, schedules, registrations, forms, statements, information and other documents
filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including all material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been filed by the Company since
December 31, 2006 and which hereafter shall be filed by the Company during the Investment Period, including, without limitation, the Current Report and the Form 10-K filed by the Company for its fiscal year ended December 31, 2006 (the
“2006 Form 10-K”), (2) the Registration Statement, as the same may be amended from time to time, the Prospectus and each Prospectus Supplement, and each Permitted Free Writing Prospectus and (3) all information contained
in such filings and all documents and disclosures that have been and heretofore shall be incorporated by reference therein. 
 (l)
“Common Stock” shall have the meaning assigned to such term in the Recitals. 
 (m) “Current Market Price”
means, with respect to any particular measurement date, the closing price of a share of Common Stock as reported on the Trading Market for the Trading Day immediately preceding such measurement date. 

 (n) “Current Report” shall have the meaning assigned to such term in Section 1.4
hereof. 
 (o) “Discount Price” shall have the meaning assigned to such term in Section 2.2 hereof. 
 (p) “EDGAR” shall have the meaning assigned to such term in Section 4.3 hereof. 
 (q) “Effective Date” shall mean the date of this Agreement. 
 (r) “Environmental Laws” shall have the meaning assigned to such term in Section 4.15 hereof. 
 (s) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. 
 (t) “Event Period” shall have the meaning assigned to such term in Section 7.2 hereof. 
 (u) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission
thereunder. 
 (v) “FDA” shall have the meaning assigned to such term in Section 4.14(a) hereof. 
 (w) “Fixed Amount Requested” shall mean the amount of a Fixed Request requested by the Company in a Fixed Request Notice delivered
pursuant to Section 2.1 hereof. 
 (x) “Fixed Request” means the transactions contemplated under Sections 2.1 through
2.8 of this Agreement. 
 (y) “Fixed Request Amount” means the actual amount of proceeds received by the Company pursuant to
a Fixed Request under this Agreement. 
 (z) “Fixed Request Exercise Date” shall have the meaning assigned to such term in
Section 2.2 hereof. 
 (aa) “Fixed Request Notice” shall have the meaning assigned to such term in Section 2.1
hereof. 
 (bb) “Free Writing Prospectus” shall mean a “free writing prospectus” as defined in Rule 405
promulgated under the Securities Act. 
 (cc) “GAAP” shall mean generally accepted accounting principles in the United
States of America as applied by the Company. 
 (dd) “Governmental Licenses” shall have the meaning assigned to such term in
Section 4.14(a) hereof. 

 (ee) “Indebtedness” shall have the meaning assigned to such term in Section 4.9
hereof. 
 (ff) “Integration Notice” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 (gg) “Intellectual Property” shall have the meaning assigned to such term in Section 4.14(b) hereof. 
 (hh) “Investment Period” shall have the meaning assigned to such term in Section 7.1 hereof. 
 (ii) “Issuer Free Writing Prospectus” shall mean an “issuer free writing prospectus” as defined in Rule 433 promulgated under
the Securities Act. 
 (jj) “Market Capitalization” shall be calculated on the Trading Day preceding the applicable Pricing
Period and shall be the product of (x) the number of shares of Common Stock outstanding and (y) the closing bid price of the Common Stock, both as determined by Bloomberg Financial LP using the DES and HP functions. 
 (kk) “Material Adverse Effect” shall mean any condition, occurrence, state of facts or event having, or insofar as reasonably can be
foreseen would likely have, any effect on the business, operations, properties or condition (financial or otherwise) of the Company that is material and adverse to the Company and its Subsidiaries, taken as a whole, and/or any condition, occurrence,
state of facts or event that would prohibit or otherwise materially interfere with or delay the ability of the Company to perform any of its obligations under this Agreement. 
 (ll) “Material Agreements” shall have the meaning assigned to such term in Section 4.16 hereof. 
 (mm) “Material Change in Ownership” shall mean the occurrence of any one or more of the following: (i) the acquisition by any
person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of
transactions, of shares of capital stock or other securities of the Company entitling such person to exercise, upon an event of default or default or otherwise, 50% or more of the total voting power of all series and classes of capital stock and
other securities of the Company entitled to vote generally in the election of directors, other than any such acquisition by the Company, any Subsidiary of the Company or any employee benefit plan of the Company; (ii) any consolidation or merger
of the Company with or into any other person, any merger of another person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the properties and assets of the Company to another person,
other than (a) any such transaction (x) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of capital stock of the Company and (y) pursuant to which holders of capital stock of the
Company immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors of
the continuing or surviving person immediately after such transaction or (b) any merger which is effected solely to change the jurisdiction of incorporation 

 
of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the
surviving entity; (iii) during any consecutive two-year period, individuals who at the beginning of that two-year period constituted the Board of Directors (together with any new directors whose election to the Board of Directors, or whose
nomination for election by the stockholders of the Company, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose elections or nominations for election were
previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (iv) the Company is liquidated or dissolved or a resolution is passed by the Company’s stockholders approving a plan of
liquidation or dissolution of the Company. Beneficial ownership shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act. The term “person” shall include any syndicate or group which would be deemed
to be a “person” under Section 13(d)(3) of the Exchange Act. 
 (nn) “Multiplier” shall have the meaning
assigned to such term in Section 2.3 hereof. 
 (oo) “Optional Amount” means the transactions contemplated under
Sections 2.9 through 2.11 of this Agreement. 
 (pp) “Optional Amount Dollar Amount” shall mean the actual amount of
proceeds received by the Company pursuant to the exercise of an Optional Amount under this Agreement. 
 (qq) “Optional Amount
Notice” shall mean a notice sent to the Company with regard to the Investor’s election to exercise all or any portion of an Optional Amount, as provided in Section 2.11 hereof and substantially in the form attached hereto as
Exhibit B. 
 (rr) “Optional Amount Threshold Price” shall have the meaning assigned to such term in Section 2.1
hereof. 
 (ss) “Other Financing” shall have the meaning assigned to such term in Section 5.6(ii) hereof. 

(tt) “Other Financing Notice” shall have the meaning assigned to such term in Section 5.6(ii) hereof. 
 (uu) “Permitted Free Writing Prospectus” shall have the meaning assigned to such term in Section 5.8(ii) hereof. 
 (vv) “Plan” shall have the meaning assigned to such term in Section 4.22 hereof. 
 (ww) “Pricing Period shall mean a period of 10 consecutive Trading Days commencing on the day of delivery of a Fixed Request Notice (or, if
the Fixed Request Notice is delivered after 9:30 a.m. (New York time), on the next Trading Day), or such other period mutually agreed upon by the Investor and the Company. 
 (xx) “Prospectus” shall mean the Base Prospectus, together with any final prospectus filed with the Commission pursuant to Rule 424(b),
as supplemented by any Prospectus Supplement, including the documents incorporated by reference therein. 

 (yy) “Prospectus Supplement” shall mean any prospectus supplement to the Base Prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein. 
 (zz) “Reduction Notice” shall have the meaning assigned to such term in Section 2.8 hereof. 
 (aaa)
“Registration Statement” shall mean the registration statement on Form S-3, Commission File Number 333-140518, filed by the Company with the Commission under the Securities Act for the registration of the Shares, as such
Registration Statement may be amended and supplemented from time to time, including the documents incorporated by reference therein and the information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or Rule 430B under
the Securities Act. 
 (bbb) “Restricted Period” shall have the meaning assigned to such term in Section 5.10 hereof.

 (ccc) “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission
thereunder. 
 (ddd) “Settlement Date” shall have the meaning assigned to such term in Section 2.7 hereof. 

(eee) “Shares” shall mean shares of Common Stock issuable to the Investor upon exercise of a Fixed Request and shares of Common Stock
issuable to the Investor upon exercise of an Optional Amount. 
 (fff) “Significant Subsidiary” means any Subsidiary of the
Company that would constitute a Significant Subsidiary of the Company within the meaning of Rule 1-02 of Regulation S-X of the Commission. 
 (ggg) “SOXA” shall have the meaning assigned to such term in Section 4.6(c) hereof. 
 (hhh)
“Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries. 
 (iii) “Threshold Price” is the lowest price (except to the extent otherwise provided in Section 2.6) at which the Company may sell Shares during the applicable Pricing Period as set forth in a Fixed Request Notice (not
taking into account the applicable percentage discount during such Pricing Period determined in accordance with Section 2.2); provided, however, that at no time shall the Threshold Price be lower than $1.50 per share unless the
Company and the Investor mutually shall agree. 
 (jjj) “Total Commitment” shall have the meaning assigned to such term in
Section 1.1 hereof. 

 (kkk) “Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York City
time, and ending at 4:00 p.m., New York City time) on the AMEX. 
 (lll) “Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date in question: the AMEX, the New York Stock Exchange or the NASDAQ. 
 (mmm) “Trading Market Limit” means that number of shares which is one less than 20.0% of the issued and outstanding shares of the Company’s Common Stock as of the Effective Date. 
 (nnn) “Trout” shall have the meaning assigned to such term in Section 4.13 hereof. 
 (ooo) “VWAP” shall mean the daily volume weighted average price (based on a Trading Day from 9:30 p.m. to 4:00 p.m. (New York time)) of
the Company on the AMEX as reported by Bloomberg Financial L.P. using the AQR function. 
 (ppp) “Warrant Value” shall mean
the fair value of all warrants, options and other similar rights issued to a third party in connection with an Other Financing, determined by using a standard Black-Scholes option-pricing model using an expected volatility percentage as shall be
mutually agreed by the Investor and the Company. In the case of a dispute relating to such expected volatility assumption, the Investor shall obtain applicable volatility data from three investment banking firms of nationally recognized reputation,
and the parties hereto shall use the average thereof for purposes of determining the expected volatility percentage in connection with the Black-Scholes calculation referred to in the immediately preceding sentence. 

 EXHIBIT A TO THE 
 COMMON STOCK PURCHASE AGREEMENT 
 FORM OF FIXED REQUEST NOTICE 
 Reference is made to the Common Stock Purchase Agreement dated as of March 14, 2007, (the “Purchase Agreement”) between Titan
Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”), and Azimuth Opportunity Ltd., an international business company incorporated under the laws of the British Virgin
Islands. Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement. 
 In
accordance with and pursuant to Section 2.1 of the Purchase Agreement, the Company hereby issues this Fixed Request Notice to exercise a Fixed Request for the Fixed Request Amount indicated below. 
  

			
	 Fixed Amount Requested:
	  	  

		
	Optional Amount Dollar Amount:	  	  

		
	Pricing Period start date:	  	  

		
	Pricing Period end date:	  	  

		
	Settlement Date:	  	  

		
	Fixed Request Threshold Price:	  	  

		
	Optional Amount Threshold Price:	  	  

		
	Dollar Amount and Number of Shares of Common Stock Currently Unissued under the Registration Statement;	  	  

		
	Dollar Amount and Number of Shares of Common Stock Currently Available under the Aggregate Limit:	  	  

  

							
				
	Dated:	 	  
	 	By:	 	  

		 		 	Name	 	
		 		 	Title:	 	
			
		 		 	Address:
		 		 	Facsimile No.

  

			
	AGREED AND ACCEPTED
		
	By:	 	  

	Name	 	
	Title:	 	

 EXHIBIT B TO TILE 
 COMMON STOCK PURCHASE AGREEMENT 
 FORM OF OPTIONAL AMOUNT NOTICE 
 To:                    
                         
 Fax#:                    
                     
 Reference is
made to the Common Stock Purchase Agreement dated as of March 14, 2007 (the “Purchase Agreement”) between Titan Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the
“Company”), and Azimuth Opportunity Ltd., an international business company incorporated under the laws of the British Virgin Islands (the “Investor”). Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. 
 In accordance with and pursuant to Section 2.1 of the Purchase
Agreement, the Investor hereby issues this Optional Amount Notice to exercise an Optional Amount for the Optional Amount Dollar Amount indicated below. 
  

													
		 		 	 Optional Amount Dollar Amount Exercised
	  	  

				
		 		 	 Number of Shares to be purchased
	  	  

				
		 		 	 VWAP on the date hereof:
	  	  

				
		 		 	 Discount Price:
	  	  

				
		 		 	 Settlement Date:
	  	  

				
		 		 	 Threshold Price:
	  	  

							
		 		 		 	Dated:	 	  
	  	By:	 	  

		 		 		 		 		  	Name	 	
		 		 		 		 		  	Title:	 	
						
		 		 		 		 		  	Address:
		 		 		 		 		  	Facsimile No.

  

 EXHIBIT C TO THE 
 COMMON STOCK PURCHASE AGREEMENT 
 CERTIFICATE OF THE COMPANY 
 CLOSING CERTIFICATE 
                      200     
 The undersigned, the [                    ] of
Titan Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Company”), delivers this certificate in connection with the Common Stock Purchase Agreement, dated as of March 14,
2007 (the “Agreement”), by and between the Company and Azimuth Opportunity Ltd., an international business company incorporated under the laws of the British Virgin Islands (the “Investor”), and hereby certifies on
the date hereof that (capitalized terms used herein without definition have the meanings assigned to them in the Agreement): 
 1. Attached
hereto as Exhibit A is a true, complete and correct copy of the Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware. The Certificate of Incorporation of the Company has not been further
amended or restated, and no document with respect to any amendment to the Certificate of Incorporation of the Company has been filed in the office of the Secretary of State of the State of Delaware since the date shown on the face of the state
certification relating to the Company’s Certificate of Incorporation, which is in full force and effect on the date hereof, and no action has been taken by the Company in contemplation of any such amendment or the dissolution, merger or
consolidation of the Company. 
 2. Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the Company, as amended
and restated through, and as in full force and effect on, the date hereof, and no proposal for any amendment, repeal or other modification to the Bylaws of the Company has been taken or is currently pending before the Board of Directors or
stockholders of the Company. 
 3. The Board of Directors of the Company has approved the transactions contemplated by the Agreement; said
approval has not been amended, rescinded or modified and remains in full force and effect as of the date hereof. 
 4. Each person who, as an
officer of the Company, or as attorney-in-fact of an officer of the Company, signed (i) the Agreement and (ii) any other document delivered prior hereto or on the date hereof in connection with the transactions contemplated by the
Agreement, was duly elected, qualified and acting as such officer or duly appointed and acting as such attorney-in-fact, and the signature of each such person appearing on any such document is his genuine signature. 
 IN WITNESS WHEREOF, I have signed my name as of the date first above written. 
  

			
	  

	By:	 	
	Title:	 	

 EXHIBIT D TO THE 
 COMMON STOCK PURCHASE AGREEMENT 
 COMPLIANCE CERTIFICATE 
 In connection with the issuance of shares of common stock of Titan Pharmaceuticals, Inc., a corporation organized and existing under the laws of the
State of Delaware (the “Company”), pursuant to the Fixed Request Notice, dated [                    ], delivered by the
Company to Azimuth Opportunity Ltd. (the “Investor”) pursuant to Article II of the Common Stock Purchase Agreement, dated March 14, 2007, by and between the Company and the Investor (the “Agreement”), the
undersigned hereby certifies as follows: 
 1. The undersigned is the duly elected
[                    ] of the Company. 
 2. Except as set forth in the attached Disclosure Schedule, the representations and warranties of the Company set forth in Article IV of the Agreement (i) that are not qualified by “materiality” or “Material Adverse
Effect” are true and correct in all material respects as of [insert Fixed Request Exercise Date] and as of the date hereof with the same force and effect as if made on such dates, except to the extent such representations and warranties are as
of another date, in which case, such representations and warranties are true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” are true and
correct as of [insert Fixed Request Exercise Date] and as of the date hereof with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such
representations and warranties are true and correct as of such other date. 
 3. The Company has performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Agreement to be performed, satisfied or complied with by the Company at or prior to [insert Fixed Request Exercise Date] and the date hereof. 
 Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Agreement. 
 The undersigned has executed this Certificate this [    ] day of
[                    ], 200[    ]. 
  

			
	By:	 	  

	Name:	 	  

	Title:Amendments to fee for service and Risk-Based Subcontract Agreement

 

 
 EXHIBIT 10.5 
 SUBCONTRACT AGREEMENT 
 THE PROVIDENCE SERVICE CORPORATION 
  

					
	CONTRACT NUMBER: A0508	 	AMENDMENT #3    	  	FY05/06

 Effective August 1, 2005 the Subcontract Agreement between Community Partnership of Southern Arizona
and The Providence Service Corporation is amended as follows: 
  

	 	1.	Scope of Work is revised and change is included in this Amendment; 

  

	 	2.	Special Terms is revised and changes are included in this Amendment; 

  

	 	3.	Definitions added new definition and is included in this Amendment; and 

  

	 	4.	Standard Terms is revised and replaced in its entirety and is attached to this Amendment. 

 All other terms, conditions and provisions of the Subcontract Agreement shall remain the same. 
  

			
	CPSA:	 	Community Partnership of Southern Arizona
		
	 Signature:
	 	 /s/ Neal Cash

	Print Name and Title:	 	Neal Cash, President/Chief Executive Officer
		
	Date:	 	March 10, 2006
		
	CONTRACTOR:	 	The Providence Service Corporation
		
	Signature:	 	/s/ Craig A. Norris
	Print Name and Title:	 	Craig A. Norris, Chief Operating Officer
		
	Date:	 	February 28, 2006

  

 Page 1 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 AMENDMENT #3

 SCOPE OF WORK 
 L. PHYSICIAN
INCENTIVES (This section contains changes in the referenced CFRs.) 
 Make the following subcontract change: 
 DELETE THE CURRENT SECTION IN ITS ENTIRETY: 
 The Contractor
must comply with all applicable physician incentive requirements and conditions defined in 42 CFR 417.479. These regulations prohibit physician incentive plans that directly or indirectly make payments to a doctor or a group an inducement to limit
or refuse medically necessary services to a member. The Contractor is required to disclose all physician incentive agreements to CPSA and to enrolled persons who request them. 
 The Contractor shall not enter into contractual arrangements that place providers at significant financial risk as defined in CFR 417.479 unless specifically approved in advance by CPSA. In order to obtain
approval, the following must be submitted to CPSA 90 days prior to the implementation of the subcontract: 
  

	1.	A complete copy of the subcontract 

  

	2.	A plan for the member satisfaction survey 

  

	3.	Details of the stop-loss protection provided 

  

	4.	A summary of the compensation arrangement that meets the substantial financial risk definition 

 The Contractor shall disclose to CPSA the information on physician incentive plans listed in 42 CFR 417.479 (h)(1) through 417.479(I) in accordance with the AHCCCS Physician Incentive Plan Disclosure by
Contractor’s Policy and upon subcontract renewal, prior to the initiation of a new subcontract, or upon the request from ADHS, AHCCCSA, CMS or CPSA. 
 The Contractor shall also provide for compliance with physician incentive plan requirements as set forth in 42 CFR 422. 
 REPLACE WITH
THE FOLLOWING: 
 The Contractor must comply with all applicable physician incentive requirements and conditions defined in 42 CFR 438.6(h). These
regulations prohibit physician incentive plans that directly or indirectly make payments to a doctor or a group as an inducement to limit or refuse medically necessary services to a member. The Contractor is required to disclose all physician
incentive agreements to CPSA and to enrolled persons who request them. 
 The Contractor shall not enter into contractual arrangements that place providers
at significant financial risk as defined in 42 CFR 422.208, 42 CFR 422.10 and 42 CFR 438.6(h) unless specifically approved in advance by ADHS. In order to obtain approval, the following must be submitted to CPSA ninety (90) days prior to the
implementation of the contract: 
  

	a.	A complete copy of the contract 

  

	b.	A plan for the member satisfaction survey 

  

	c.	Details of the stop-loss protection provided 

  

	d.	A summary of the compensation arrangement that meets the substantial financial risk definition. 

 The Contractor shall disclose to CPSA the information on physician incentive plans listed in 42 CFR 422.208 and 42 CFR 422.210 in accordance with the AHCCCCS Physician Incentive Plan Disclosure by Contractor’s
Policy and upon contract renewal, prior to initiation of a new agreement, or upon request from ADHS, AHCCCSA, CMS, or CPSA. 
 The Contractor shall also
provide compliance with physician incentive plan requirements as set forth in 42 CFR 438.6(h). These regulations apply to contract arrangements with subcontracted entities. 
  

 Page 2 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 AMENDMENT #3

 SPECIAL TERMS 
 Section: D. ACCOUNTING: 
 A requirement for a Cost Record Keeping System is added. 
 Make the following subcontract change: 
 Add paragraph 4 to Section D
as follows: 
  

	“4.	Contractor shall maintain a Cost Record Keeping System. All books and records shall be maintained in such detail as shall reflect each service provided and all other costs and
expenses of whatever nature for which payment is made to the Contractor.” 

 Section: J. INSURANCE
PROVISIONS: 
 Indemnification language is changed. 
 Make the following subcontract change: 
 Replace Section J, paragraph 2 with the following: 
  

	a.	“Contractor shall indemnify, defend, save and hold harmless the State of Arizona, Department of Health Services, and CPSA (hereinafter referred to as “Indemnitee:)”
from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorney’s fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for
bodily injury or personal injury (including death), or loss of damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of the Contractor or any of its owners,
officers, directors, agents, employees or subcontractors. This indemnity includes any claim or amount arising out of or recovered under the Workers’ Compensation Law or arising out of the failure of such Contractor to conform to any federal,
state or local law, statue, ordinance, rule, regulation or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the
Indemnitee, be indemnified by the Contractor from and against any and all claims. It is agreed that the Contractor will be responsible for primary loss investigation, defense and judgment costs where this indemnification is applicable. In
consideration of the award of this contract, the Contractor agrees to waive all rights of subrogation against the State of Arizona, its officers, officials, agents and employees, and CPSA for losses arising from the work performed by the Contractor
for the State of Arizona. 

  

	b.	This indemnity shall not apply if the Contractor or sub-contractor(s) is/are an agency, board, commission or University of the State of Arizona.” 

 Section: K. BUSINESS CONTINUITY PLAN: 
 A provision for periodic testing of the Business Continuity Plan is added. 
 Make the following subcontract change: 
 Add: 
 “f. “Periodic Testing” 
  

 Page 3 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 AMENDMENT #3

 ATTACHMENT 1 
 DEFINITIONS 
 Make the following subcontract change: 
 Add the following definition: 
 “Claim Disputes” means a dispute involving a payment of a claim, denial of
claim, or imposition of a sanction. 
  

 Page 4 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 AMENDMENT #3

 STANDARD TERMS 
 Make the
following subcontract change. 
 Replace the Standard Terms Section in its entirety (see attached). 
 This section contains the following changes: 
 Section: C. REQUIREMENTS, MANAGEMENT AND REPORTING: 
 Addition of a specific requirement for providers and subcontractors to be
registered Medicare and Medicaid providers. 
 Section: H. QUALITY MANAGEMENT/UTILIZATION MANAGEMENT:

 A CFR reference change to Utilization Management. 
 Section: I. COMPLAINTS, SMI GRIEVANCES, MEMBER APPEALS, AND PROVIDER CLAIM DISPUTES: 
 A reference to
processing claim denial appeals in accordance with the ADHS/DBHS/CPSA Provider Manual. 
 Section: K. STANDARD
PROVISIONS: 
 A change in records retention from five years to six years. 
 Section: L. DOCUMENTS INCORPORATED BY REFERENCE: 
 Addition of the ADHS Performance Improvement Plan and the Balanced Budget Act to the list of documents incorporated by reference. 
 Section: N. SUBCONTRACTING: 
 Required subcontract language changes as follows: 
 Claims denial appeals processed in accordance with the ADHS/DBHS/CPSA Provider Manual.

 New language regarding utilization management and physician incentives 
 Registration as Medicare and Medicaid providers 
 Section: O. INSURANCE
PROVISIONS: 
 New exemption for contractors who obtain insurance through Social Service Contractors Indemnity Pool (SSCIP) 
 Replacing State of Arizona “boards, commissions, officers, etc”. as additional insureds with the Arizona Department of Heath Services as an additional insured
throughout each insurance requirement section. 
 Additional requirement for a waiver of subrogation against the State and CPSA throughout each insurance
requirement section. 
  

 Page 5 

			
	

	 	
	 	 SUBCONTRACT AGREEMENT

 COMPREHENSIVE SERVICE NETWORK 
  

					
	 Contract Number: A0508
	  	Amendment #4	  	

 Effective July 1, 2006 the Subcontract Agreement between Community Partnership of Southern Arizona and The
Providence Service Corporation is amended as follows: 
  

	1.	Extend contract through June 30, 2007. 

  

	2.	Revised Scope of Work; Standard Terms; Special Terms; Schedule I-A Payment Methodology; Schedule III Contract Deliverables; and Attachment A-Definitions. These sections are included
and are to be replaced in their entirety. 

  

	3.	Schedule I-C Fee For Service Methodology has been added and is attached. 

  

	4.	Schedule II, Program Funding Allocation is included and attached. 

  

	5.	Added Attachment E, CPSA Direct Contracted Agencies; and Attachment F, Automated Clearinghouse (ACH). 

 All other terms, conditions and provisions of the Subcontract Agreement shall remain the same. 
  

			
	CPSA:	 	Community Partnership of Southern Arizona
		
	 Signature:
	 	 /s/ Neal Cash

	Print Name and Title:	 	Neal Cash, Chief Executive Officer
		
	Date:	 	October 16, 2006
		
	CONTRACTOR:	 	The Providence Service Corporation
		
	Signature:	 	/s/ Craig A. Norris
	Print Name and Title:	 	 Craig A. Norris, Chief Operating Officer
 The
Providence Service Corporation

		
	Date:	 	October 16, 2006

  

 Page 6 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SCOPE OF WORK

  

	A.	PURPOSE 

 To provide a complete and integrated
continuum of behavioral health services to enrolled children, meeting DSM IV criteria for mental illness, including substance use or dependence related disorders. Included under the auspices of this Subcontract is the population of uniquely
identified children enrolled in the Comprehensive Medical and Dental Plan (CMDP) who are wards of the State of Arizona. 
  

	B.	ELIGIBILITY GROUPS COVERED UNDER THIS SUBCONTRACT 

 The following individuals and families are covered under this subcontract: 
  

	 	1.	Title XIX and Title XXI Eligible Children and Adults 

  

	 	a.	The ADHS/DBHS/CPSA Provider Manual lists the AHCCCS eligibility key codes for all Title XIX and Title XXI children and adults that are covered under this subcontract.

  

	 	b.	The Title XIX eligible children include but are not limited to: 

  

	 	i.	Title XIX children who have been adjudicated by the court to be in the care and custody of: 

  

	 	a)	Arizona Department of Economic Security/Division of Children, Youth and Families (Child Protective Services); 

  

	 	b)	Arizona Department of Juvenile Corrections (except for those who are adjudicated delinquents and are in a correctional institution); 

  

	 	c)	Administrative Office of the Courts/Juvenile Probation. 

 These Title XIX eligible children in the care and custody of the state are enrolled with the Comprehensive Medical and Dental Program (CMDP) health plan. CMDP is responsible for the acute care medical health benefit for these children.

  

	 	ii.	Title XIX children in the Arizona Department of Economic Security/Division of Children Youth and Families Adoption Subsidy Program. 

  

	 	iii.	Title XIX children in the Arizona Department of Economic Security/Division of Children Youth and Families voluntary foster care arrangements. 

  

	 	c.	Title XIX and Title XXI eligible Native Americans regardless if they live on or off reservation, except when enrolled with an ADHS Tribal Contractor. 

  

	 	2.	Developmentally Disabled (DD) ALTCS Children and Adults 

 The ADHS/DBHS/CPSA Provider Manual lists the DD ALTCS eligibility key code groups that are covered under this subcontract. 
  

	 	3.	Non-Title XIX/XXI Persons with a Serious Mental Illness (SMI) 

 These are persons who are determined to have a serious mental illness in accordance with the ADHS/DBHS/CPSA Provider Manual, Section 3.10, SMI Eligibility Determination. 
  

 Page 7 

	 	4.	The following individuals and families are covered under this subcontract to the extent that funding is available and allocated to the Contractor. The Contractor may limit the scope
of services provided to these populations consistent with ADHS/DBHS/CPSA Provider Manual, Section 3.2, Service Prioritization for Non-Title XIX/XXI Funding: 

  

	 	a.	Non-Title XIX/XXI General Mental Health Adults (GMH) 

 Adult persons age eighteen and older who have general behavioral health issues and have not been determined to have a serious mental illness. 
  

	 	b.	Non-Title XIX/XXI Substance Abuse Adults (SA) 

 Adult
persons age eighteen and older who have a substance use disorder, or are referred for DUI screening, education and treatment, and have not been determined to have a serious mental illness. 
  

	 	c.	Non-Title XIX/XXI Children 

 Children up through the age
of seventeen who are in need of behavioral health services 
  

	C.	SERVICES TO BE PROVIDED UNDER THIS SUBCONTRACT 

  

	 	1.	Based on the funding source as specified in Schedule II, Program Funding Allocation, the Contractor shall develop, maintain and monitor a continuum of Covered Services for its
enrolled members. The Contractor shall ensure that the complete continuum of behavioral health services contained in the ADHS/DBHS Covered Behavioral Health Services Guide is available to meet the needs of and provided when needed to eligible and
enrolled persons. A comprehensive listing of service codes, including limitations, such as Title XIX or Tile XXI reimbursability, categories of service, and allowed provider types, can be found in the CPSA Service Authorization Matrix. All service
codes, unless explicitly stated otherwise, refer to both substance abuse/dependence and mental health services and populations. 

  

	 	2.	Service provision is based on the premise that all mandated and appropriate covered services will be of high quality and provided in a culturally competent manner, in the least
restrictive environments, accessible to all populations and sensitive to consumer choice. 

  

	 	3.	All services must be provided in compliance with the processes established in the ADHS/DBHS/CPSA Provider Manual and the CPSA Program Protocol Manual. Additionally:

  

	 	a.	Services to those determined to have serious mental illness must be provided in accordance with all provisions of Arizona Administrative Code Title 9, Chapter 21, Behavioral Health
Services for Persons with Serious Mental Illness, and with the ADHS Principles for Persons with a Serious Mental Illness, available on the ADHS/DBHS web site and incorporated herein by reference. 

  

	 	b.	Services provided to Title XIX/XXI children must be delivered in accordance with the Arizona Vision set forth in the JK Settlement Agreement and the Title XIX Children’s
Behavioral Health Annual Action Plan available on the ADHS/DBHS web site and incorporated herein by reference. 

  

	 	4.	All services will be provided in the context of the enrolled person’s Adult Recovery Team, Child and Family Team, or Young Adult Team in accordance with the processes
established by the ADHS/DBHS/CPSA Provider Manual and the Program Protocol Manual. 

  

	 	a.	The Contractor shall continue to deliver ongoing behavioral health services to a member 18 through the 21st year and his/her family, facilitated through a Young Adult Team,
provided: 

  

	 	i.	The Member and family choose to remain enrolled with the Children’s Network. 

  

	 	ii.	The Member is Title XIX/XXI and/or CMDP enrolled 

  

	 	iii.	The Young Adult Team has commenced development of life skills and independence 6 months prior to 18th birthday 

  

	 	iv.	The determination as a person with Serious Mental Illness is completed and Title XIX rights and requirements are implemented. 

  

	 	5.	The Contractor shall encourage adult persons to include family members in the assessment and treatment for behavioral health recipients, unless it is contraindicated by family
circumstances. The Contractor shall support the participation of parents/primary caregivers, adolescents and children in the assessment and treatment process. A unified process of assessment, planning, service delivery and support among multiple
agencies represents the preferred practice. 

  

 Page 8 

	 	6.	Psychotropic medications must be provided according to the CPSA Formulary and coordinated in compliance with the member’s Medicare Part D eligibility. Contractor employed and
contracted physicians, registered nurse practitioners, and/or physician assistants shall prescribe and abide by the CPSA drug formulary and by the ADHS/DBHS/CPSA Provider Manual Sections 3.15, Psychotropic Medications: Prescribing and Monitoring,
3.16, Medication Formulary and 3.14, Securing Services and Prior Authorization. 

  

	 	7.	The Contractor may not arbitrarily deny or reduce the amount, duration, or scope of a required service solely because of the behavioral health diagnosis, type of illness, or
condition of the eligible or enrolled person. The Contractor may place appropriate limits on a service on the basis of criteria, such as medically necessary covered services, or for utilization control, provided the services furnished can reasonably
be expected to achieve their purpose. 

 The Contractor must provide services as determined through the Child and Family Team
process, which as appropriate must include utilization of the CPSA Direct Contracted Agencies listed in Attachment E. A monthly utilization report must be submitted to CPSA Children’s Services Manager. 
  

	 	8.	Contractor is encouraged to use consumers of behavioral health services and their families to provide supportive services to enrolled members including payment, as appropriate, for
those services. Consumers and families shall receive appropriate training and must meet requirements for service provision under this Subcontract. 

  

	 	9.	The Contractor shall ensure coordination and continuity of care for behavioral health recipients admitted to the Arizona State Hospital in accordance with the ADHS/DBHS Arizona
State Hospital Practice Improvement Protocol, including but not limited to the following: 

  

	 	a.	diversion of potential admission from the Arizona State Hospital, as appropriate; 

  

	 	b.	coordination of the admission process with the Arizona State Hospital Admissions Office; 

  

	 	c.	participation in the Arizona State Hospital treatment and discharge planning; 

  

	 	d.	forwarding of available clinical and medical record information upon or shortly after admission; and 

  

	 	e.	any other requested communication and/or collaboration with the Arizona State Hospital 

  

	D.	CRISIS SERVICES 

 CPSA is responsible for ensuring
that Crisis Services, including detoxification services, are available to eligible and enrolled persons who are at imminent risk of decompensation, relapse, hospitalization, risk of harm to self or others, or loss of residence due to a behavioral
health condition. Contractor is responsible for coordinating its members’ access to the CPSA Community-wide Crisis Providers in Pima County. The Contractor shall ensure that each enrolled Member has an individual crisis plan as well as clear
written instructions on how to access crisis services. For enrolled members in crisis beyond regular business hours, the Contractor shall arrange for phone consultation, services to stabilize the crisis and appropriate referral to continue
stabilization. 
 Although the Contractor is not expected to duplicate the range of services provided by the Community-wide Crisis Providers,
as an Intake provider, the Contractor is expected to respond to eligible, but non-enrolled persons in urgent need or to arrange for services to a community-wide crisis provider according to the ADHS/DBHS appointment standards and to CPSA established
protocol, Network/SAMHC Crisis Interface: Persons who Present Needing Medication or Network/SAMHC Crisis Interface: All Other Crisis Situations. 
 CPSA funds contracted providers to deliver Crisis Stabilization services for adolescents in a 10 bed unit and for children, 2 beds in a group setting. The contractor shall participate with these contracted providers to ensure appropriate
utilization of these resources in accordance with protocols and scopes of work specific to these resources. 
 CPSA funds detoxification
services through a Detoxification Service Provider (DSP). The DSP provides services for Members assessed as requiring care at intensities of service comparable to ASAM Levels II-D, III.2-D, and III.7-D. The Contractor is responsible for coordinating
members’ access to services provided by the DSP in accordance with the processes established by the CPSA Program Protocol Manual. 
  

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	E.	COORDINATION OF CARE 

 The Contractor shall
collaborate with community and government agencies and individuals to coordinate the delivery of Covered Services with other services and supports needed by the enrolled person and their families. Specific requirements related to this provision are
delineated in ADHS/DBHS/CPSA Provider Manual Section 4.4, Coordination of Care with Other Government Entities. 
 Contractor agrees to
comply with the terms and conditions of the Arizona Department of Economic Security (ADES) Interagency Service Agreement (ISA) between Rehabilitation Services Administration (RSA) and ADHS/DBHS and to coordinate with RSA as required in
ADHS/DBHS/CPSA Provider Manual Section 4.4, Coordination of Care with Other Government Entities. 
 The Contractor must communicate and
coordinate with enrolled persons’ AHCCCS Health Plan primary care providers and other health care providers regarding the enrolled persons’ behavioral health and general medical care and treatment in compliance with the ADHS/DBHS/ CPSA
Provider Manual Section 4.3, Coordination of Care with AHCCCS Health Plans and Primary Care Providers. 
  

	F.	PROVIDER NETWORK REQUIREMENTS 

  

	 	1.	Network Development, monitoring and maintenance 

  

	 	a.	Contractor shall establish and maintain a community-based governing or advisory board for local decision-making and input into service delivery and network development.

  

	 	b.	The Contractor shall establish, maintain and monitor a provider network that is capable of delivering a full continuum of treatment, rehabilitative and supportive services for
children and adults. The continuum of care may be provided directly or through contractual arrangements with qualified providers (Subcontracted Providers). The Contractor shall provide technical assistance to its providers regarding Covered
Services, encounter submission and documentation requirements on an as needed basis. 

  

	 	c.	The Contractor’s network must meet the Minimum Network Standards and Staff Inventory requirements established by CPSA. Contractor must submit quarterly reports documenting
these minimum standards in the format prescribed by CPSA and on the time schedule enunciated in Schedule III, Subcontract Deliverables. 

  

	 	d.	The Contractor’s network must be sufficient to ensure that: 

  

	 	i.	Capacity to serve eligible and enrolled persons of non-dominant culture and ethnicity is demonstrated; 

  

	 	ii.	Unnecessary use of emergency departments and urgent care centers is reduced; 

  

	 	iii.	Use of jail and detention centers is reduced; 

  

	 	iv.	Covered Services, including emergency care, are provided promptly and are reasonably accessible in terms of location and hours of operation and are delivered in compliance with
ADHS/DBHS/CPSA Provider Manual, Section 3.2, Appointment Standards and Timeliness of Service. 

  

	 	v.	Children with special health care needs have adequate access to behavioral health practitioners with experience in treating the child’s diagnosed condition.

  

	 	e.	The Contractor’s network must include intake sites and capacity adequate to ensure the following: 

  

	 	i.	Scheduled hours for intake appointments must ensure accessibility and ease of entry into the behavioral health system. 

  

	 	ii.	All service sites must be staffed adequately to complete SMI determinations within time frames established by ADHS/DBHS/CPSA Provider Manual Section 3.10, SMI Eligibility
Determination. 

  

	 	iii.	 Financial assessments must be conducted at each intake site by a staff person trained in financial screening and dedicated to the completion of applications for
public benefits according to ADHS/DBHS/CPSA Provider Manual, Section 3.1, Eligibility Screening for AHCCCS Health Insurance, Medicare Part D Prescription Drug Coverage, and the Limited Income Subsidy 

  

 Page 10 

	 	 
Program. Staff must be capable of informing potential members and family members about required documents needed to prove citizenship for Title XIX/XXI
eligibility and assist them in obtaining such documents. 

  

	 	iv.	At intake, written materials will be provided to the Member to include at a minimum: Member Handbook, Rights and Responsibilities of Members, name and phone number of their assigned
Clinical Liaison and the procedure for reaching the Clinical Liaison in the event of an urgent or emergent need. 

  

	 	v.	Intake services are available during non-business hours (evenings and weekends) to accommodate Member’s access into the system. Intake services are also available outside the
Contractor’s office, i.e. schools, homes, wellness centers. 

  

	 	f.	The Contractor’s network must be sufficient to ensure that a Clinical Liaison is assigned to each member. The Clinical Liaison is responsible for providing clinical oversight,
working in collaboration with the enrolled person and his/her family or significant others to implement an effective treatment plan, and serves as the point of contact, coordination and communication with other systems where clinical knowledge of
the case is important. Contractor must comply with the ADHS/DBHS/CPSA Provider Manual, Section 3.7, Clinical Liaisons. The Contractor shall maintain a roster in the CPSA Information System that identifies the Clinical Liaison and Clinical
Liaison contact information for each behavioral health recipient. The Contractor shall update the roster as the Clinical Liaison changes. 

  

	 	g.	The Contractor shall recruit, evaluate and monitor providers with an appropriate combination of skills, training and experience to provide Covered Services under this Subcontract.

  

	 	h.	The Contractor shall, and require its subcontractors to, credential and privilege providers as required in the ADHS/DBHS Provider Manual Section 3.20, Credentialing and
Privileging, including processes to expedite temporary credentialing and privileging when needed to ensure the sufficiency of the network and add to specialized providers 

  

	 	i.	The Contractor shall retain providers based upon performance and quality improvement data acquired while delivering services under this subcontract. 

  

	 	j.	Contractor shall not restrict or inhibit providers in any way from communicating freely with or advocating for persons regarding: 

  

	 	i.	Behavioral health care, medical needs and treatment options, even if needed services are not covered by the Contractor or if an alternate treatment is self-administered;

  

	 	ii.	Any information the behavioral health recipient needs in order to decide among all relevant treatment options; 

  

	 	iii.	The risks, benefits, and consequences of treatment or non-treatment; and, 

  

	 	iv.	The behavioral health recipient’s right to participate in decisions regarding his or her behavioral health care, including the right to refuse treatment, and to express
preferences about future treatment decisions. 

  

	 	k.	Contractor shall provide enrolled persons choice within the provider network, subject to reasonable frequency limitations and contingent on the availability within the
Contractor’s service network of an alternative that is suitable to meet the enrolled member’s needs. 

  

	 	l.	The Contractor shall not discriminate, with respect to participation in its network, against any provider based solely on the provider’s type of licensure or certification. In
addition, the Contractor shall not discriminate against providers that service high-risk populations or specialize in conditions that require costly treatment. This provision, however, does not prohibit the Contractor from limiting provider
participation to the extent that the Contractor is meeting the needs of those persons covered under this contract. This provision also does not interfere with measures established by the Contractor to control costs consistent with its
responsibilities under this subcontract nor does it preclude the Contractor from using different reimbursement amounts for different specialists or for different practitioners in the same specialty. 

  

	 	m.	 If the Contractor or its Subcontracted Provider network is unable to provide a covered service required under this Subcontract, the Contractor shall ensure timely
and adequate coverage of these 

  

 Page 11 

	 	 
services through an out-of-network provider until a network provider is contracted. The Contractor shall coordinate with respect to authorization and payment
under these circumstances. 

 The Contractor shall ensure that any costs incurred by a member for services provided by an
out of network provider are no greater than the costs that would be charged if services were furnished with the Network. Any agreement between the Contractor and an out of network provider must limit the charges to a member to an amount no greater
than that allowed when services are furnished within the network. 
  

	 	n.	If the Contractor declines to include individuals or groups of providers in its network, it shall give the affected providers written notice of the reason for its decision. The
Contractor may not include providers excluded from participation in Federal health care programs, pursuant to Section 1128 or Section 1128 A of the Social Security Act. 

  

	 	2.	Additional Network Requirements: 

  

	 	a.	Juvenile Service Provisions: The Contractor and its Subcontracted Providers shall meet and ensure that all its paid and unpaid personnel who are required or are allowed to
provide behavioral health services directly to Juveniles have met all fingerprint and certification requirements of A.R.S. §36 425.03 prior to providing such services. Additionally, the Contractor and any subcontractors providing Level II and
III behavioral residential services to juveniles will comply with all relevant provisions in A.R.S.36-1201. 

  

	 	b.	IMD Facility Provisions: If the Contractor operates or subcontracts with as IMD facility (provider types B6 and 71) the following minimum provisions apply:

  

	 	i.	The IMD facility shall keep track of the number of days a Title XIX or Title XXI behavioral health recipient is in the facility and may only bill for services within the limitations
of the IMD expenditure authority for Title XIX services. The Title XIX service limitations are thirty (30) days per admission, and sixty (60) days per contract year for those aged 21 through 64 for services provided in IMDs. Service
limitations are cumulative across providers. For persons under 21 and over 64, there are no IMD service limitations. 

  

	 	ii.	The IMD facility shall notify AHCCCS Member Services according to the requirements outlined in the ADHS/DBHS/CPSA Provider Manual. 

  

	 	iii.	The IMD facility shall provide written notification to Title XIX and Title XXI behavioral health recipients aged 21 through 64 that their AHCCCS eligibility may end if they remain
in an IMD longer than thirty (30) days per admission or sixty (60) days per contract year. 

  

	 	3.	Notification Requirements for Changes to the Network 

  

	 	a.	The Contractor shall notify and obtain written approval from CPSA before making any expected network material changes in the size, scope, configuration, or change in location of
sites of the Contractor’s provider network as indicated in the most recent network inventory. This includes any significant reduction in a provider’s workforce or any plan to not fill, or delay filling, key staff vacancies.

  

	 	b.	The Contractor shall notify CPSA in writing within one (1) day of becoming aware of any unexpected network material change, or learning of a network deficiency, or anticipating
a network material change that could impair the provider network. The notice shall include: 

  

	 	i.	Information about how the change will affect the delivery of covered services; 

  

	 	ii.	The Contractor’s plan to ensure that there is minimal disruption to the behavioral health recipient’s care and provision of service. The plan shall also address that
clinical team meetings with the behavioral health recipient will be provided to discuss the options available to the behavioral health recipient and that treatment plans will be revised to address any changes in services or service providers; and

  

	 	iii.	The Contractor’s plan to address and resolve any network deficiency. 

  

 Page 12 

	 	c.	The Contractor shall notify CPSA in writing within five (5) days of a decision by the Contractor to terminate, suspend or limit a subcontract, if the decision impacts the
sufficiency of the network, including situations that require behavioral health recipients to transition care to a different provider. 

  

	 	i.	The notice shall include: 

  

	 	a)	The number of individuals to be impacted by the termination, limitation or suspension decision including the number of Title XIX and Title XXI and Non-Title XIX/XXI behavioral
health recipients affected by program category. 

  

	 	b)	The Contractor’s plan to ensure that there is minimal disruption to the behavioral health recipient’s care and provision of service. The plan shall also address that
clinical team meetings with the behavioral health recipient will be provided to discuss the options available to the behavioral health recipient and that treatment plans will be revised to address any changes in services or service providers.

  

	 	c)	The Contractor’s plan for communicating changes to affected behavioral health recipients. Such plan must include the provision of written notice to affected members within
fifteen (15) days of issuance of termination notice. 

  

	 	d.	The Contractor shall track all persons transitioned due to a subcontract suspension, limitation or termination to ensure service continuity. Required elements to be tracked include:
Name, Title XIX/XXI status, date of birth, population type, current services that the behavioral health recipient is receiving, services that the behavioral health recipient will be receiving, new agency assigned, and date of first appointment and
activities to re-engage persons who miss their first appointment at the new provider. Other elements to be tracked may be added based on the particular circumstances. 

  

	G.	DESIGNATED SERVICE PROVIDER 

  

	 	1.	The Contractor shall function as the Designated Service Provider for the following rural geographic subdivisions: 

 Marana - Subdivision B and Ba, which includes: 
 Marana; Saguaro; Silver Bell; Avra Valley; Rillito; Cortaro; and Catalina. 
  

	 	2.	As a Designated Service Provider, the Contractor will: 

  

	 	a.	Maintain a physical presence in each rural subdivision indicated above throughout the term of this contract 

  

	 	b.	Offer an array of services as described in the ADHS Covered Services Guide 

  

	 	c.	Ensure availability and accessibility of services according to established appointment standards 

  

	 	d.	Develop and implement methods to communicate contract requirements with subcontractors in designated area(s) and to monitor contract compliance. 

  

	 	e.	Contractor will follow established CPSA Program Protocol regarding expectations for rural services. 

  

	H.	CONTRACTOR ADMINISTRATIVE ORGANIZATION 

 The
Contractor shall maintain organizational, managerial and administrative systems and staff capable of fulfilling all contractual requirements and shall employ staff persons with adequate time designated to carry out the required functions. Contractor
shall maintain the following required staff positions: 
  

	 	1.	Medical Director: The Contractor shall designate a Medical Director who shall be available on a continuing basis to work with CPSA medical staff to ensure administration and
delivery of high quality, medically appropriate care including care provided by Subcontracted Providers. 

  

	 	a.	Contractor shall have a board qualified/ board certified psychiatrist who serves as the Medical Director of the network. “The Medical Director shall have ultimate clinical
authority, but must function as a collaborator and team member, both with the administration and with clinicians or other disciplines, in order to be maximally effective in accomplishing the goals and functions of the position.” (Adapted from
APA Guidelines for Psychiatric Practice in State and Community Psychiatry Systems, 1993). 

  

 Page 13 

	 	b.	The Medical Director shall have sufficient time to perform administrative duties. Administrative duties include, but are not limited to, attendance at required meetings convened by
CPSA and shall have ultimate authority for ensuring psychiatric oversight in: 

  

	 	i.	Emergency Services. Review of all dispositions through a defined protocol. 

  

	 	ii.	Acute Care Services. Admissions and discharge decisions, level of care determinations, direct supervision of care, and denial of requested services based on established medical
necessity criteria as established by CPSA. 

  

	 	iii.	Outpatient and Residential Services. Provide participation and/or leadership in regular interdisciplinary team case reviews, including review and signature of treatment plans and
Individual Service Plans that address the entire spectrum of bio-psychosocial needs of members. 

  

	 	iv.	Other medical care delivery and coordination with member’s primary care physician. 

  

	 	c.	Additional duties include: 

  

	 	i.	Development of job descriptions for provider psychiatrists, nurse practitioners and physician assistants. 

  

	 	ii.	Assuring the adequacy of psychiatric staffing to meet members’ needs in a timely and clinically safe manner. 

  

	 	iii.	Recruitment and supervision of provider psychiatric staff. 

  

	 	iv.	Staff training. 

  

	 	v.	Direct involvement in the quality management and utilization management processes of the Contractor. 

  

	 	vi.	In conjunction with other provider Medical Directors and the CPSA Chief Medical Officer, development, refinement and implementation of clinical best practices and implementation of
documentation standards for psychiatrists, nurse practitioners and physician assistants 

  

	 	vii.	Involvement in the grievance and appeal process. 

  

	 	viii.	Involvement in the Title 36 and process, including the assurance that psychiatric providers will be available for required testimony and court appearances in any and all Title 36
and proceedings. 

  

	 	ix.	Assurance of ongoing coordination of care of members confined to the Arizona State Hospital (ASH). 

  

	 	2.	Clinical Liaison: shall be assigned to each member to complete the assessment and service planning processes and provide clinical oversight to ensure the provision of
necessary covered services. 

  

	 	3.	Intake Staff: shall be available to provide routine and urgent intakes according to established time frames. 

  

	 	4.	Co-located Children’s Staff: The Contractor shall deploy a minimum of two (2) Children’s staff positions that are co-located, one at the PCJCC, and one at
designated DES offices. 

  

	 	5.	Liaison to the Detoxification Service Provider: The Contractor will designate an appropriately qualified person to oversee and manage the care of its established and newly
enrolled members receiving services at the DSP. Contractor will follow established guidelines in the CPSA Program Protocol Manual regarding the expectations of the Liaison to the Detoxification Service Provider. 

  

	 	6.	Arizona State Hospital Liaison: State Hospital Liaison for all covered populations who has the authority to commit resources of the Subcontractor in finalizing discharge
planning for its enrolled members in the State Hospital. 

  

 Page 14 

	 	7.	Special Child Populations: The Contractor shall be responsible for identifying one or more contact person(s) for each Special Population, in addition to those listed above.
These populations include the following: 

  

	 	a.	Children assigned to ADES/CPS; 

  

	 	b.	Children assigned to AOC; 

  

	 	c.	Children assigned to ADES/DDD; and 

  

	 	d.	Children assigned to ADJC. 

  

	 	e.	Children ages Birth through Five 

 The contact person shall
interact with CPSA staff member assigned to each population. 
  

	 	8.	Quality Management (QM)/Utilization Management (UM): The Contractor shall designate an appropriately qualified person to oversee it’s QM/UM function both internally and
externally 

  

	 	9.	Teleconferencing: The Contractor shall designate a staff member with sufficient time allocated to be responsible for the coordination of the telecommunications system

  

	 	10.	Planning: The Contractor shall identify a staff member who is responsible for both coordinating planning activities and interfacing with CPSA in its planning process. The
Contractor shall appoint a RBHA Development Plan Liaison to interact and coordinate with CPSA Network Development as a single point of contact responsible for gathering and reporting on all related activities/achievements that support the goal of
the plan. The Contractor shall appoint a liaison to work with CPSA staff on the development and monitoring of the JK Plan. 

  

	 	11.	Subcontract Administration: The Contractor shall assign a staff member to coordinate the contract administration functions. 

  

	 	12.	Child and Family Team Staff: The Contractor shall have a sufficient number of staff to implement the Child and Family Team Process. This includes family support staff,
community resource staff and staff with specific expertise in working with CMDP children/youth. 

  

	 	13.	Cultural Liaison: The Contractor shall appoint a Cultural Liaison to interact and collaborate with CPSA Cultural Diversity Specialist on cultural proficiency issues,
including any new initiatives relating to culture. 

  

	I.	MEMBER REFERRAL, ENROLLMENT AND ASSIGNMENT 

  

	 	1.	The Contractor shall accept and act upon referrals and requests for Covered Services made by any person or person’s legal guardian, family member, an AHCCCS health plan,
primary care provider, hospital, jail, court, probation or parole officer, tribal government, Indian Health Services, school, or other state or community agency. The Contractor and its Subcontracted Providers shall follow all referral procedures
outlined in the ADHS/DBHS/CPSA Provider Manual, Section 3.3, Referral Process. 

  

	 	2.	Contractor shall ensure that any Level I, II or III facility that it operates or subcontracts with is required to accept all referrals of behavioral health recipients made by the
Contractor and may not arbitrarily or prematurely deny, suspend or terminate services to a behavioral health recipient without prior notification to the Contractor. 

  

	 	3.	The Contractor shall ensure that all eligible persons who receive Covered Services are enrolled in the CPSA PACE Enrollment System in a timely manner and in accordance to the
ADHS/DBHS/CPSA Provider Manual provisions governing timeliness of service. 

  

	 	4.	 Member assignment to the Contractor shall be based upon member choice, geographic location, and on an equitable, proportional assignment procedure. Assignment of
members to the Contractor shall be at the sole discretion of CPSA. CPSA may adjust assignments to the Contractor based upon subcontract performance or QM findings at its discretion. The Contractor must accept enrollment of all members assigned. In
the event a Member’s eligibility or assignment is questioned, the Contractor will seek assistance from CPSA Member Services. Members are the responsibility of the Contractor effective the member’s assignment date to the Contractor. CPSA
will provide notification of assignment within 48 hours of member’s assignment date to the Contractor. Under no circumstances shall the Contractor be 

  

 Page 15 

	 	 
financially or clinically responsible for services provided to a member, pursuant to this Subcontract, prior to a member’s assignment to the Contractor.

  

	 	5.	Members may change their assigned Network at the discretion of CPSA based upon established criteria and guidelines established in ADHS/DBHS/CPSA Provider Manual Section 3.17,
Transition of Persons. The Contractor will facilitate the transfer of clinical information necessary to accomplish such a change in Network assignment. The Contractor shall accept responsibility programmatically and financially as of the date of the
member’s assignment to the Contractor, which shall occur upon the complete transfer of the member’s clinical information. 

  

	 	6.	Eligible persons currently enrolled with a Contractor shall remain enrolled with the Contractor regardless of subsequent move out of that Contractor’s GSA unless and until the
enrolled person is transitioned to an ALTCS Contractor, other Contractor or service provider, as applicable, and such transfer occurs in accordance with the ADHS/DBHS/CPSA Provider Manual Section 3.17, Transition of Persons.

  

	 	7.	The Contractor shall ensure that complete, timely and accurate enrollment, assessment and disenrollment data is submitted to CPSA in accordance to ADHS/DBHS/CPSA Provider Manual
Section 7.5, Enrollment, Disenrollment and Other Data Submission. 

  

	 	8.	The Contractor member roster is available to the Contractor via intranet within an hour of data transmission. The Contractor is responsible for reconciliation of the member roster
and reporting of corrections to CPSA at least monthly according to the established Roster Reconciliation Protocols. The Contractor is responsible for the identification of AHCCCS eligibility, program indicator, and eligible fund type assignment at
point of intake and throughout duration of enrollment of services. The Contractor must ensure that internal agency enrollment rosters coincide with CPSA enrollment information. The Contractor submits this report to CPSA as required in Schedule III,
Contract Deliverables. 

  

	 	9.	The Contractor will maintain a current roster of children enrolled in CMDP (Comprehensive Medical and Dental Plan) and provide CPSA with a list monthly by the 15th of the month for
the previous month. 

  

	J.	COMMUNICATIONS WITH BEHAVIORAL HEALTH RECIPIENTS, FAMILY MEMBERS, STAKEHOLDERS, AND PROVIDERS 

  

	 	1.	The Contractor shall participate and cooperate with CPSA’s outreach activities designed to inform eligible and enrolled persons of the availability of behavioral health
services in accordance with the ADHS/DBHS/CPSA Provider Manual, Section 3.8, Outreach, Engagement, Re-engagement and Closure. 

 The Contractor shall identify at least one staff to regularly participate in the Children’s Community Council and its assigned subcommittees to ensure information is shared between providers, stakeholders, enrolled members and
families. 
  

	 	2.	Within 10 days of their first service, Contractor shall provide enrolled members or their guardians or families the CPSA Member Handbook which identifies procedures for accessing
emergency services, individual member rights, SMI grievance, appeal procedures, and co-payment policies. The Contractor shall ensure that handbooks are available at all provider sites and easily accessible to all enrolled persons. The Contractor
shall supplement the CPSA Member Handbook with specific information that at minimum includes the following: Clinical Liaison, list of Subcontract Providers, available services, service locations and access to emergency services. The Contractor shall
ensure that these supplements are written at a 4th grade reading level, and that the information be printed in a type, style, and size that can be easily read by members with varying degrees of visual impairment or limited reading proficiency. The
Contractor must notify members that alternative formats are available and how to access them. The Contractor shall assist CPSA in its efforts to annually make available a Member Handbook to all enrolled persons. 

  

	 	3.	The Contractor shall distribute CPSA developed written materials to members and family members and make such materials available in the lobbies of their service sites. The
Contractor will assist members in understanding the content of these materials. 

  

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	 	4.	The Contractor shall maintain a website. 

  

	 	a.	The website shall be organized to allow for easy access of information by behavioral health recipients, family members, providers and stakeholders. The website shall contain at a
minimum the following information or links: 

  

	 	i.	Provider Name 

  

	 	ii.	Provider Address 

  

	 	iii.	Provider telephone number 

  

	 	iv.	Locations and sites at which members may receive services 

  

	 	v.	Provider’s hours of operation 

  

	 	vi.	Available spoken languages 

  

	 	b.	The Contractor shall ensure that the website is in compliance with the Americans with Disabilities Act. 

  

	K.	QUALITY MANAGEMENT/UTILIZATION MANAGEMENT 

  

	 	1.	Quality Management 

 The Contractor shall have a quality
management program that fulfills all requirements contained in the CPSA Quality Management/Utilization Management Plan (QM/UM Plan). In addition to Quality Management requirements set forth in Standard Terms, Paragraph H, the Contractor shall submit
a QM/UM Plan within thirty (30) days of the initial execution of the subcontract and annually thereafter. The plan shall comply with the CPSA QM/UM Plan and ensure reporting of incidents, accidents, and deaths according to ADHS/DBHS/CPSA
Provider Manual Section 7.4, Reporting of Incidents, Accidents and Deaths and when applicable, reporting of incidents of seclusion and restraint according to ADHS/DBHS/CPSA Provider Manual section 7.3, Seclusion and Restraint Reporting.

 The Contractor shall meet ADHS Minimum Performance Standards included in the QM/UM Plan and CPSA shall require a corrective action plan
from, and may impose sanctions on Contractor if it does not achieve the minimum standard for any indicator, performance for any indicator declines to a level below the ADHS Minimum Performance Standard or there is a statistically significant drop in
the Contractor’s performance on any indicator without a justifiable explanation. The Contractor’s QM/UM Plan shall use methods to address the ADHS Minimum Performance Standards. 
 The Contractor will provide sufficient space for the CPSA QM Liaison to perform QM review and analysis at the contractor’s site. 
  

	 	2.	Utilization Management 

  

	 	a.	General: 

  

	 	i.	The contractor will assume certain Utilization Management Functions specified in the CPSA Utilization Management Plan. The Contractor and subcontractors will comply with this plan
and requirements contained in the ADHS/DBHS/CPSA Provider Manual, Chapter 3.14, Securing Services and Prior Authorization. 

  

	 	ii.	The Contractor shall participate in CPSA processes that monitor for under and over utilization of services. 

  

	 	iii.	The Contractor shall maintain a risk management program and ensure that appropriate action is taken as needed. The Contractor shall use information obtained to improve the quality
of care. 

  

	 	iv.	The Contractor shall address discharge from inpatient services as follow-up to a special event and develop a discharge plan according to the ADHS/DBHS/CPSA Provider Manual
Section 3.8.6-C. 

  

	 	b.	Utilization Management Reporting Requirements 

  

	 	i.	Utilization (Census) Data for Level II placements are required as referenced in Schedule III, Subcontract Deliverables. Census data for all CPS and DDD children placed out of home
including; Level 3 Group Home, Therapeutic Foster Care, Unlicensed Out of Home Placement, and Foster Placement are also required. 

  

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	 	ii.	The Contractor will submit additional reports as required by special program provisions or in response to identified discrepancies identified through monitoring efforts.

  

	L.	PHYSICIAN INCENTIVES 

 The Contractor must comply
with all applicable physician incentive requirements and conditions defined in 42 CFR 417.479. These regulations prohibit physician incentive plans that directly or indirectly make payments to a doctor or a group as inducement to limit or refuse
medically necessary services to a member. The Contractor is required to disclose all physician incentive agreements to CPSA and to enrolled persons who request them. 
 The Contractor shall not enter into contractual arrangements that place providers at significant financial risk as defined in CFR 417.479 unless specifically approved in advance by CPSA. In order to obtain approval,
the following must be submitted to CPSA 90 days prior to the implementation of the subcontract: 
  

	 	1.	A complete copy of the subcontract 

  

	 	2.	A plan for the member satisfaction survey 

  

	 	3.	Details of the stop-loss protection provided 

  

	 	4.	A summary of the compensation arrangement that meets the substantial financial risk definition 

 The Contractor shall disclose to CPSA the information on physician incentive plans listed in 42 CFR 417.479 (h)(1) through 417.479(I) in accordance with
the AHCCCS Physician Incentive Plan Disclosure by Contractor’s Policy and upon subcontract renewal, prior to the initiation of a new subcontract, or upon the request from ADHS, AHCCCSA, CMS or CPSA. 
 The Contractor shall also provide for compliance with physician incentive plan requirements as set forth in 42 CFR 422. 
  

	M.	ADVANCE DIRECTIVES 

 The Contractor shall ensure
compliance with requirements contained in the ADHS/DBHS/CPSA Provider Manual, Section 3.12, Advance Directives, addressing advanced directives for adult enrolled members. 
 Each subcontract or agreement with a hospital, nursing facility, home health agency, hospice or organization responsible for providing personal care, must
comply with Federal and State law regarding advance directives for adult members. 
  

	N.	ASSISTED LIVING HOMES AND UNLICENSED BOARDING HOMES 

 In accordance with the ADHS/DBHS/CPSA Provider Manual, Section 10.1, Members Residing in Boarding Homes, the Contractor shall assess the living situation for all persons with a serious mental illness to ensure that the person’s
basic needs are met in an environment that is safe, secure and consistent with their behavioral needs. The Contractor shall ensure that any situations observed that pose a threat to the health or safety of a person is promptly resolved. 

 

	O.	HOUSING PROGRAM 

 The Contractor shall participate
with CPSA in delivering housing services in compliance and with CPSA’s Housing Plan and the ADHS/DBHS/CPSA Provider Manual. 
 The
Contractor shall deliver Housing Support Services in accordance with the ADHS/DBHS Covered Services Guide and ADHS/DBHS/CPSA Provider Manual, Section 10.3, Housing Support Services. 
  

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 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 STANDARD TERMS 
  

	A.	PROVISION OF SERVICES 

 The Contractor, subject to
the terms of this Subcontract, at the maximum dollar amounts and rates set forth herein or in any Schedule hereto, agrees to provide Covered Services to members as the Contractor may be authorized to do so by CPSA as provided herein. 
  

	B.	ARIZONA SYSTEM PRINCIPLES 

 The Contractor agrees to
participate with CPSA to ensure that the behavioral health delivery system operates and services are delivered in accordance with the following System Principles. 
  

	 	1.	Easy Access to Care: 

  

	 	a.	Accurate information is readily available that informs behavioral health recipients, family members and stakeholders how to access services. 

  

	 	b.	The behavioral health network is organized in a manner that allows for easy access to behavioral health services. 

  

	 	c.	Services are delivered in a manner, location and timeframe that meet the needs of behavioral health recipients and their families. 

  

	 	2.	Behavioral Health Recipient and Family Member Involvement: 

  

	 	a.	Behavioral health recipients and family members are active participants in behavioral health delivery system design, prioritization of behavioral health resources and planning for
and evaluating the services provided to them. 

  

	 	b.	Behavioral health recipients, family members and other parties involved in the person’s and family’s lives are central and active participants in the assessment, service
planning and delivery of behavioral health services and connection to natural supports. 

  

	 	3.	Collaboration with the Greater Community: 

  

	 	a.	Stakeholders including general medical, child welfare, criminal justice, education and other social service providers are actively engaged in the planning and delivery of integrated
services to behavioral health recipients and their families. 

  

	 	b.	Relationships are fostered with stakeholders to maximize access by behavioral health recipients and their families to other needed resources such as housing, employment, medical and
dental care, and other community services. 

  

	 	c.	Providers of behavioral health services collaborate with community stakeholders to assist behavioral health recipients and family members in achieving their goals.

  

	 	4.	Effective Innovation: 

  

	 	a.	Behavioral health providers are continuously educated in, and use, best practices. 

  

	 	b.	The services system recognizes that substance use disorder and other mental health disorders are inextricably intertwined, and integrated substance abuse and mental health
assessment and treatment are the community standard. 

  

	 	c.	Behavioral health recipients and family members (who want to) are provided training and supervision to become, and be retained as, providers of peer support services.

  

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	 	5.	Expectation for Improvement: 

  

	 	a.	Services are delivered with the explicit goal of assisting people to achieve or maintain success, recovery, gainful employment, success in age-appropriate education; return to or
preservation of adults, children and families in their own homes; avoidance of delinquency and criminality; self-sufficiency and meaningful community participation. 

  

	 	b.	Services are continuously evaluated, and modified if they are ineffective in helping to meet these goals. 

  

	 	c.	Behavioral health providers instill hope, even for the most disabled, that achievement of goals is possible. 

  

	 	6.	Cultural Competency: 

  

	 	a.	Behavioral health service providers are recruited, trained and evaluated based upon competence in linguistically and culturally appropriate skills for responding to the individual
needs of each behavioral health recipient and family members. 

  

	 	b.	Corporate management reflects cultural diversity in values and action. 

  

	 	c.	Corporate management and behavioral health service providers strive to improve through periodic cultural self assessment and modify individual services or the system as a whole as
needed to achieve this goal. 

  

	C.	REQUIREMENTS, MANAGEMENT AND REPORTING 

  

	 	1.	Contractor registration: 

 Contractor must be and ensure
that its qualified subcontracted clinicians and providers are: 
  

	 	a.	Registered with AHCCCS (or ADHS as applicable) as provider types that are specified in the ADHS/DBHS Covered Behavioral Health Services Guide. 

  

	 	b.	Registered as a Medicare services provider. For the purpose of this provision, a qualified/provider means a clinical/provider who is a valid Medicare provider type and provides
services that could be billed under Medicare. 

  

	 	c.	Registered as Medicaid service provider. 

 Services must be
delivered by Providers that meet all provider qualifications and operate within the scope of their practice as specified in the ADHS/DBHS Covered Behavioral Health Services Guide. 
  

	 	2.	Licenses and Permits: 

 The Contractor, unless otherwise
exempt by law, shall obtain and continuously maintain and shall require all of its Subcontracted Providers and their employees and contractors who participate in the provision of Covered Services, unless otherwise exempt by law, to obtain and
continuously maintain all licenses, permits, certifications, credentials and authority necessary to do business and render Covered Services under this Subcontract. Copies of all licenses shall be provided to CPSA, Contracts Department as specified
in the Subcontract Deliverables Schedule of this subcontract. 
  

	 	3.	Minimum Staffing: 

 The Contractor shall maintain
organizational, managerial and administrative systems and staff capable of fulfilling all Subcontract requirements. The Contractor shall ensure the following: 
  

	 	a.	All staff have appropriate training, education, experience, orientation and credentialing as applicable, to fulfill the requirements of their position; 

  

	 	b.	Staff who require credentialing and privileging under the terms of ADHS/DBHS/CPSA Provider Manual Section 3.20, Credentialing and Privileging, receive such as required by that
section. 

 The Contractor shall inform CPSA in writing within five (5) days of personnel changes in any of its key staff,
including psychiatrists, psychologists, registered nurse practitioners, and physician assistants. 
  

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	 	4.	Cultural Competence: 

  

	 	a.	The Contractor shall develop, maintain, promote and monitor a culturally competent system of behavioral health care and engage in culturally competent practices with members served,
as well as within their organizational structures. 

  

	 	b.	The Contractor shall maintain a cultural competency development and implementation policy that clearly delineates how it will self-assess, implement improvements, and monitor the
success of such improvements. 

  

	 	c.	Contractor shall ensure that interpreters of any language are available free of charge for eligible or enrolled persons to ensure appropriate delivery of covered services.

  

	 	d.	The Contractor is required to comply with the CPSA Cultural Proficiency Strategic Plan and any additional requirements as delineated in the ADHS/DBHS/CPSA Provider Manual.

  

	 	5.	Participation in ADHS Reporting Requirements: 

 Upon
request, the Contractor will participate and cooperate with CPSA in providing timely information and data necessary to prepare quarterly and annual reports as required in the ADHS/DBHS/CPSA Provider Manual. Reports include, but are not limited to:

  

	 	a.	Network Assurance of Sufficiency 

  

	 	b.	Annual Provider Network Development and Management Plan 

  

	 	c.	Quarterly Network Status Reports 

  

	 	d.	Network Inventory 

  

	 	e.	Other Spending Plans as required by ADHS. 

  

	D.	SERVICE DELIVERY SYSTEM 

  

	 	1.	Customer Service: 

 The Contractor shall have a customer
service function that is responsive to behavioral health recipients, family members and stakeholders. At a minimum the customer service function shall: 
  

	 	a.	Be customer oriented; 

  

	 	b.	Be warm and welcoming to members and families; 

  

	 	c.	Respond to inquiries and assist behavioral health recipients, family members and stakeholders in a manner that resolves their inquiry, including having the ability to respond to,
and provide language assistance services for, those with limited English proficiency; 

  

	 	d.	Assist in referring behavioral health recipients, family members or stakeholders to the crisis line when indicated; 

  

	 	2.	Coordination of Behavioral Health Benefits and Collection Practices: 

  

	 	a.	Coordination of Behavioral Health Benefits: 

  

	 	i.	ADHS is the payer of last resort in the event any one or more other third party payers is responsible for covered services provided to CPSA members. 

  

	 	ii.	The Contractor agrees to identify Medicare and other third party liability coverage and seek such Medicare or third party liability payment before submitting claims/encounters to
CPSA. Contractor shall coordinate benefits in accordance with Medicare Part D and adhere to coordination of benefits and third-party liability requirements described in the ADHS/DBHS/ CPSA Provider Manual, Section 3.5, Third Party Liability and
Coordination of Benefits. 

  

	 	b.	Reporting: 

 The Contractor shall communicate any known
change in health insurance information, including Medicare, to CPSA not later than ten (10) days from the date of discovery. 
  

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	 	c.	Co-payment: 

  

	 	i.	The Contractor will assess and collect co-payments as provided in the ADHS/DBHS/CPSA Provider Manual, Section 3.4, Co-Payments. 

  

	 	ii.	Neither the Contractor nor any Subcontracted Provider shall bill or attempt to collect any charge or fee except permitted co-payments from any Title XIX or Title XXI eligible or
enrolled person for any Title XIX or Title XXI covered service. 

  

	 	iii.	An out-of-network provider must limit any charge of costs to a member to an amount no greater than that allowed when services are furnished within the network.

  

	 	d.	Notice to Members Concerning Non-Covered Services: 

 When
the Contractor provides members with services other than Covered Services, the Contractor shall, prior to the provision of such services, and except in emergencies, exercise all reasonable efforts to inform the member in writing: (1) of the
service(s) to be provided; (2) that neither the CPSA nor ADHS will pay in full for or be liable for such services; and (3) that the member may be financially liable for such services. 
  

	E.	TRAINING OF CONTRACTOR PERSONNEL AND SERVICE PROVIDERS 

 The Contractor shall comply with the ADHS/DBHS/CPSA Provider Manual, Section 9.1, Training Requirements, regarding staff training, competency and development for contracted provider agencies. 
  

	F.	SYSTEM COLLABORATION 

 System Collaboration with
State Agencies/County Agencies: The Contractor shall abide by all applicable written collaborative protocols and letters of agreement developed by CPSA with State and County Agencies and communicated through the CPSA website. 
  

	G.	COMMUNICATION WITH BEHAVIORAL HEALTH RECIPIENTS, FAMILY MEMBERS, STAKEHOLDERS, AND PROVIDERS 

  

	 	1.	The Contractor shall ensure timely and accurate dissemination and communication of information required by CPSA and ADHS. Upon request, the Contractor shall assist CPSA and ADHS in
the dissemination of information to behavioral health recipients prepared by the federal government, AHCCCS, or ADHS. 

  

	 	2.	All advertisements, publications, and printed materials which are produced by the Contractor and refer to Title XIX and Title XXI covered services shall state that such services are
funded under a contract between AHCCCS and ADHS. All advertisements, publications, and printed materials, which are produced by the Contractor and refer to Covered Services shall state that such services are funded through CPSA and ADHS.

  

	 	3.	The Contractor shall make every effort to ensure that all information prepared for distribution to behavioral health recipients is written at a 4th grade level.

  

	H.	QUALITY MANAGEMENT/UTILIZATION MANAGEMENT 

 The
Contractor agrees to comply with ADHS’s and CPSA’s quality management programs. The Contractor agrees to participate in and be evaluated in accordance with the Quality Management/Performance Improvement and Utilization Management Plan
established by CPSA. CPSA agrees to provide the Contractor written notice of any changes to the Quality Management/Performance Improvement and Utilization Management Plan. CPSA requires the Contractor to develop quality management/performance
improvement and utilization management requirements in accordance with CPSA Quality Management/Performance Improvement and Utilization Management Plan requirements. 
 The Contractor shall participate in other required quality management activities, including but not limited to, an Annual Independent Case Review, Performance Improvement Projects (PIP) as mandated by ADHS,
Performance Improvement activities designed to improve compliance with the ADHS Performance Standards, 

  

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Case Reviews, Critical Incident Investigations, Mortality Investigations, Root Cause Analyses, Training and Technical Assistance Efforts, Member Satisfaction
Survey and other activities that may be required from time to time by CPSA, ADHS or AHCCCS. 
 The Contractor and its Subcontracted Providers
shall comply with and implement CPSA endorsed best or promising practice guidelines. The Contractor shall comply and ensure its Subcontracted Providers comply with guidelines pertaining to competence in linguistically and culturally appropriate
practices. 
 If the Contractor provides compensation to individual or entities that conduct utilization management activities, that
compensation shall not be structured so as to provide incentives for the individual or entity to deny, limit, or discontinue medically necessary services to any member according to 42 CFR 438.12(e). 
 Contractor agrees to cooperate with CPSA in its investigation, analysis, tracking and trending of Quality of Care issues. 
  

	I.	COMPLAINTS, SMI GRIEVANCES, MEMBER APPEALS, AND PROVIDER CLAIM DISPUTES 

 The Contractor will comply with CPSA complaint, SMI grievance, and member appeal processes and may file provider claim disputes consistent with the ADHS/DBHS/CPSA Provider Manual sections contained in Chapter 5.0,
Member Rights and Provider Claims Disputes. The Contractor may appeal a claim denial by CPSA in accordance with the ADHS/DBHS/CPSA Provider Manual. 
 Contractor shall assist eligible and enrolled persons in understanding their right to make complaints and file grievances (SMI) and appeals. Contractors are required to advise Members of CPSA complaint, grievance and appeals processes as
outlined in the ADHS/DBHS/CPSA Provider Manual and to assist members in accessing these processes. 
 The Contractor may attempt to resolve
member complaints and disputes through an internal agency complaint process, however, the Contractor must advise Members that they may use CPSA grievance and appeals process as outlined in the ADHS/DBHS/CPSA Provider Manual instead of the
Contractor’s and may not interfere with a Member’s right to file a grievance or appeal with CPSA. 
 The Contractor must require
that its staff participate effectively in CPSA, ADHS and AHCCCS grievance and appeals processes. 
 Contractor shall carry out ADHS, AHCCCS or
CPSA decisions issued with respect to a complaint, SMI Grievance, Member appeal and/or provider claim dispute. 
 Pending the final resolution
of any dispute involving a complaint, grievance, appeal, or claims dispute, the Contractor shall proceed with performance in accordance with CPSA’s instructions, unless informed otherwise in writing. 
  

	J.	CORPORATE COMPLIANCE 

 Contractor is responsible for
participating in and complying with the CPSA Compliance Program pertaining to fraud and abuse, including the reporting requirements contained in ADHS/DBHS/CPSA Provider Manual Section 7.1, Fraud and Abuse Reporting. The Contractor shall ensure
that subcontractors comply with the Corporate Compliance Program. Failure to comply may result in the penalty described in A.R.S. §13-2310. Contractor is responsible for complying with ADHS/DBHS Fraud and Abuse Operations and Procedures Manual.

  

	K.	STANDARD PROVISIONS 

  

	 	1.	Warranty of Services: 

 Contractor, by execution of this
subcontract, warrants that it has the ability, authority, skill, expertise and capacity to perform the services specified in this subcontract and that all services shall be performed in conformity with the requirements of this Subcontract by
qualified personnel in accordance with standards required by Federal or State law, rules and regulations. 
  

 Page 23 

	 	2.	No Guaranteed Quantities: 

 CPSA does not guarantee
Contractor any minimum or maximum quantity of services or goods to be provided under this Subcontract. 
  

	 	3.	Subcontract Interpretation and Amendment: 

  

	 	a.	No Parole Evidence: This Subcontract is intended by the parties as a final and complete expression of their agreement. No course of prior dealings between the parties and no usage
of the trade shall supplement or explain any terms used in this document. 

  

	 	b.	No Waiver: Either party’s failure to insist on strict performance of any term or condition of the Subcontract shall not be deemed a waiver of that term or condition even if the
party accepting or acquiescing in the nonconforming performance knows of the nature of the performance and fails to object to it. 

  

	 	c.	Written Subcontract Amendments: The Subcontract shall be modified only through a written Subcontract amendment within the scope of the Subcontract signed by the Chief Executive
Officer on behalf of CPSA; however, written amendment to this Subcontract shall not be required for: 

  

	 	i.	Change of non-licensable behavioral health facility address or administrative address; 

  

	 	ii.	Change of telephone number; 

  

	 	iii.	Change of authorized signatory; 

  

	 	iv.	Changes in the name and/or address of the person to whom notices are to be sent; 

  

	 	v.	Change in the name of the Contractor where the ownership remains the same; 

  

	 	vi.	Funding source(s) changes by CPSA when the amount of the Subcontract remains unchanged; or 

  

	 	vii.	Funding source(s) transfers by CPSA when the amount of the Subcontract remains the same. 

 CPSA shall give written notice to the Contractor of Subcontract funding source(s) changes or transfers within 30 days following the effective date thereof, including any changes in program requirements. 
 Above notwithstanding, the Contractor shall give notice to CPSA and ADHS within 30 days of any non-material alteration to this Subcontract. 

 

	 	d.	Merger, Reorganization and Change in Ownership: A merger, reorganization or change in ownership of Contractor, or of a subcontracted provider that is related or affiliated with
Contractor, shall require a written subcontract amendment and the prior approval of CPSA and ADHS. 

  

	 	e.	Changes to Documents Incorporated by Reference: Changes to any of the documents incorporated by reference do not require a written contract amendment and are effective upon
notification to Contractor. 

  

	 	f.	Notices: Whenever notice is required pursuant to the terms of this Subcontract, such notice shall be in writing, shall be delivered in person or by certified mail, return receipt
requested, and shall be directed to the person(s) and address (es) specified for such purpose on the first page of this Subcontract or to such other person(s) and/or address (es) as either party may designate to the other party by written notice.

  

	 	g.	Renegotiation: Any request to renegotiate this Subcontract must be delivered in writing to CPSA by certified mail, return receipt requested. 

  

	 	h.	Subcontract Order of Precedence: In the event of a conflict in the provisions of the subcontract the following shall prevail in the order set forth below: 

 

	 	i.	Scope of Work 

  

	 	ii.	Special Terms 

  

	 	iii.	Standard Terms 

  

 Page 24 

	 	i.	Severability: The provisions of this subcontract are severable. Any term or condition deemed illegal or invalid shall not affect any other term or condition of the subcontract.

  

	 	j.	Entire Agreement: This Subcontract and its appendices, schedules, and attachments, including all amendments and modifications incorporated by reference, shall constitute the entire
agreement between the parties, and supersedes all other understandings, oral or written. 

  

	 	k.	Applicable Law: 

  

	 	i.	Arizona Law: The law of Arizona applies to this Subcontract including, where applicable, the Uniform Commercial Code as adopted by the State of Arizona. 

  

	 	ii.	Implied Contract Terms: Each provision of law and any terms required by law to be in this Subcontract are a part of this Subcontract as if fully stated in it.

  

	 	4.	Subcontract Performance: 

  

	 	a.	Measurement: Contractor agrees that its retention as a provider will be based upon performance and quality improvement data acquired while delivering services under this
subcontract. 

  

	 	b.	Deliverables: The Contractor shall, within the timeframes specified, submit deliverables in accordance with requirements outlined in the Special Terms, Scope of Work, and
Subcontract Deliverables Schedule. 

  

	 	c.	Corrective Actions: At its discretion, CPSA may require corrective action when it is determined that the Contractor is out of compliance with the terms of the Subcontract or not
adhering with the ADHS/DBHS/CPSA Provider Manual or other incorporated document. The corrective action shall be outlined and documented on a Corrective Action Plan using the format prescribed by CPSA. This document will be the means of communication
between the Contractor and CPSA regarding progress of the corrective action. 

  

	 	d.	Right to Assurance: If CPSA in good faith has reason to believe that the Contractor does not intend to, or is unable to perform or continue performing this Subcontract, CPSA may
demand in writing that the Contractor give a written assurance of intent or ability to perform. The demand shall be sent to the Contractor by certified mail, return receipt required. Failure by the Contractor to provide written assurance within the
number of days specified in the demand may, at CPSA’s option, be considered a default by the Subcontract. 

  

	 	5.	Definition of Terms: 

 The definition of terms pertaining
to this subcontract are contained in Attachment A. 
  

	 	6.	Records: 

  

	 	a.	Contractor shall maintain and require its subcontractors to maintain all forms, records, reports and working papers used in the preparation of reports, files, correspondence,
financial statements, records relating to quality of care, medical records, prescription files, statistical information and other records specified by ADHS or CPSA for purposes of audit and program management. 

  

	 	b.	Contractor shall preserve and make available for audit all records for a period of six (6) years from the date of final payment under this subcontract except as provided in
paragraphs (i) and (ii) below: 

  

	 	i.	If this subcontract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of six (6) years from
the date of any such termination. 

  

	 	ii.	Records which relate to disputes, litigation or the settlement of claims arising out of the performance of this subcontract, or costs and expenses of this subcontract to which
exception has been taken by the state, shall be retained by Contractor until such disputes, litigation, claims or exceptions have been disposed of. 

  

	 	c.	In addition to the requirement to retain business records as provided above, Contractor shall ensure that all medical records are created, maintained and retained as required in the
ADHS/DBHS/CPSA Provider Manual, Section 4.2, Behavioral Health Medical Record Standards. 

  

 Page 25 

	 	d.	The Contractor shall ensure that information regarding behavioral health recipients is shared in accordance with confidentiality and HIPAA rules and policy as outlined in Federal
and State law and the ADHS/DBHS/CPSA Provider Manual, Section 4.1, Disclosure of Behavioral Health Information. Confidentiality of records containing member information will be handled in accordance with that same section. The contractor must
comply with applicable security requirements governing protected health information contained in 45 CFR Parts 160, 162, and 164. 

  

	 	e.	All records shall be subject to inspection and audit by CPSA or the State at reasonable times. Upon request, the Contractor shall produce a legible copy of any or all such records.

  

	L.	SUPPORTING DOCUMENTS 

  

	 	1.	Subjection of ADHS Contract with AHCCCS: 

 The terms of
this subcontract shall be subject to the applicable material terms and conditions of the contract existing between ADHS and AHCCCS for the provision of Title XIX and Title XXI covered behavioral health services. 
  

	 	2.	Subjection of this subcontract to CPSA/ADHS Contract Number HP532003: 

 The terms of this subcontract shall be subject to the applicable material terms and conditions of the contract existing between CPSA and ADHS for the provision of covered behavioral health services, including the
Uniform Terms and Conditions, which are incorporated by reference herein as applicable. 
  

	 	3.	Documents Incorporated by Reference: 

 The Contractor and
its Subcontracted Providers shall have access to the internet and agree to access documents incorporated by reference through internet connections. Documents incorporated by reference are available from the following websites (www.azdhs.gov,
www.ahcccs.state.az.us, and www.cpsa-rbha.org). Additionally, www.cpsa-rbha.org provides a link to the ADHS and AHCCCS sites. 
  

	 	a.	Document Listing: 

 The following documents, and any
subsequent amendments, modifications, and supplements to these documents adopted by CPSA, ADHS, or AHCCCS (as applicable) during the Contract period, are incorporated and made a part of this subcontract by reference: 
  

	 	i.	ADHS/DBHS Covered Behavioral Health Services Guide 

  

	 	ii.	ADHS/DBHS/CPSA Provider Manual 

  

	 	iii.	ADHS Accounting and Auditing Procedures Manual 

  

	 	iv.	ADHS/DBHS Quality Management/Utilization (QM/UM) Plan 

  

	 	v.	CPSA Quality Management/Utilization Management (QM/UM) Plan 

  

	 	vi.	AHCCCS Medical Policy Manual (AMPM) - Chapters 900 and 1000 

  

	 	vii.	ADHS/DBHS Strategic Plan 

  

	 	viii.	CPSA Strategic Plan 

  

	 	ix.	Arizona Families First Protocol 

  

	 	x.	ADHS/DBHS Clinical Guidance Documents: 

  

	 	a)	Performance Improvement Projects (PIPS) 

  

	 	b)	Technical Assistance Document (TADS) 

  

	 	xi.	Title XIX Children’s Behavioral Health Annual Action Plan 

  

	 	xii.	ADHS Performance Improvement Specifications Manual 

  

	 	xiii.	ADHS/DBHS Cultural Competence Plan 

  

	 	xiv.	CPSA Cultural Proficiency Strategic Plan 

  

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	 	xv.	CPSA Provider Financial Guide 

  

	 	xvi.	CPSA Service Authorization Matrix 

  

	 	xvii.	CPSA Management Information Guide 

  

	 	xviii.	CPSA Program Protocol Manual 

  

	 	xix.	CPSA Housing Program Guide 

  

	 	xx.	ADHS/DBHS Fraud and Abuse Operations and Procedures Manual 

  

	 	b.	Revisions to Documents Incorporated by Reference: 

 Contractor shall comply with the terms, conditions, and requirements of these documents, as amended/revised from time to time, consistent with State and Federal law as if the terms and conditions of the documents had been fully set forth in
this subcontract. 
  

	 	c.	Other Supporting Documents: 

 This section contains
references to documents, also incorporated by reference where applicable, that guide the development of the behavioral health system requirements. 
  

	 	i.	Administrative Rules: 

  

	 	a)	Arizona Administrative Code Title 2, Chapter 19, Administrative hearing rules. 

  

	 	b)	Arizona Administrative Code Title 9, Chapter 20, ADHS rules for the licensing of behavioral health agencies. 

  

	 	c)	Arizona Administrative Code Title 9, Chapter 21, ADHS rules for service delivery for persons with a serious mental illness. 

  

	 	d)	Arizona Administrative Code Title 9, Chapter 22, AHCCCS rules for the Title XIX acute program. 

  

	 	e)	Arizona Administrative Code Title 9, Chapter 28, AHCCCS rules for the Title XIX DDD ALTCS program. 

  

	 	f)	Arizona Administrative Code Title 9, Chapter 31, AHCCCS rules for the Title XXI program. 

  

	 	g)	Arizona Administrative Code Title 9, Chapter 34, AHCCCS rules for the grievance system. 

  

	 	h)	Balance Budget Act of 1997 

  

	 	ii.	Legal Document: 

 JK vs. Eden Settlement Agreement

  

	 	iii.	Federal Block Grants: 

  

	 	a)	Community Mental Health Services Performance Partnership Program pursuant to Division B, Title XXXII, Section 3204 of the Children’s Health Act of 2000 (CMHS)

  

	 	b)	Substance Abuse Prevention and Treatment Performance Partnership Program pursuant to Division B, Title XXXIII, Section 3303 of the Children’s Health Act of 2000 and
pursuant to Section 1921-1954 of the Public Health Service Act and 45 CFR Part 96 Interim Final Rules (SAPT) 

  

	 	iv.	Intergovernmental Agreements, Interagency Service Agreements and Memorandums of Understanding: 

  

	 	a)	Intergovernmental Agreements: 

  

	 	1)	Intergovernmental Agreement between ADHS and the Arizona Department of Economic Security/Division of Children, Youth and Families (DCYF) (This IGA is under review.)

  

	 	2)	Intergovernmental Agreement between ADHS and the Arizona Department of Economic Security/Division of Developmental Disabilities (DDD) 

  

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	 	3)	Intergovernmental Agreement between ADHS and the Arizona Department of Economic Security (ADES)-Joint Substance Abuse Treatment Fund (Expires June 30, 2005 but may be
extended.) 

  

	 	4)	Intergovernmental Agreement between ADHS and Pima County (for GSA 5.) 

  

	 	b)	Interagency Service Agreements: 

  

	 	1)	Interagency Service Agreement between ADHS and the Arizona Administrative Office of the Courts (AOC) 

  

	 	2)	Interagency Service Agreement between ADHS and Arizona Department of Economic Security (ADES) for Vocational Rehabilitation for the Seriously Mentally Ill. 

 

	 	3)	Interagency Service Agreement between ADHS and the Arizona Department of Economic Security/Rehabilitation Services Administration (ADES/RSA) 

  

	 	4)	Interagency Service Agreement between ADHS and the Arizona Department of Juvenile Corrections (ADJC) 

  

	 	5)	Interagency Service Agreement between ADHS and the Arizona Department of Corrections-Correctional Officer/Offender Liaison (COOL) Program 

  

	 	6)	Interagency Service Agreement between ADHS and the Arizona Department of Housing 

  

	 	c)	Memorandum of Understanding: 

 Memorandum of Understanding
between ADHS and the Arizona Department of Economic Security, Arizona Health Care Cost Containment System, Arizona Department of Education, Arizona Department of Juvenile Corrections and Administrative Office of the Arizona Supreme Court
(Children’s Executive Memorandum of Understanding) 
  

	 	v.	Other: 

  

	 	a)	State Plan – AHCCCS State Plan with Center for Medicare and Medicaid Services (CMS) 

  

	 	b)	AHCCCS Medical Policy Manual 

  

	M.	ADMINISTRATION PROVISIONS 

  

	 	1.	Requests for Information: 

 ADHS or CPSA may request
financial or other information from Contractor. Upon receipt of a request for information, Contractor shall provide complete and accurate information no later than thirty (30) days after the receipt of the request unless otherwise specified by
ADHS or CPSA. 
  

	 	2.	Cooperation with Other Contractors: 

 Contractor shall
cooperate fully with other contractors and/or State employees in scheduling and coordinating its services with other related services for enrolled persons. Contractor shall afford other contractors reasonable opportunity to provide services and
shall not commit or permit any act that interferes with the performance of services by other contractors or by State employees. 
  

	N.	SUBCONTRACTING 

  

	 	1.	Subcontracts and Assignment: 

 The Contractor shall be
responsible for contract performance whether or not subcontracts are used. No subcontract shall operate to terminate the responsibility of the Contractor to assure that all activities carried out by the Subcontracted Provider conform to the
provisions of this Subcontract. Subject to such conditions, any function required to be provided by the Contractor pursuant to this Subcontract may be subcontracted to a qualified person or organization. All such subcontracts shall be in writing.

 All subcontracts entered into by the Contractor are subject to prior review and approval by CPSA and shall incorporate by reference the
documents set forth in paragraph L of the Standard Terms of this 

  

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subcontract. The Contractor must enter into a subcontract with any provider the Contractor anticipates will be providing covered services on its behalf
except in the following circumstances: 
  

	 	a.	A provider is anticipated to provide services less than 25 times during the contract year; 

  

	 	b.	A provider refuses to enter into a subcontract with the Contractor in which case the Contractor shall submit documentation of such refusal to CPSA within 7 days of the final attempt
to gain such agreement; or 

  

	 	c.	A provider performs emergency services. 

 The Contractor
shall maintain a fully executed original of all subcontracts, which shall be accessible to CPSA or ADHS within two (2) working days of request. All subcontracts will comply with the applicable provisions of Federal and State laws, regulations
and policies. 
 Contractor shall submit to CPSA a copy of all fully executed subcontracts and any subsequent amendments for each
Subcontracted Provider within ten (10) days of contract execution. 
 Contractor shall not include covenant-not-to-compete requirements
in its subcontracts. Specifically, Contractor shall not prohibit a subcontracted provider from providing services to ADHS, AHCCCS or any other ADHS or AHCCCS contractor. Contractor and its subcontracted providers shall not contract with any
individual or entity that has been debarred, suspended or otherwise lawfully prohibited from participating in any public procurement activity. 
  

	 	2.	Behavioral Health Provider Subcontract Provisions: 

 Each
behavioral health provider subcontract shall contain the following: 
  

	 	a.	Identification of the name and address of the subcontractor. 

  

	 	b.	Full disclosure of the method and amount of compensation or other consideration to be received by the subcontractor. 

  

	 	c.	Identification of the population, to include behavioral health recipient capacity, to be served by the subcontractor. 

  

	 	d.	The amount, duration and scope of covered services to be provided, and for which compensation shall be paid. 

  

	 	e.	The term of the subcontract including beginning and ending dates, procedure for extension, termination and renegotiation. 

  

	 	f.	The specific duties of the subcontractor relating to coordination of benefits and determination of third party liability. 

  

	 	g.	A provision that the subcontractor agrees to identify Medicare and other third party liability coverage and to seek such Medicare or third party liability payment before submitting
claims and/or encounters to Contractor. 

  

	 	h.	A provision that the subcontractor shall maintain a cost record keeping system. 

  

	 	i.	A provision that the subcontractor shall comply with ADHS’ and CPSA’s quality management programs. 

  

	 	j.	A provision that a merger, reorganization or change in ownership or control of a subcontractor that is related to or affiliated with Contractor shall require a Contract amendment
and prior approval of CPSA and ADHS. 

  

	 	k.	A provision that the subcontractor shall obtain and maintain all applicable insurance as outlined in paragraph O of the Standard Terms of this subcontract and shall submit a copy of
insurance certificates to the Contractor. 

  

	 	l.	A provision that the subcontractor shall be fully responsible for all tax obligations, Worker’s Compensation Insurance, and all other applicable insurance coverage obligations
as stated in Standard Terms, Section T, Miscellaneous Provisions, Applicable Taxes of this subcontract, for itself and its employees, and that CPSA, AHCCCS or ADHS shall have no responsibility or liability for any such taxes or insurance coverage.

  

 Page 29 

	 	m.	Incorporate by reference the ADHS/DBHS Covered Behavioral Health Services Guide and the ADHS/DBHS/CPSA Provider Manual. Require that the subcontractor adhere to all requirements
stated within these documents. 

  

	 	n.	A provision that the subcontractor shall comply with encounter reporting and claims submission requirements as described in the ADHS/DBHS/CPSA Provider Manual.

  

	 	o.	A provision that the subcontractor may appeal a claim denial of the Contractor in accordance with the ADHS/DBHS/CPSA Provider Manual. 

  

	 	p.	A provision that the subcontractor shall assist eligible and enrolled clients in understanding their right to file grievances and appeals and follow requirements stated in the
ADHS/DBHS/CPSA Provider Manual with regard to these processes. 

  

	 	q.	A provision that the subcontractor shall comply with audits, inspections and reviews that are outlined in the ADHS/DBHS/CPSA Provider Manual and any reviews the CPSA, ADHS, or
AHCCCS may conduct. 

  

	 	r.	A provision that the subcontractor shall cooperate fully with other contractors and/or State employees in scheduling and coordinating its services with other related services for
enrolled persons. The Subcontractor shall afford other contractors reasonable opportunity to provide services and shall not commit or permit any act that interferes with the performance of services by other contractors or by State employees.

  

	 	s.	A provision that the subcontractor shall carry out ADHS, AHCCCS, or CPSA decisions issued with respect to a complaint, SMI grievance, member appeal, and/or claim dispute.

  

	 	t.	A provision that compensation to individuals or entities that conduct utilization management activities is not structured so as to provide incentives for the individual or entity to
deny, limit, or discontinue medically necessary services to any enrollee according to 42 CFR 438.12(e). 

  

	 	u.	A provision that requires all qualified clinicians/providers to be registered as a Medicare services provider. For the purpose of this provision, a qualified/provider means a
clinical/provider who is a valid Medicare provider type and provides services that could be billed under Medicare. 

  

	 	v.	A provision that requires all qualified clinicians/providers to be registered as Medicaid service providers. 

  

	O.	INSURANCE PROVISIONS 

  

	 	1.	General: 

 The Contractor shall obtain and maintain and
ensure that its subcontractors obtain and maintain all applicable insurance as outlined below. 
 The Contractor shall obtain and keep on file
copies of provider insurance certificates, and shall make them available for review by CPSA and ADHS upon request. 
 The insurance
requirements herein are minimum requirements for this Subcontract and in no way limit any indemnity covenants contained in this Subcontract. The State of Arizona and CPSA in no way warrant that the minimum limits contained herein are sufficient to
protect the Contractor from liabilities that might arise out of the performance of the work under this subcontract by the Contractor, its agents, representatives, employees or subcontractors, and Contractor is free to purchase additional insurance.

 If the social services program utilizes the Social Service Contractors Indemnity Pool (SSCIP) for insurance coverage, SSCIP is exempt from
the A.M. Best’s rating requirements listed in this contract. If contractor and/or subcontractor choose to use SSCIP as their insurance provider, the contractor and/or subcontractor would be in full compliance with insurance requirements.

  

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	 	2.	Minimum Scope and Limits of Insurance: 

 Contractor shall
provide coverage with limits of liability not less than those stated below. 
  

	 	a.	Commercial General Liability – Occurrence Form 

 Policy shall include bodily injury, property damage, personal injury and broad form contractual liability coverage. 
  

				
	 General Aggregate
	  	$	2,000,000
	 Products – Completed Operations Aggregate
	  	$	1,000,000
	 Personal and Advertising Injury
	  	$	1,000,000
	 Blanket Contractual Liability – Written and Oral
	  	$	1,000,000
	 Fire Legal Liability
	  	$	50,000
	 Each Occurrence
	  	$	1,000,000

 The policy shall be endorsed to include coverage for sexual abuse and molestation. This coverage
shall apply to any provider with responsibility for consumer interaction in person. 
 The policy shall be endorsed to include the following
additional insured language: “The State of Arizona, Department of Health Services and CPSA shall be named as additional insured with respect to liability arising out of the activities performed by or on behalf of the Contractor.” For GSA 5
Contractor, Pima County must also be named as additional insured. 
 Policy shall contain a waiver of subrogation against the State of
Arizona, Department of Health Services and CPSA for losses arising from work performed by or on behalf of the Contractor. 
  

	 	b.	Automobile Liability: 

 Bodily Injury and Property Damage
for any owned, hired, and/or non-owned vehicles used in the performance of this Subcontract. 
  

				
	 Combined Single Limit (CSL)
	  	$	1,000,000

 The policy shall be endorsed to include the following additional insured language: “The State
of Arizona, Department of Health Services and CPSA shall be named as additional insured with respect to liability arising out of the activities performed by or on behalf of the Contractor, involving automobiles owned, leased, hired or borrowed by
the Contractor.” For GSA 5 Contractor, Pima County must also be named as additional insured. 
  

	 	c.	Worker’s Compensation and Employer’s Liability: 

  

				
	 Worker’s Compensation
	  	Statutory
	 Employer’s Liability
	  		
	 Each Accident
	  	$	500,000
	 Disease – Each Employee
	  	$	500,000
	 Disease – Policy Limit
	  	$	1,000,000

 Policy shall contain a waiver of subrogation against the State of Arizona, Department of Health
Services and CPSA losses arising from work performed by or on behalf of the Contractor. 
 This requirement shall not apply to: Separately,
EACH contractor or subcontractor exempt under A.R.S. §23-901, AND when such contractor or subcontractor executes the appropriate waiver (Sole Proprietor/Independent Contractor) form. 
  

	 	d.	Professional Liability (Errors and Omissions Liability): 

  

				
	 Each Claim
	  	$	1,000,000
	 Annual Aggregate
	  	$	2,000,000

 In the event that the professional liability insurance required by this Subcontract is written on
a claims-made basis, Contractor warrants that any retroactive date under the policy shall precede the effective date of this Subcontract; and that either continuous coverage will be maintained or an 

  

 Page 31 

 
extended discovery period will be exercised for a period of two (2) years beginning at the time work under this Subcontract is completed. 
 The policy shall cover professional misconduct or lack of ordinary skill for those positions defined in the Scope of Work of this subcontract.

 Professional Liability shall include Medical Malpractice for licensed medical providers. 
  

	 	3.	Additional Insurance Requirements: 

 The policies shall
include, or be endorsed to include, the following provisions: 
  

	 	a.	The State of Arizona, Department of Health Services and CPSA wherever additional insured status is required such additional shall be covered to the full limits of liability
purchased by the Contractor, even if those limits of liability are in excess of those required by this Contract. For GSA 5, Contractor shall name Pima County as an additional insured. 

  

	 	b.	The Contractor’s insurance coverage shall be primary insurance with respect to all other available sources. 

  

	 	c.	Coverage provided by the Contractor shall not be limited to the liability assumed under any indemnification provisions of this Subcontract. 

  

	 	4.	Notice of Cancellation: 

 Each insurance policy required by
the insurance provisions of this Subcontract shall provide the required coverage and shall not be suspended, voided, canceled, or reduced in coverage or in limits except after thirty (30) days prior written notice has been given to CPSA. Such
notice shall be sent directly to CPSA, Contracts Department, 4575 E. Broadway, Tucson, AZ 85711 and shall be sent by certified mail, return receipt requested. 
  

	 	5.	Acceptability of Insurers: 

 Insurance is to be placed with
duly licensed or approved non-admitted insurers in the State of Arizona with an “A.M. Best” rating of not less than A-VII. The State of Arizona nor CPSA in no way warrants that the above-required minimum insurer rating is sufficient to
protect the Contractor from potential insurer insolvency. 
  

	 	6.	Verification of Coverage: 

 Contractor shall furnish the
CPSA with certificates of insurance (ACORD form or equivalent approved by the State of Arizona) as required by this subcontract. The certificates for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on
its behalf. 
 All certificates and endorsements are to be received and approved by the CPSA Contract Department before work commences. Each
insurance policy required by this subcontract must be in effect at or prior to commencement of work under this Subcontract and remain in effect for the duration of the project. Failure to maintain the insurance policies as required by this
Subcontract, or to provide evidence of renewal, is a material breach of contract. 
 All certificates required by this subcontract shall be
sent directly to CPSA, Contracts Department, 4575 E. Broadway, Tucson, AZ 86711. The CPSA Contract Number and project description shall be noted on the certificate of insurance. 
  

	 	7.	Subcontractors: 

 Contractor’s certificate(s) shall
include all subcontractors as insured under its policies or Contractor shall obtain from the subcontractor(s) separate certificates and endorsements for each subcontractor. The Contractor shall maintain certificates of insurance from all
subcontractors and providers and ensure adequate coverage is provided throughout the term of the subcontractors’ agreement. All coverage for subcontractors shall be subject to the minimum requirements identified above. 
  

 Page 32 

	 	8.	Approval: 

 Any modification or variation from the
insurance requirements in this Subcontract shall be submitted to CPSA. CPSA will discuss this requirement with ADHS. Such action will not require a formal Contract amendment, but may be made by administrative action. 
  

	 	9.	Exceptions: 

 In the event the Contractor or
sub-contractor(s) is/are a public entity, then the Insurance Requirements shall not apply. Such public entity shall provide a Certificate of Self-Insurance. If the contractor or sub-contractor(s) is/are a State of Arizona agency, board, commission,
or university, none of the above shall apply. 
  

	P.	FINANCIAL PROVISIONS 

  

	 	1.	General: 

  

	 	a.	Contractor shall have adequate professional staff and sufficient internal controls and systems in place designed to account for all related revenue/expenses.

  

	 	b.	Contractor is required to submit monthly, quarterly, and annual financial reports as outlined in the CPSA Provider Financial Guide. Financial reports shall be submitted in
electronic and hard copy form. 

  

	 	c.	Contractor agrees to submit Financial Audits and Reports as required by the CPSA Financial Guide. 

  

	 	2.	Compensation: 

 The method of compensation under this
Subcontract is delineated in Special Terms section of this Subcontract. 
  

	 	3.	Availability of Funds: 

 Payments made by CPSA pursuant to
this Subcontract are conditioned upon the availability to CPSA of funds from ADHS authorized for expenditure in the manner and for the purposes provided herein. CPSA and ADHS shall not be liable for any purchases or subcontracts entered into by any
subcontracted provider in anticipation of funding. 
  

	 	4.	Termination for Non-availability of Funds: 

 If monies are
not appropriated or otherwise available to CPSA to support continuation of performance of the subcontract, the Subcontract shall, upon written notice from CPSA, be canceled in whole or in part or at CPSA’s election, suspended until such monies
are so appropriated or available. 
  

	 	5.	Payments: 

 Payments made by CPSA to the Contractor are
conditioned upon receipt of applicable, accurate and complete reports and encounters, documentation and information then due from the Contractor, except to the extent excused by CPSA with the consent of ADHS. Reports, documentation and information
required to be submitted by the Contractor and the associated time frames are outlined in Subcontract Deliverables Schedule of this subcontract and the CPSA Provider Financial Guide. 
  

	 	6.	Compliance by the Contractor: 

 If the Contractor is in any
manner in default in the performance of any material obligation as outlined in this Subcontract, or if financial, compliance or performance audit exceptions are identified, CPSA or ADHS may, at its option and in addition to other available remedies,
either adjust the amount of payment or withholding or cause payment to be withheld until satisfactory resolution of the default or exception. CPSA shall be entitled to offset against any sums due the Contractor, any expenses or costs incurred by
CPSA as a result of nonconforming performance or failure to perform the Subcontract. The Contractor shall have the right to ten (10) business days prior written notice of any such action in adjusting the amount of payment or withholding
payment. Under no circumstances shall payments be authorized that exceed an amount specified in this Subcontract without an approved written amendment to this Subcontract. CPSA may, at its option, withhold final payment to the Contractor until
receipt of all final reports and deliverables. 
  

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	 	7.	Billing: 

  

	 	a.	Billing Generally: 

 The Contractor and its Subcontracted
Providers shall timely submit claims or encounters for covered services, in accordance with the ADHS/DBHS/CPSA Provider Manual, Section 6.1, Submitting Claims and Encounters. 
  

	 	b.	Review/Disallowance: 

 Each encounter submitted by the
Contractor shall be subject to disallowance in the event and to the extent such encounter is incomplete, does not conform to the applicable service authorization or to this Subcontract, any applicable Subcontract, or the ADHS/DBHS/CPSA Provider
Manual, or is otherwise incorrect. 
  

	 	c.	Sources of Payment/Adjustments: 

 The parties acknowledge
that other than donations and grants to the Contractor and funds otherwise generated by the Contractor independently from this Subcontract, and except for funds, if any, made available from third party payers by reason of coordination of benefits
and collection of permitted co-payments, the only source of payment to the Contractor for Covered Services provided hereunder is funds from CPSA payable hereunder via the Fiscal Agent. Any error discovered by CPSA or ADHS with or without an audit in
the amount of compensation paid to the Contractor will be subject to and shall require adjustment or repayment by or to the Contractor, by making a corresponding increase or decrease in a current payment to the Contractor or by making an additional
payment by CPSA to the Contractor, or vice versa. 
  

	 	d.	State Not Liable: 

 The Contractor acknowledges and agrees
that the obligations for payment to the Contractor for Covered Services hereunder are those solely and exclusively of the CPSA through the Fiscal Agent and that neither the State, ADHS nor AHCCCS shall have any liability or obligation to the
Contractor for the payment for Covered Services to members, or otherwise. The obligations of the State with respect to payment for Covered Services are solely those set forth in the contract between CPSA and ADHS. 
  

	 	e.	Provisional Nature of Payments: 

 All payments to the
Contractor shall be provisional and shall be subject to review and audit for their conformity with the provisions hereof and of any applicable subcontract. The Contractor agrees to reimburse CPSA immediately upon demand for all Subcontract funds
expended which are determined by CPSA, ADHS or the Auditor General not to have been disbursed by the Contractor in accordance with the terms of this Subcontract. If the party responsible to repay the Subcontract payments is other than the
Contractor, the Contractor and CPSA shall work together to identify and to obtain the funds from the responsible party (ies). 
  

	Q.	COMPLIANCE PROVISIONS 

  

	 	1.	The contractor will comply with all Audits, Surveys, Reviews and Inspections as specified in the CPSA Provider Financial Guide and the ADHS/DBHS/CPSA Provider Manual or otherwise
conducted by CPSA, ADHS or AHCCCS. 

  

	 	2.	At any time during the term of this Subcontract, Contractor and its subcontractors shall fully cooperate with financial, program, service and/or organizational reviews conducted by
CPSA, ADHS, AHCCCS, the U.S. Department of Health and Human Services, the U.S. Office of Civil Rights, The Center for Medicaid and Medicare Services or any authorized representative of the state or federal governments and allow them:

  

	 	a.	access to Contractor’s and Subcontractors’ staff and behavioral health recipients; 

  

	 	b.	access to, inspection and reproduction of books and records related to the performance of the Subcontract or second tier Subcontracts; and 

  

 Page 34 

	 	c.	through on-site inspection, or other means, to evaluate the quality, appropriateness and timeliness of services performed under this Subcontract. 

  

	 	3.	Contractor and its subcontractors will support CPSA when ADHS conducts an Annual Administrative Review of CPSA for the purpose of ensuring operational and financial program
compliance for all programs. Contractor and its Subcontractors will assist CPSA in complying with these Reviews. 

  

	 	4.	Contractor shall allow ADHS or CPSA to inspect the records of any employee who works on the contract to ensure that the Contractor is in compliance with all Federal Immigration laws
and regulations. 

  

	R.	DISPUTES, NON-PERFORMANCE, TERMINATION, AND CANCELLATION PROVISIONS 

  

	 	1.	Contract Disputes: 

  

	 	a.	In the event of a dispute under this Subcontract, the parties agree to make a good faith attempt to resolve the dispute prior to taking formal action. 

  

	 	b.	ADHS Claims Dispute procedures shall be the exclusive manner by which the Contractor may challenge denial of claims, non-payment of claims, or sanctions. 

 

	 	c.	Additionally, a Contractor must advise its Subcontracted Providers that they may dispute denial or non-payment of claims by the Contractor, in accordance with the ADHS/DBHS/CPSA
Provider Manual, Section 5.6, Provider Claims Disputes. 

  

	 	2.	Termination: 

  

	 	a.	Termination Upon Mutual Agreement: This Subcontract may be terminated by mutual written agreement of the parties effective upon the date specified in the written agreement.

  

	 	b.	Termination for Convenience: CPSA and the Contractor, in addition to other rights set forth elsewhere in this Subcontract, reserve the right to terminate this Subcontract in whole
or in part, without cause, effective 60 days after mailing written notice of termination, by certified mail, return receipt requested. 

  

	 	c.	Termination for Default: CPSA, in addition to other rights set forth elsewhere in this Subcontract, may at any time terminate this Subcontract in whole or in part if CPSA determines
that the Contractor has failed to perform any material requirement hereunder and is not cured within 30 days of receipt of written notice thereof (such period shall be reduced to three (3) days in the event of a failure that may pose a threat
to Members or personnel of the Contractor). 

  

	 	d.	Continuing Performance: The Contractor shall continue the performance of this Subcontract to the extent not terminated under the provisions of this Section.

  

	 	3.	Voidability of Contract: 

 This subcontract is voidable and
subject to immediate termination by CPSA upon Contractor becoming insolvent or filing proceedings in bankruptcy or reorganization under the United States Code, or upon assignment or delegation of the subcontract without the prior written approval of
CPSA. 
  

	 	4.	Rights & Obligations Upon Termination: 

  

	 	a.	In case of default, CPSA reserves the right to purchase services, or to complete the required work. CPSA may recover any reasonable excess costs from contractor by deduction from an
unpaid balance. 

  

	 	b.	The Contractor shall stop all work as of the effective date of the termination and shall immediately notify all Subcontracted providers, in writing, to stop all work as of the
effective date of the notice of termination. 

  

	 	c.	Upon receipt of the notice of termination and until the effective date of the notice of termination, the Contractor shall perform work consistent with the requirements of this
Subcontract and in accordance with a written plan approved by CPSA for the orderly transition of eligible and enrolled persons and clinical information necessary for their continued treatment to another Contractor. 

  

 Page 35 

	 	d.	The Contractor shall comply with all terms of the Subcontract and shall be paid the Subcontract price for all services and items completed as of the effective date of the notice of
termination and shall be paid its reasonable and actual costs for work in progress as determined by GAPP, however, no such amount shall cause the sum of all amounts paid to the Contractor to exceed the compensation limits set forth in the
Subcontract. 

  

	S.	MANAGEMENT INFORMATION SYSTEM 

 All contractors will
participate in the CPSA Information System to the extent necessary to perform this subcontract. Management Information System Requirements are defined in the CPSA Management Information Guide. This Guide contains specific information on Encounter
Submissions, Enrollment and Demographic Data Submission. Additionally, the ADHS/DBHS/CPSA Provider Manual contains information on Eligibility Inquiries and AHCCCS Eligibility Application Status Reports. 
  

	T.	MISCELLANEOUS PROVISIONS 

  

	 	1.	Conflict of Interest: 

 The Contractor shall not undertake
any work that represents a potential conflict of interest, or which is not in the best interest of CPSA, ADHS or the State without prior written approval by CPSA. The Contractor shall fully and completely disclose any situation, which may present a
conflict of interest. 
  

	 	2.	Anti-Kickback: 

  

	 	a.	Contractor or any director, officer, agent, employee or volunteer of the Contractor shall not request or receive any payment or other thing of value either directly or indirectly,
from or for the account of any Subcontractor (except such performance as may be required of a Subcontractor under the terms of its subcontract) as consideration for or to induce Contractor to enter into a subcontract with the Subcontractor or any
referrals of enrolled persons to the Subcontractor for the provision of covered services. 

  

	 	b.	Contractor certifies that it has not engaged in any violation of the Medicare Anti-kickback statute (42 USC 130a-7b) or the “Stark I” and “Stark II” laws
governing related-entity referrals (PL101-239 and PL 101-432) and compensation. 

  

	 	3.	Lobbying: 

  

	 	a.	Contractor shall not use funds paid to Contractor by CPSA, or interest earned, for the purpose of influencing or attempting to influence any officer or employee of any State or
Federal agency; or any member of, or employee of a member of, the United States Congress or the Arizona State Legislature in connection with awarding of any Federal or State Contract, the making of any Federal or State grant, the making of any
Federal or State loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment or modification of any Federal or State Contract, grant, loan, or cooperative agreement. 

  

	 	b.	Contractor shall not use funds paid to Contractor by CPSA, or interest earned, for the purpose of influencing or attempting to influence any officer or employee of any State or
Federal agency; or any member of, or employee of a member of, the United States Congress or the Arizona State Legislature in which it asserts authority to represent CPSA or ADHS or advocate the official position of CPSA or ADHS in any matter before
a State or Federal agency; or any member of, or employee of a member of, the United States Congress or the Arizona State Legislature. 

  

	 	4.	Offshore Performance of Work Prohibited: 

 Due to security
and identity protection concerns, all service under this subcontract shall be performed within the borders of the United States. All storage and processing of information shall be performed within the borders of the United States. This provision
applies to work performed by subcontractors at all tiers. 
  

 Page 36 

	 	5.	Choice of Forum: 

 The parties agree that jurisdiction over
any action arising out of or relating to this Subcontract shall be brought or filed in a court of competent jurisdiction located within the State of Arizona. 
  

	 	6.	Relationship of Parties: 

 The Contractor under this
subcontract is an independent Contractor. Neither party to this Subcontract shall be deemed to be the employee or agent of the other party to the subcontract. 
  

	 	7.	Assignment And Delegation: 

 The Contractor shall not
assign any right or payment nor delegate any duty under the Subcontract without the prior written approval of CPSA and ADHS. No assignment or delegation of the duties of this subcontract shall be valid without the above written approval. 

 

	 	8.	General Indemnification: 

 Indemnification-Patent and
Copyright. The Contractor shall indemnify and hold harmless the State and CPSA against any liability, including costs and expenses, for infringement of any patent, trademark or copyright arising out of Contract performance or use by the State or
CPSA of materials furnished or work performed under this Subcontract. The State shall reasonably notify the Contractor of any claim for which it may be liable under this paragraph. If the contractor is insured pursuant to A.R.S.§41-621 and
§35-154, this section shall not apply. 
  

	 	9.	Non-Exclusive Remedies: 

 The rights and remedies of CPSA,
ADHS and AHCCCS under this Subcontract are not exclusive and shall be in addition to any other rights and remedies provided by this Subcontract or available at law or in equity. 
  

	 	10.	Non-Discrimination: 

 The Contractor shall comply with
State Executive Order No. 99-4 which mandates that all persons, regardless of race, color, religion, sex, age, national origin or political affiliation, shall have equal access to employment opportunities, and all other applicable Federal and
State laws, rules and regulations, including the Americans with Disabilities Act and Title VI. 
  

	 	11.	Assignment of Overcharges: 

 The Contractor, CPSA and ADHS
recognize that in actual practice overcharges resulting from antitrust violations are in fact borne by the purchaser. Therefore, the Contractor hereby assigns to CPSA and ADHS any and all claims for such overcharges relating to items or services to
be provided by the Subcontract hereunder. 
  

	 	12.	Force Majeure: 

 Except for payment of sums due, neither
party shall be liable to the other nor deemed in default under this Subcontract if and to the extent that such party’s performance of this Subcontract is prevented by reason of force majeure. The term “force majeure” means an
occurrence that is beyond the control of the party affected and occurs without its fault or negligence. Without limiting the foregoing, force majeure includes acts of God; acts of the public enemy; war; riots; strikes; mobilization; labor disputes;
civil disorders; fire; flood; lockouts; injunctions-interventions-acts; or failures or refusals to act by government authority; and other similar occurrences beyond the control of the party declaring force majeure which such party is unable to
prevent by exercising reasonable diligence. 
  

	 	13.	Applicable Taxes: 

 Tax Indemnification: Contractor and all
subcontractors shall pay all Federal, state and local taxes applicable to its operation and any persons employed by the Contractor. Contractor shall, and require all subcontractors to hold CPSA and the State harmless from any responsibility for
taxes, damages and interest, if applicable, contributions required under Federal, and/or state and local laws and regulations and any other costs including transaction privilege taxes, unemployment compensation insurance, Social Security and
Worker’s Compensation. 
  

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	 	14.	Institutional Review Board For Research: 

 Any research
that a Contractor undertakes that includes RBHA Members must be reviewed and approved by an Institutional Review Board for Research maintained by the Contractor and forwarded to CPSA’s Research/Human Subjects Review Committee for final
approval. In the absence of an Institutional Review Board maintained by the Contractor, approval for research involving RBHA Members must be obtained from CPSA’s Research/Human Subjects Review Committee. 
  

	 	15.	Excluded Providers: 

 If the Contractor declines to include
individuals or groups of providers in its network, it shall give the affected providers written notice of the reason for its decision. The Contractor may not include providers excluded from participation in Federal health care programs, pursuant to
Section 1128 or Section 1128 A of the Social Security Act. 
  

	 	16.	Federal Immigration Laws: 

 The Contractor warrants that it
is in compliance with all Federal Immigration laws and regulations. The breach of any such warranty shall be deemed a material breach subject to monetary penalties up to and including the termination of this Subcontract. 
  

 Page 38 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SPECIAL TERMS

 (Inclusive of Provisions for Title XIX, Non-Title XIX, and Title XXI services – Children) 
  

	A.	FINANCIAL VIABILITY/PERFORMANCE BONDS 

 The
Contractor shall meet the financial viability criteria described in the CPSA Provider Financial Guide, applying Generally Accepted Accounting Principles (GAAP), within 30 days prior to the effective date of this Subcontract. If the Contractor cannot
meet the financial viability criteria the Contractor shall post a performance bond equal to one monthly payment less pharmacy withhold. The performance bond shall be payable to CPSA. Further details regarding Performance Bonds are described in the
CPSA Provider Financial Guide. 
  

	B.	FINANCIAL WITHHOLDING 

  

	 	1.	Pharmacy 

  

	 	a.	CPSA will withhold the amount of the pharmacy used by the Contractor’s Members against the gross 1/12th installment payment. The actual pharmacy cost is withheld two months
after the month in which the usage occurred. An estimated amount is withheld against the 1/12th installment payment until actual pharmacy costs are available. Reconciliation is made at the end of the fiscal year through the withholding against the
1/12th installment payment. 

  

	 	b.	CPSA will pay the contracted Third Party Pharmacy Administrator on a bimonthly basis for all pharmacy costs related to members from the respective Comprehensive Service Network
withhold amounts. 

  

	 	2.	Hospital 

  

	 	a.	CPSA will withhold the prorated Contractor’s share of hospital block payments from this contract based on authorized days.

  

	 	b.	Authorized days are used to estimate Contractor bed day responsibility on an interim basis until hospital reconciliations are complete. 

  

	 	c.	Estimated Contractor bed day responsibility for the current fiscal year is based on the prior fiscal year’s authorized bed day data. One-twelfth of the annual estimated
Contractor bed day responsibility is withheld from Contractor payments each month. 

  

	 	d.	At the end of the month subsequent to quarter end, authorized bed day data for the preceding quarters of the current fiscal year is evaluated on a year-to-date basis. The variance
between actual bed days and authorized bed days is adjusted as a year-to-date true-up in Contractor payments two months after quarter end. 

  

	 	e.	Reconciliation, based on clean, adjudicated claims through the CPSA claims system will be completed as claims data becomes available. Any differences between authorized days and
claims will be withheld or returned to the respective Contractor. 

  

	 	f.	Within 30 days of the completion of the hospital block purchase bed day reconciliation, CPSA will adjust the Contractor’s payments accordingly. 

  

	 	g.	CPSA reserves the right to change the withhold methodology with thirty (30) days notice to the Contractor. 

  

 Page 39 

	 	3.	Residential Treatment Centers (RTC) and Out of Area Placements (OOA) 

  

	 	a.	CPSA will withhold the Contractor’s share of RTC and OOA Placements from the Contractor’s payment. Withhold will be based on authorized days. 

  

	 	b.	At the end of the month subsequent to quarter end, authorized bed day data for the preceding quarters of the current fiscal year is evaluated on a year-to-date basis. The variance
between actual bed days and authorized bed days is adjusted as a year-to-date true-up in Contractor payments two months after quarter end. 

  

	 	c.	Reconciliation, based on clean, adjudicated claims through the CPSA claims system will be completed as claims data becomes available. Any differences between authorized days and
claims will be withheld or returned to the respective Contractor. 

  

	 	d.	Within 30 days of the completion of the RTC or OOA Placement reconciliation, CPSA will adjust the Contractor’s payments accordingly. 

  

	 	e.	CPSA reserves the right to change the withhold methodology with thirty (30) days notice to the Contractor. 

  

	C.	METHOD OF COMPENSATION 

  

	 	1.	All payments made to the Contractor shall be subject to the availability of funds and the terms and conditions of the Subcontract. CPSA shall disburse payments in accordance with
the Subcontract, provided that the Contractor’s performance complies with the terms and conditions of the Subcontract. 

  

	 	2.	CPSA reserves the right to renegotiate the services, rates, program budget, and/or method of compensation as set forth in these Special Terms. 

  

	 	3.	CPSA reserves the right to convert the payment mechanisms described in these special provisions to alternative mechanisms at its discretion and within thirty (30) days notice
to the Contractor. 

  

	 	4.	The annual funding allocation for services is identified and incorporated herein as Schedule II, Funding Allocation Schedule. All payments made by CPSA to the Contractor for the
provision of services are conditioned upon the availability of authorized funds for expenditure to CPSA from the funding source. 

  

	 	5.	Full compensation to the Contractor for all services rendered pursuant to this Subcontract will be paid subject to all requirements delineated in the CPSA Provider Financial Guide.

  

	 	6.	Contractor agrees to render the Covered Services set forth in the Scope(s) of Work throughout the entire contract year. 

  

	 	7.	The Contractor and its Subcontracted Providers shall submit 100% of claims/encounters for all Covered Services provided to Members, even if the claim amount/encounter data value
exceeds the annual funding allocation. All submissions shall meet CPSA’s Claims/Encounter System requirements. 

  

	 	8.	At the discretion of CPSA, supplemental or additional payments may be distributed in addition to the annual funding allocation. 

  

	 	9.	CPSA shall distribute scheduled payments to Contractor as long as CPSA has received funding from ADHS/DBHS. If funding from ADHS to CPSA is delayed, funding to Contractor may occur
the day funds are deposited and verified to CPSA accounts. 

  

	 	10.	CPSA will make payments by Automated Clearinghouse (ACH) (see Attachment F, ACH form). Any exception shall require a written notification to CPSA, Attention Controller.

  

	 	11.	Payments to the Contractor shall be in accordance with the following Schedules incorporated herein the agreement: 

  

	 	a.	Schedule 1-A – Monthly One-Twelfth Payment 

  

	 	b.	Schedule 1-C – Fee-for-Service 

  

 Page 40 

	D.	ACCOUNTING FOR FUNDS 

  

	 	1.	The practices, procedures, and standards specified in the CPSA Provider Financial Guide shall be used by the Contractor in the management, recording and reporting of funds.

  

	 	2.	Contractor shall manage available funding to ensure that Non-Title XIX covered services are available on a continuous basis throughout the Contract Year. 

 

	 	3.	Records/Administrative Costs: The Contractor shall establish and maintain financial and personnel records to verify that administrative monies expended do not exceed the total
amount allowed for such administrative service expenditures. Administrative services are defined in Attachment A, Definitions. 

  

	 	4.	Federal Block Grant Monies: The management of block grant funds will be handled in accordance with procedures specified in the CPSA Provider Financial Guide.

  

	 	5.	All funds received shall be separately accounted for in accordance with the requirements outlined in the CPSA Provider Financial Guide. 

  

	 	6.	CPSA reserves the right to withhold and/or recoup funds in accordance with any remedies allowed under this Subcontract. Any recoupments imposed by AHCCCS and/or ADHS against CPSA
and passed through to the Contractor shall be reimbursed to CPSA upon demand. 

  

	 	7.	Funding withholds applicable to this contract are contained in paragraph B above. 

  

	E.	ADVANCEMENT OF FUNDS BY THE CONTRACTOR 

 CPSA may,
in its sole and absolute discretion, advance payments to the Contractor if necessary or appropriate in the judgment of CPSA to develop, salvage or maintain an essential service to members. 
  

	F.	FINANCIAL AUDITS 

 In addition to the audit
requirements contained in Standard Terms, Section P, of this contract, financial audit requirements apply to this contract. These requirements are delineated in the CPSA Provider Financial Guide. 
  

	G.	PERFORMANCE INCENTIVE SYSTEM 

  

	 	1.	ADHS shall use a Performance Incentive System to encourage improved quality of care for behavioral health recipients. Incentives are performance based and CPSA will be eligible to
receive financial reimbursements based on meeting or exceeding set performance targets. If incentives are received, the Contractor will be eligible to receive a portion of the incentive amounts. The Contractor’s portion of the incentive will be
prorated based on the Contractor’s contribution to meeting the performance targets. 

  

	 	2.	Amount of Incentives 

  

	 	a.	The Contractor can receive a portion of any incentive earned by CPSA if the Contractor meets or exceeds the following indicators: 

  

					
	 Performance Indicator
	  	 Measured through
	  	 Thresholds that shall be
 met to earn incentive

	 Symptomatic Improvement
	  	ICR	  	80%
			
	 Functional Improvement
	  	ICR	  	80%
			
	 Overall Satisfaction
	  	Behavioral Health Recipient Satisfaction Survey	  	80%
			
	 Coordination of Care with PCP and other state agencies
	  	ICR	  	75%
			
	Cultural Competency: Member/Families cultural preferences are assessed and included in the development of the treatment plans	  	Behavioral Health Recipient Satisfaction Survey	  	70%
			
	Member/Family Involvement: Staff actively engage members/families in the treatment planning process	  	ICR	  	85%

  

 Page 41 

	 	3.	Earning Incentives 

 In order to qualify for incentive
payments, the Contractor shall meet all contractually required data submission requirements, including encounter submission requirements, as outlined in the CPSA Provider Financial Guide and the ADHS/DBHS/CPSA Financial Reporting Guide. For purposes
of qualifying for incentive payments, an 85% data submission requirement must be met. Contractor shall participate in any earned incentive money by satisfying the criteria for the above performance indicators and meeting all the contractually
required data and encounter submission requirements. 
  

	 	4.	Time Frames for Measuring, Meeting and Payment for Performance Indicators 

 The time frame for measuring and meeting performance indicators shall be from July 1 through June 30. The indicators shall be measured through existing performance measures and required data submission
requirements. For indicators derived from routinely collected data submission requirements, the average of the data collected across the twelve (12) months shall be used to determine if the indicator is met. Payment shall be made in or about
the month of October for the preceding State fiscal year. 
  

	H.	SANCTIONS 

  

	 	1.	CPSA may impose financial sanctions for failure to comply with the terms of this Subcontract or requirements set forth in the documents incorporated by reference or failure to
comply with a corrective action. Sanctions shall be assessed according to the severity of the violation. Unless explicitly stated otherwise in this Subcontract or document incorporated by reference, at the discretion of CPSA, sanctions shall be
applied as described in the CPSA Provider Financial Guide, Section V. 

  

	 	2.	The Contractor may challenge any sanctions imposed by CPSA in accordance with the ADHS/DBHS/CPSA Provider Manual Section 5.6, Provider Claims Disputes.

  

	I.	OWNERSHIP OF PROPERTY 

  

	 	1.	Real Property 

 Any real property or buildings and
improvements to buildings (“the property”) purchased by the Contractor with funds provided by ADHS through CPSA under the Contract, excluding net profits earned under the Subcontract, for delivering or coordinating the delivery of
behavioral health services to behavioral health recipients shall include (1) a use restriction in the deed, or (2) covenants, conditions, or restrictions, or (3) another legal instrument acceptable to DHS that requires the property to
be used solely for the benefit of behavioral health recipients. Notwithstanding the funding source used to purchase the property, prior to the purchase the Contractor shall: 
  

	 	a.	Disclose to CPSA the funding source used to purchase the property to demonstrate whether the purchase is to be made with funds provided by ADHS under the Contract, funds from net
profits earned under the Contract or other funds; 

  

	 	b.	Disclose to CPSA the financing arrangements made to purchase the property; and 

  

 Page 42 

	 	c.	If the property is purchased with funds provided by ADHS under the Contract, submit to CPSA, for prior approval, a deed containing the use restrictions, covenants, conditions or
restrictions or another legal instrument that ensures the property is used solely for the benefit of behavioral health recipients and that failure to comply with the use restrictions allows the State to take title to the property or otherwise
enforce the restrictions. 

  

	 	2.	HB 2003 Funded Property 

  

	 	a.	Notwithstanding the preceding paragraph, any real property acquired or buildings constructed on real property with HB2003 funds for the purpose of providing housing for persons with
serious mental illness, shall be governed by any provisions of this subcontract that apply to services, if applicable. 

  

	 	b.	Any real property, including land, buildings and improvements purchased by the Contractor or its subcontractor with HB2003 funding, shall include a deed restriction and reversionary
clause that requires the real property to be used solely for the benefit of enrolled persons. Prior to the purchase of any real property, the Contractor shall submit to CPSA and ADHS, for prior approval, a deed containing the use restrictions and a
reversionary clause that ensures the property is used for the benefit of enrolled persons and that failure to comply with the use restrictions allows the property to revert to the state. 

  

	J.	INSURANCE PROVISIONS 

 The following types of
insurance are required by the Contractor for performance of this contract: 
  

	 	1.	Commercial General Liability - Limits of liability and other requirements are contained in the Standard Terms of this contract, Section O.2.a. 

  

	 	2.	Automobile Liability - Limits of liability and other requirements are contained in the Standard Terms of this contract, Section O.2.b. 

  

	 	3.	Worker’s Compensation and Employer’s Liability - Limits of liability and other requirements are contained in the Standard Terms of this contract, Section O.2.c.

  

	 	4.	Professional Liability (Errors and Omissions Liability) - Limits of liability and other requirements are contained in the Standard Terms of this contract, Section O.2.d.

 In addition to the insurance requirements contained in Standard Terms, Section O, 2(d) of this contract, the following
requirement applies to Professional Liability Insurance: 
 The policy shall be endorsed to include the following additional insured language:
“The State of Arizona, Pima County, Department of Health Services and CPSA shall be named as additional insured with respect to liability arising out of the activities performed by or on behalf of the Contractor” 
  

	K.	INDEMNIFICATION 

 Contractor shall indemnify,
defend, save and hold harmless the State of Arizona, Department of Health Services, and CPSA (hereinafter referred to as “Indemnitee:)” from and against any and all claims, actions, liabilities, damages, losses, or expenses (including
court costs, attorney’s fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (including death), or loss of damage to tangible or intangible
property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of the Contractor or any of its owners, officers, directors, agents, employees or subcontractors. This indemnity includes any claim or
amount arising out of or recovered under the Workers’ Compensation Law or arising out of the failure of such Contractor to conform to any federal, state or local law, statue, ordinance, rule, regulation or court decree. It is the specific
intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by the Contractor from and against any and all claims. It is
agreed that the Contractor will be responsible for primary loss investigation, defense and judgment costs where this indemnification is applicable. In consideration of the award of this contract, the Contractor agrees to waive all rights of
subrogation against the State of Arizona, its officers, officials, agents and employees, and CPSA for losses arising from the work performed by the Contractor for the State of Arizona. 
  

 Page 43 

 This indemnity shall not apply if the Contractor or sub-contractor(s) is/are an agency, board, commission
or university of the State of Arizona. 
  

	L.	BUSINESS CONTINUITY PLAN 

  

	 	1.	The Contractor shall develop a Business Continuity Plan to deal with unexpected events that may negatively and significantly affect its ability to adequately serve members. This
plan shall, at a minimum include planning and training for: 

  

	 	a.	Behavioral health facility closure/loss of a major provider; 

  

	 	b.	Electronic/telephonic failure at the Contractor’s main place of business; 

  

	 	c.	Complete loss of use of the main site; 

  

	 	d.	Loss of primary computer system/records; and 

  

	 	e.	How the Contractor will communicate with CPSA in the event of a business disruption. 

  

	 	2.	The Business Continuity Plan shall be reviewed annually by the Contractor, updated as needed, and provided to CPSA for review upon request. All key staff shall be trained and
familiar with the Plan. 

  

	M.	REMITTANCES AND NOTICES 

 Remittances: All payments
to the Contractor shall be sent to: 
 The Providence Service Corporation 
 620 N. Craycroft 
 Tucson, AZ 85711

 Notices: All notices to the Contractor shall be sent to: 
 Craig A. Norris, Chief Operating Officer 
 The Providence Service Corporation 
 620 N. Craycroft 
 Tucson, AZ 85711

 Contractor must notify CPSA Contracts Department when there is a change in the above remittance or notice addresses. 
  

 Page 44 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SCHEDULE I–A

 SPECIAL PROVISIONS 
 MONTHLY ONE-TWELFTH PAYMENT METHODOLOGY 
 (This methodology is used for the following populations as applicable) 

 

	A.	AT-RISK CHILDREN SERVICES 

 Title XIX Children

 Title XIX Children, CMDP 
 Title XIX Children, DD 
 Non-Title XIX Children 
 Title XXI, KidsCare 
  

	B.	ACCOUNTING FOR FUNDS 

 Monthly Block Payments:

 Monthly Block Payment is described in the CPSA Provider Financial Guide Section I, General Information under Subcontracting and Payment
Methodology. Payments due to the Contractor will be determined on a monthly basis and paid to the Contractor in accordance with the following: 
  

	 	1.	Payment of monthly prospective installment amount equal to 1/12th the annual program funding allocation will be distributed by CPSA on the second Thursday of the month, beginning
with the first month of the contract year. 

  

	 	2.	At-Risk Services - On an on-going monthly basis, CPSA will monitor and reconcile year-to-date encounter values in accordance with the CPSA Provider Financial Guide, Section VI, A.

 Non-At Risk Services - On an on-going monthly basis, CPSA will monitor year-to-date clean claim/encounter values adjudicated
and approved by the CPSA Claims/Encounter System to the corresponding year-to-date payments in accordance with the CPSA Provider Financial Guide, Section VI, B. 
  

 Page 45 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SCHEDULE I-C

 SPECIAL PROVISIONS 
 FEE FOR SERVICE METHODOLOGY 
 (This methodology used for programs that are Fee-For-Service) 
  

	A.	PROGRAMS 

 Title XIX SMI – Young Adult Team

 Title XXI Adult – Young Adult Team 
 Title XIX GMH – Young Adult Team 
  

	C.	PAYMENTS 

 Payments due to the Contractor shall be
determined on a fee for service reimbursement basis. 
  

	D.	REIMBURSABLE EXPENSES 

  

	 	1.	Fee-for-service reimbursement amounts shall be determined by the then current CPSA matrix rate. 

  

	 	2.	Payment of clean claims which are adjudicated through CPSA claims/encounter system as of the last day of the month will be released by CPSA on the 2nd Thursday of the following
month. 

  

 Page 46 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SCHEDULE II

 PROGRAM FUNDING ALLOCATION 
 (SEE FOLLOWING PAGE) 
  

 Page 47 

 THIS PAGE IS TO BE REMOVED AND INSERT 
 FUNDING ALLOCATION SCHEDULE 
  

 Page 48 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 AMENDMENT #4 
 SCHEDULE III

 CONTRACT DELIVERABLES 
  

									
	 Reference
	  	 Deliverable
	  	 Due Date
	  	 Submit To
	  	Form
Req’d
					
	AHCCCS Rules, ADHS Policy	  	Office of Behavioral Health Licensure (OBHL) License(s)	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance	  	Contracts Unit	  	
					
	AHCCCS Rules, ADHS Policy	  	Copy of OBHL/DES Licensure Audit Report/Findings	  	30 days after receipt	  	Contracts Unit	  	
					
	AHCCCS Rules, ADHS Policy	  	OBHL/DES Licensure Corrective Action Plan	  	15 days after due date to OBHL/DES	  	Contracts Unit	  	
					
	AHCCCS Rules, ADHS Policy	  	Proof of Accreditation	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance	  	Contracts Unit	  	
					
	RBHA Contract	  	Professional and Personal Liability Certificate of Insurance	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance	  	Contracts Unit	  	
					
		  	General Liability Certificate of Insurance	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance	  	Contracts Unit	  	
					
		  	Automobile Liability Certificate of Insurance	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance	  	Contracts Unit	  	
					
		  	Worker’s Compensation Insurance	  	15 days prior to contract execution. Renewed or amended license within 15 days of issuance.	  	Contracts Unit	  	
					
	RBHA Contract	  	Contractor’s Subcontract Agreements with Subcontracted Providers and any subsequent amendments.	  	Within 10 days of execution of new Subcontract Agreement or Amendment	  	Contracts Unit	  	
					
	RBHA Contract	  	Organization Chart	  	Within 30 days of contract award renewal. Within 30 days of any changes.	  	Contracts Unit	  	
					
	RBHA Contract	  	List of Board of Directors or equivalent that includes members’ Name, Affiliation, Address and Telephone Number.	  	Within 30 days of contract award/renewal. Within 30 days of any changes.	  	Contracts Unit	  	
					
	RBHA Contract	  	Independent Practitioner (M.D., D.O., R.N., P.A. & Ph.D, N.P, CISW, CPC, CMFT)	  	Within 5 days of any changes.	  	Contracts Unit	  	X

  

 Page 49 

									
	 Reference
	  	 Deliverable
	  	 Due Date
	  	 Submit To
	  	Form
Req’d
					
	RBHA Contract	  	Schedule of Budgeted Revenue and Expenses	  	Annually no later August 15 each fiscal year	  	Finance Unit	  	X
					
	RBHA Contract	  	Cost Allocation Plan	  	Annually no later than August 15 each fiscal year.	  	Finance Unit	  	
					
	RBHA Contract	  	 Balance Sheet
 Statement of Operations and Changes in Net
Assets
 Statement of Cash Flow
	  	30 calendar days after month end	  	Finance Unit	  	
					
		  	Supplemental Schedule of Revenue and Expenses	  	30 calendar days after month end	  	Finance Unit	  	X
					
		  	Certification Statement	  	30 calendar days after month end	  	Finance Unit	  	X
					
		  	 Certified audited financial statement
 Management letter
from Contractor’s auditor including any provider responses
 OMB Circular A-133 Reports, if applicable
	  	150 calendar days following Contractor’s fiscal year end.	  	Finance Unit	  	
					
	RBHA Contract	  	Audited Supplemental Schedule of Revenue and Expenses	  	150 calendar days following Contractor’s fiscal year end	  	Finance Unit	  	X
					
		  	Attestation of Privileges	  	Upon completion of a thorough competency assessment of each individual who will perform initial assessments	  	QM Unit	  	
					
	Office of Behavioral Health Licensure; ADHS/RBHA Contract	  	Incident/Accident/Mortality Report	  	Within 24 hours following incident.	  	QM Unit	  	X
					
	RBHA Contract	  	Fraud & Abuse Report	  	Per incident within 5 days.	  	QM Unit	  	
					
	RBHA Contract	  	Restraint and Seclusion Report (SMI & Children Level 1 Facility)	  	5th day of each month.	  	QM Unit	  	X
					
	ADHS Policy; AHCCCS Rules	  	Medical Care Evaluation Studies (Inpatient/RTC/PHF)	  	Annually no later than August 15 each fiscal year.	  	QM Unit	  	X
					
	RBHA Contract	  	Contractor’s Policies & Procedures	  	Annually no later than October 15 each fiscal year; updates within 30 days of revision.	  	QM Unit	  	
					
	RBHA Contract	  	Policies or Codes Governing Agency’s Operational Ethics	  	Prior to implementation for review/approval and Annually thereafter.	  	QM Unit	  	
					
	RBHA Contract, AHCCS Rules	  	Agency QM/UM Plan and Annual Review	  	30 days from initial execution of Subcontract, Annually thereafter by no later than November 15 each fiscal year.	  	QM Unit	  	

  

 Page 50 

									
	 Reference
	  	 Deliverable
	  	 Due Date
	  	Submit To	  	Form
Req’d
					
	RBHA Contract	  	QM Site Visit and/or Chart Audit Plan of Correction Report	  	30 days after receipt of report.	  	QM Unit	  	
					
	RBHA Contract	  	Minimum Network Standard and Staff Inventory Report	  	Quarterly, 30 days following the end of quarter	  	Systems
Development
and Evaluation
Unit	  	
					
	RBHA Contract	  	Utilization (Census) Data of Members Out of Home placements	  	Weekly for Networks including facility subcontractors	  	Utilization
Management
Manager	  	
					
	RBHA Contract; ADHS Policy; AHCCCS Rules	  	 Certification of Need (CON)
 (For TXIX/TXXI members in a
Level 1 RTC)
	  	Initial CONs weekly; renewal CONs every 30 days thereafter.	  	Utilization
Management
Manager	  	
					
	RBHA Contract	  	Member Roster Reconciliation	  	Exception corrections submitted 15 days after month-end.	  	Provider
Services
Manager	  	
					
	ADHS Policy & RBHA Contract	  	Agency’s Training Plan	  	Annually no later than August 15 each fiscal year, updates within 30 days of revision	  	Training
Manager	  	
					
	ADHS Policy & RBHA Contract	  	Agency’s Training Report	  	Annually no later than August 15 each fiscal year.	  	Training
Manager	  	
					
	RBHA Contract	  	Member Enrollment (PACE electronic submission)	  	Enrollment, closure and initial demographic assessment within 5 days of intake and closure.	  	Pace
Enrollment
System	  	
					
	RBHA Contract	  	Progress Updates toward meeting targeted outcomes	  	By the 5th day of the month following quarter	  	Network
Development
Manager	  	

  

 Page 51 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE
SERVICE NETWORK 
 ATTACHMENT A 
 DEFINITIONS (REVISED) 
 The terms contained in this subcontract are defined as follows: 
 “638 Tribal Facility” means a facility owned and operated by an Indian tribe authorized to provide services pursuant to Public Law 93-638, as amended.

 “834 Transaction Enrollment/Disenrollment” means the HIPAA-compliant transmission, by a behavioral health provider to a T/RBHA and by a
T/RBHA to ADHS/DBHS, of information to establish or terminate a person’s enrollment in the ADHS/DBHS behavioral health service delivery system. 
 “A.A.C.” means the Arizona Administrative Code. 
 “A.R.S.” means the Arizona Revised Statutes. 
 “ACYF” means the Administration for Children, Youth and Families within ADES. 
 “ADES” means the Arizona Department of Economic Security. 
 “ADHS” means the Arizona
Department of Health Services. 
 “ADHS Information System” means the ADHS/DBHS Information Systems in place or any other data collection
and information system as may from time to time be established by the ADHS/DBHS. 
 “ADHS/DBHS” means the Arizona Department of Health
Services, Division of Behavioral Health Services. 
 “ADJC” means the Arizona Department of Juvenile Corrections. 
 “Administrative Costs” means administrative expenses incurred to manage the behavioral health system, including, but not limited to: provider relations
and contracting, provider billing, accounting, information technology services, processing and investigating grievances and appeals, legal services (including any legal representation of the Contractor at administrative hearings concerning the
Contractor’s decisions, and actions), planning, program development, program evaluation, personnel management, staff development and training, provider auditing and monitoring, utilization review and quality assurance. Administrative costs do
not include expenses related to direct provision of behavioral health services including case management. See also Financial Reporting Guide for categories of classification. 
 “ADOC” means the Arizona Department of Corrections. 
 “ADOE” means the Arizona Department
of Education. 
 “Adult” means a person 18 years of age or older, unless the term is given a different definition by statute, rule, or
policies adopted by the ADHS or AHCCCS. 
 “AHCCCS” means the Arizona Health Care Cost Containment System. 
 “AHCCCS Health Plan” means an organization or entity agreeing through a direct contracting relationship with AHCCCS to provide the goods and services
specified by contract in conformance with the stated contract requirements, AHCCCS statute and rules and federal law and regulations. 
 “ALTCS” means the Arizona Long Term Care System. 
 “AMPM” meant the AHCCCS Medical Policy Manual. 
 “AOC” means the Administrative Office of the Courts of the Arizona Supreme Court. 
 “Arizona Administrative Code (A.A.C.)” means the State regulations established pursuant to relevant statutes. 
 “Arizona Long Term Care System (ALTCS)” means a program under AHCCCS that delivers long term, acute and behavioral health care services to eligible members, as authorized by A.R.S. §36-2931 et seq. 
  

 Page 52 

 “Arizona Revised Statute (A.R.S.)” means the laws of the State of Arizona. 
 “Attachment” means documents that information only and do not affect the scope, terms, or conditions of the contract. 
 “BBA” means the Balanced Budget Act of 1997. 
 “Behavioral Health Disorder” means any behavioral or mental diagnosis and/or substance use (abuse/dependence) diagnosis found in the most current version of the Diagnostic and Statistical Manual or International
Classification of Disorders. 
 “Behavioral Health Paraprofessional” means a staff member of a licensed behavioral health service agency as
specified in A.A.C. Title 9, Chapter 20. 
 “Behavioral Health Professional” means a psychiatrist, behavioral health medical practitioner,
psychologist, social worker, counselor, marriage and family therapist, substance abuse counselor or registered nurse with at least one year of full time behavioral health work experience and who meets the requirements of A.A.C. Title 9, Chapter 20.

 “Behavioral Health Provider” means any individual or facility that delivers behavioral health services in the network. This may be the
Contractor or a subcontracted behavioral health provider. 
 “Behavioral Health Recipient” means any adult or child receiving services
in/through ADHS funded programs. 
 “Behavioral Health Services” means those services listed in the ADHS Covered Behavioral Health Services
Guide. 
 “Behavioral Health Technician” means a staff member of a licensed behavioral health service agency as specified in A.A.C. Title 9,
Chapter 20. 
 “Best Practices” means evidence-based practices, promising practices, or emerging practices. 
 “Board Eligible for Psychiatry” means documentation of completion of an accredited psychiatry residency program approved by the American College of
Graduate Medical Education, or the American Osteopathic Association. Documentation would include either a certificate of residency training including exact dates, or a letter of verification of residency training from the training director including
the exact dates of training. 
 “Capitation” is a method by which a Contractor or Subcontractor is paid to deliver covered services for the
duration of a contract to eligible persons based on a fixed rate per member per month notwithstanding (a) the actual number of eligible persons who receive care from the Contractor and (b) the amount of services provided to any enrolled
person; a cost containment alternative to fee-for-service. 
 “Center for Medicare and Medicaid Services” (CMS, formerly HCFA) means the
organization within the United States Department of Health and Human Services, which administers the Medicare and Medicaid program and the State Children’s Health Insurance Program. 
 “CFR” means the Code of Federal Regulations. 
 “Child” means an eligible person who is under the
age of 18, unless the term is given a different definition by statute, rule or policies adopted by the ADHS or AHCCCS. 
 “Child and Family
Team” means a defined group of people that includes, at a minimum, the child and his/her family, a behavioral health representative, and any individuals important in the child’s life and who are identified and invited to participate by
the child and family. This may include, for example, teachers, extended family members, friends, family support partners, healthcare providers, coaches, community resource providers, representatives from churches, synagogues or mosques, agents from
other service systems like CPS or DDD, etc. The size, scope and intensity of involvement of the team members are determined by the objectives established for the child, the needs of the family in providing for the child, and by which individuals are
needed to develop an effective service plan, and can therefore expand and contract as necessary to be successful on behalf of the child. 
 “CIS” means the Client Information System. 
  

 Page 53 

 “Client Information System” means the data system used by DHS. 
 “Clinical Liaison” means a behavioral health professional or a behavioral health technician who has been credentialed and privileged by the T/RBHA or
their designee in accordance with ADHS/DBHS requirements to perform this function. The Clinical Liaison: (1) Assumes the primary responsibility of clinical oversight of the person’s care (2) Ensures the clinical soundness of the
assessment/treatment process (3) Serves as the point of contact, coordination and communication with the person’s team and other systems where clinical knowledge of the case is important. 
 “CMDP” means the Comprehensive Medical and Dental Plan, an AHCCCS Health Plan administered through DES who provide for medical needs of children in the
care and custody of the state. 
 “CMHS” means the Community Mental Health Services Performance Partnership Program Pursuant to Division B,
Title XXXII, Section 3204 of the Children’s Health Act of 2000. 
 “CMS” (formerly HCFA) means Center for Medicare and Medicaid
Services. 
 “Collaborative Team” means a team of individuals whose primary function is to develop a comprehensive and unified service or
treatment plan for an enrolled person. The team may include an enrolled person, member of the enrolled person’s family, health, mental health or social service providers including professionals representing disciplines related to the
person’s needs, or other persons that are not health, mental health or social service providers identified by the person or family. Collaborative Teams include child and family teams and adult teams. 
 “Community Service Agency” means an agency that is contracted directly by the Contractor or a provider network and registered with AHCCCS to provide
rehabilitation and support services consistent with the staff qualifications and training. Community Service Agencies are not required to be licensed through the ADHS Office of Behavioral Health Licensure. Refer to the ADHS/DBHS Covered Behavioral
Health Services Guide for details. 
 “Contract” means the written agreement between CPSA and ADHS under
which CPSA operates as the Regional Behavioral Health Authority. 
 “Contract Amendment” means a written
document signed by the parties to a subcontract for the purpose of making changes in the Contract. 
 “Contract Year” means a period from
July 1 of a calendar year through and including June 30 of the following year. 
 “Contractor”
means the person or entity bound by the terms of a subcontract with CPSA. 
 “Covered Services” means those services listed in the
ADHS/DBHS Covered Behavioral Health Services Guide. 
 “CPS” means the Child Protective Services within the ADES. 
 “Credentialing” means the process of obtaining, verifying and assessing information (e.g. validity of the license, certification, training and/or work
experience) to determine whether a behavioral health professional or a behavioral health technician has the required credentials to provide behavioral health services to persons enrolled in the ADHS/DBHS behavioral health system. It also includes
the review and verification of applicable licensure, accreditation and certification of behavioral health providers. 
 “Cultural Competence”
means a set of congruent behaviors, attitudes and policies that come together in a system, agency, or among professionals which enables that system, agency or those professionals to work effectively in cross-cultural situations. 
 “Days” means calendar days unless otherwise specified. 
 “DBHS” means the Division of Behavioral Health Services within ADHS. 
 “DDD” means the Division of Developmental
Disabilities within ADES. 
 “Department” means the Arizona Department of Health Services. 
 “Deputy Director” means the Deputy Director for the ADHS or his or her duly authorized representative. 
  

 Page 54 

 “DHS” means the Arizona Department of Health Services. 
 “Eligible Person” means an individual who needs or is at risk of needing ADHS covered services. 
 “Emerging Practices” means new innovations in clinical or administrative practice that address critical needs of a particular program, population
or system, but do not yet have scientific evidence or broad expert consensus support. 
 “Encounter” means a record of a covered service
rendered by a provider to a person enrolled with a capitated RBHA on the date of service. 
 “Enrolled Person” means a Title XIX, Title XXI
or Non-Title XIX/XXI eligible person recorded in the ADHS Information System as specified by the ADHS. 
 “Enrollment” means the process by
which a person is enrolled into the Contractor and DHS data system. 
 “Evidence-based practice” means an intervention that is an
integration of science-based evidence; the skill and judgment of health professionals; and the unique needs, concerns and preferences of the person receiving services. Evidence-based practices are not intended to be automatically and uniformly
applied, but instead considered as a combination of all three factors. 
 “Formulary” means a list of medications that are made available by
individual T/RBHAs for their enrolled members. The list must encompass all medications included on the ADHS/DBHS minimum list of medications. 
 “Fraud” means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to the person or some other person. It includes any act that
constitutes fraud under applicable Federal or State Law. 
 “GAAP” means Generally Accepted Accounting Principles. 
 “General Mental Health Adults” means a classification of adult persons age eighteen and older who have general behavioral health issues and have not
been determined to have a serious mental illness. 
 “Geographic Service Area” means a specific county or defined grouping of counties that
are available for contract award. The Contractor is responsible to provide covered services to eligible residents of their contracted GSA (s) except as otherwise stated in this Contract. 
 “GMH” means General Mental Health and is used to designate adult fund type. 
 “GMH/SA” means General Mental Health and Substance Abuse and is used to designate adult fund type. 
 “Gratuity” means a payment, loan, subscription, advance, deposit of money, services, or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received.

 “GSA” means Geographic Service Area. 
 “HB2003” means House Bill 2003 enacted 2000 Arizona Session Laws, Chapter 2, Section 1 (5th Special Session). 
 “Health Insurance Portability and Accountability Act of 1996 (HIPAA)”
means Public Law 104-291 Title II Subtitle F and regulations published by the United States Department of Health and Human Services, the administrative simplification provisions and modifications thereof, and the Administrative Simplification
Compliance Act of 2001. 
 “HIPAA” means Health Insurance Portability and Accountability Act of 1996. 
 “HUD” means the United States Department of Housing and Urban Development. 
 “IBNR” means claims for covered services that have been Incurred But Not Reported. 
 “IGA”
means an Intergovernmental Agreement. 
 “IHS” means the Indian Health Service of the United States Department of Health and Human Services.

 “IMD” means an Institution for Mental Disease. 
  

 Page 55 

 “Incurred But Not Reported (IBNR)” means liability for service rendered for which claims have not been
reported. 
 “Indian Health Service (IHS)” means the bureau of the United States Department of Health and Human Services that is responsible
for delivering public health and medical services to American Indians throughout the country. The federal government has direct and permanent legal obligation to provide health services to most American Indians according to treaties with Tribal
Governments. 
 “Institution for Mental Disease (IMD)” means a hospital, nursing facility, or other institution of more than 16 beds that is
primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services. An institution is an IMD if its overall character is that of a facility established and
maintained primarily for the care and treatment of individuals with mental diseases (42 CFR 435.1009). In the State of Arizona, Level I facilities with more than 16 beds are IMDs except when licensed as a unit of a General Medical Hospital.

 “Interagency Service Agreement (ISA)” means an agreement between two or more agencies of the State wherein an agency is reimbursed for
services provided to another agency or is advanced funds for services provided to another agency. 
 “Intergovernmental Agreement (IGA)”
means an agreement conforming to the requirements of A.R.S. Title 11, Chapter 7, Article 3 (A.R.S. § 11-951 et. seq.). 
 “ISA”
means an Interagency Service Agreement. 
 “KidsCare” means the Arizona version implementing the Title XXI of the Social Security Act,
referred to in federal legislation as the “State Children’s Health Insurance Program” (SCHIP). 
 “Level I Behavioral Health
Facility” means a behavioral health agency as defined in A.A.C. Title 9, Chapter 20. 
 “Level II Behavioral Health Facility” means
a behavioral health agency as defined in A.A.C. Title 9, Chapter 20. 
 “Level III Behavioral Health Facility” means a behavioral health
agency as defined in A.A.C. Title 9, Chapter 20. 
 “Materials” means all property including equipment,
supplies, printing, insurance and leases of property but does not include land, a permanent interest in land or real property or leasing space. 1 
 “Medically Necessary Covered Services” means those covered services provided by
qualified service providers within the scope of their practice to prevent disease, disability and other adverse health conditions or their progression or to prolong life. Medically necessary services are aimed at achieving the following: the
prevention, diagnosis, and treatment of behavioral health impairments; the ability to achieve age-appropriate growth and development; and the ability to attain, maintain, or regain functional capacity. 
 “Medicare Modernization Improvement Act” The Medicare Modernization Improvement Act of 2003 created a Prescription Drug Benefit Plan called Medicare
Part D for individuals who are eligible for Medicare Part A and/or enrolled in Medicare Part B. 
 “Medicare Part D Excluded drugs” Medicare
Part D is the Prescription Drug Coverage option available to Medicare beneficiaries, including those also eligible for Medicaid. Medications that are available under this benefit will not be covered by AHCCCS post January 1, 2006. There are
certain drugs that are excluded from coverage by Medicare, and will continue to be covered by AHCCCS. Those medications are barbiturates, benzodiazepines, and over the counter medication. Prescription medications that are covered under Medicare, but
are not on a Part D Health Plans formulary are not excluded drugs, and will not be covered by AHCCCS. 
 “Member” means a person receiving
behavioral health services. 
 “Member Appeal” means a request for a review of an action in accordance with 42 CFR 438.400, and for a person
with an SMI, an appeal of an SMI eligibility determination; decisions regarding eligibility for behavioral health services, including Title XIX services, fees and waivers; assessments and further evaluations; service and treatment plans and planning
decisions; and the implementation of those decisions. 
  

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 “Network Material Change” means an alteration or development within a provider network that may
reasonably be foreseen to affect the quality or delivery of covered services provided under this Contract. 
 “Non-Title XIX/XXI Funding”
means fixed, non-capitated funds, including funds from CMHS and SAPT, State appropriations (other than state appropriations to support the Title XIX and Title XXI program), counties and other funds, which are used for services to Non-Title XIX/XXI
eligible persons and for services not covered by Title XIX or Title XXI provided to Title XIX and Title XXI eligible persons. 
 “Non-Title XIX/XXI
Person” means an individual who needs or may be at risk of needing covered services, but does not meet Federal and State requirements for Title XIX or Title XXI eligibility. 
 “Outreach” means activities to identify and encourage individuals who may be in need of behavioral health services to receive them. 
 “PCP” means Primary Care Provider. 
 “Primary Care Provider/Practitioner (PCP)” is an
individual who meets the requirement of A.R.S. 36-2901, and who is responsible for the management of a member’s health care. A PCP may be a physician defined as a person licensed as an allopathic or osteopathic physician according to A.R.S.
Title 32, Chapter 13 or Chapter 17, or a practitioner defined as physician assistant licensed under A.R.S. Title 32, Chapter 25, or a certified nurse practitioner licensed under A.R.S. Title 32, Chapter 15. 
 “Prior Authorization” means an action taken by ADHS/DBHS, a RBHA or a subcontracted provider that approves the provision of a covered service prior to
the service being provided. 
 “Privileging” means the process used to determine if credentialed clinicians are competent to perform their
assigned responsibilities, based on training, supervised practice and/or competency testing. 
 “Profit” means the excess of revenues over
expenditures, in accordance with Generally Accepted Accounting Principles, regardless of whether the Contractor is a for-profit or a not-for-profit entity. 
 “Promising Practices” means clinical or administrative practices for which there is considerable evidence or expert consensus and which show promise in improving client outcomes, but which are not yet proven by the highest
or strongest scientific evidence. 
 “Provider” means an organization and/or behavioral health professional who provides behavioral health
services to behavioral health recipients. 
 “Provider Network” means the agencies, facilities, professional groups or professionals under
subcontract to the Contractor to provide covered services to behavioral health recipients and includes the Contractor to the extent the Contractor directly provides covered services to behavioral health recipients. 
 “Psychiatrist” means a person who is a licensed physician as defined in A.R.S. Title 32, Chapter 13 or Chapter 17 and who holds psychiatric board
certification from the American Board of Psychiatry and Neurology, the American College of Osteopathic Neurologist and Psychiatrist; or the American Osteopathic Board of Neurology and Psychiatry; or is board eligible. 
 “RBHA” means a Regional Behavioral Health Authority. 
 “Referral for Behavioral Health Services” means any oral, written, faxed, or electronic request for behavioral health services made by any person, or person’s legal guardian, family member, an AHCCCS health plan,
primary care provider, hospital, jail, court, probation and parole officer, tribal government, Indian Health Services, school, or other state or community agency. 
 “Regional Behavioral Health Authority” means an organization under contract with the ADHS to coordinate the delivery of behavioral health services to eligible and/or enrolled persons in a geographically specific service
area of the state. 
 “Related Party” means a party that has, or may have, the ability to control or significantly influence a Contractor,
or a party that is, or may be, controlled or significantly influenced by a Contractor. “Related parties” include, but are not limited to, agents, managing employees or persons with an ownership or 

  

 Page 57 

 
controlling interest in the disclosing entity, and their immediate families, subcontractors, wholly-owned subsidiaries or suppliers, parent companies, sister
companies, holding companies, and other entities controlled or managed by any such entities or persons. 
 “RSA” means the Rehabilitation
Services Administration within the ADES. 
 “RTC” means Level 1 Residential Treatment Center. 
 “SA” means Substance Abuse and is used to designate adult fund type. 
 “SAPT” means Substance Abuse Prevention and Treatment. Performance Partnership Program pursuant to Division B. Title XXXIII, Section 3303 of The Children’s Health Act of 2000 pursuant to
Section 1921 – 1954 of the Public Health Service Act and 45 CFR Part 96 Interim Final Rules. 
 “Serious Mental Illness” means a
condition of persons who are eighteen years of age or older and who, as a result of a mental disorder as defined in A.R.S §36-501, exhibit emotional or behavioral functioning which is so impaired as to interfere substantially with their
capacity to remain in the community without supportive treatment or service of a long term or indefinite duration. In these persons mental disability is severe and persistent, resulting in long term limitation of their functional capacities for
primary activities of daily living such as interpersonal relationships, homemaking, self-care, employment and recreation. 
 “Seriously Emotionally
Disturbed” means those children from birth up to age 18 who meet diagnostic requirements as set forth by the ADHS. 
 “Services” means the behavioral health, prevention or management services provided under the terms of a subcontract. 
 “SMI” means Seriously Mentally Ill. 
 “State” means the State of Arizona and Department or Agency of the State
that executes the contract. 
 “State Fiscal Year” means the period beginning with July 1 and ending June 30. 
 “State Plan” means the written agreements between the State of Arizona and CMS which describe how the AHCCCS programs meet all CMS requirements for
participation in the Medicaid program and the Children’s Health Insurance Program. 
 “Statistical Significance” means a mathematical
measure of change within the sample population, when the sample population is large enough to be considered representative of the overall population. The change is said to be statistically significant if it is greater than what might be expected to
happen by chance alone. The mathematical threshold is a statistically significant change would occur less than 5% of the time by chance alone. 
 “Subcontract” means any Contract, express or implied, between the Contractor and another party or between a subcontractor and another party delegating or assigning, in whole or in part, the making or furnishing of any
material or any service required for the performance of the Contract. 
 “Subcontractor” means any third party under contract with the
Contractor, in a manner conforming to the ADHS requirements. 
 “Substance Abuse Adults” means a classification of adults age eighteen and
older who have a substance use disorder and have not been determined to have a serous mental illness. 
 “Support Services” means covered
services provided to facilitate the delivery of or enhance the benefit received from other behavioral health services. Refer to the ADHS/DBHS Covered Behavioral Health Services Guide for additional information. 
 “T/RBHA” means a reference to both RBHAs and Tribal RBHAs. 
 “Team” means a group of individuals working in collaboration who are actively involved in a person’s assessment, service planning and service delivery. At a minimum, the team consists of the person, family members as
appropriate in the case of children and a qualified behavioral health clinician. As applicable, the team would also include representatives from other state agencies, clergy, other relevant practitioners involved with the person and any other
individuals requested by the person. 
  

 Page 58 

 “Third Party Liability” means sources available to pay all or a portion of the cost of services incurred
by a person. 
 “Title XIX” means Title XIX of the Social Security Act, as amended. This is the Federal statute authorizing Medicaid which
is administered by the AHCCCS. 
 “Title XIX Covered Services” means those covered services identified in the ADHS/DBHS Covered Behavioral
Health Services Guide as being Title XIX reimbursable. 
 “Title XIX Eligible Person” means an individual who meets Federal and State
requirements for Title XIX eligibility. 
 “Title XIX Member” means an AHCCCS member eligible for Federally funded Medicaid programs under
Title XIX of the Social Security Act including those eligible under Section 1931 provisions of the Social Security Act (previously AFDC), Sixth Omnibus Budget Reconciliation Act (SOBRA), Supplemental Security Income (SSI), SSI-related groups,
and Title XIX Waiver Groups. 
 “Title XIX Waiver Member” means all AHCCCS Medical Expense Deduction (MED) members, and adults or childless
couples at or below 100% of the Federal Poverty Level who are not categorically linked to another Title XIX program. This would also include Title XIX linked individuals whose income exceeds the limits of the categorical program. 
 “Title XXI” means Title XXI of the Social Security Act, referred to in federal legislation as the State Children’s Health Insurance Program
(SCHIP). The Arizona version of SCHIP is referred to as KidsCare. 
 “Title XXI Covered Services” means those covered services identified in
the ADHS/DBHS Covered Behavioral Health Services Guide as being Title XXI reimbursable. 
 “Title XXI Eligible Person” means an individual
who meets Federal and State requirements for Title XXI eligibility. 
 “Title XXI Member” means a person eligible for acute care services
under Title XXI of the Social Security Act, referred to in federal legislation as the “State Children’s Health Insurance Program” (SCHIP). The Arizona version of the SCHIP is referred to as KidsCare. 
 “Treatment” means the range of behavioral health care received by a behavioral health recipient. 
 “Treatment Services” means covered services provided to identify, prevent, eliminate, ameliorate, improve or stabilize specific symptoms, signs and
behaviors related to, caused by, or associated with a behavioral health disorder. 
 “Tribal RBHA” means a Native American Indian tribe
under Contract with ADHS to coordinate the delivery of behavioral health services to eligible and enrolled persons who are residents of the Federally recognized Tribal Nation that is the party to the Contract. 
  

 Page 59 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE SERVICE NETWORK 
 ATTACHMENT E 
 CPSA DIRECT
CONTRACTED AGENCIES 
  

	1.	La Canada 

  

	2.	Parenting Arizona 

  

	3.	Tucson Urban League 

  

	4.	Cornerstone 

  

	5.	Child and Family Resources 

  

	6.	Touchstone 

  

	7.	La Paloma 

  

	8.	Intermountain 

  

 Page 60 

 COMMUNITY PARTNERSHIP OF SOUTHERN ARIZONA (CPSA) 
 SUBCONTRACT AGREEMENT 
 COMPREHENSIVE
SERVICE NETWORK 
 ATTACHMENT F 
 Electronic Fund Transfer (Automated Clearing House – ACH) Instructions: 
  

	1.	The agency requesting electronic fund transfer must provide a letter including approval for CPSA to submit payment via ACH. The following information must be included in the letter:

 - Banking institution used by the agency 
 - Agency’s bank account number 
 - Bank’s routing (ABA) number, and 
 - Whether the account is a checking or savings account 
  

	2.	The letter must be signed by a signatory on the bank account. 

  

	3.	An original voided check must be mailed with the letter. The check provides verification that funds will be transferred to the agency’s bank account. 

 

	4.	The letter is to be mailed to the attention of: 

 Controller 
 Community Partnership of Southern Arizona 
 4575 East Broadway 
 Tucson, AZ 85711 
  

	5.	Once the ACH information has been set up at CPSA all future payments will be remitted through electronic fund transfer. Back up to the payment will be mailed to the agency.

 The following sample letter may be copied onto the agency’s letterhead, the blank spaces filled in, and mailed to CPSA. 
  

 Page 61 

 Date:
                                        
                 
 Connie Prince, Controller 
 Community Partnership of Southern Arizona 
 4575 East Broadway 
 Tucson, AZ 85711 
 Please process payments
for
                                        
                             by electronic fund 
                                        
                         (agency name) 
 transfer (ACH). The banking information for ACH transfer is as follows: 
  

			
	 Name of Bank:
                                        
                                        
                                        
                                       
 
	  	
		
	 Routing Number (ABA):
                                        
                                        
                                        
                     
	  	
		
	 Bank Account Number:
                                        
                                        
                                        
                        
	  	
		
	 This account is a
                                        
                                        
                                        
                      account
	  	
	 (checking or savings)
	  	

 An original voided check is attached. I verify by the signature below that I am an authorized signatory on this
bank account. 
 Sincerely, 
  

 Page 62 

			
	

	  	 SUBCONTRACT AGREEMENT
 COMPREHENSIVE SERVICE NETWORK
 THE PROVIDENCE SERVICE CORPORATION
 AMENDMENT 5

			
	 CONTRACT NUMBER: A0508
	  	FY06-07

 Effective July 1, 2006, the Subcontract Agreement between Community Partnership of Southern Arizona and The
Providence Service Corporation is hereby amended as follows: 
  

	 	1.	Schedule II, Program Funding Allocation is revised to increase the funding for TXIX Child and increase the TXIX CMDP for RTC Differential. The Schedule II, Program Funding
Allocation has been replaced in its entirety. 

 All other terms, conditions, and provisions of the Subcontract Agreement shall remain the
same. 
  

			
	CPSA:	 	Community Partnership of Southern Arizona
	Signature:	 	/s/ Neal Cash
	Print Name and Title:	 	 Neal Cash
 President/Chief Executive
Officer

	Date:	 	1/23/07
		
	CONTRACTOR:	 	The Providence Service Corporation
		
	Signature:	 	/s/ Craig A. Norris
	Print Name and Title:	 	 Craig A. Norris
 Chief Operating
Officer

	Date:	 	1/12/07

  

 Page 63 

 Community Partnership of Southern Arizona 
 Funding Allocation Schedule 
 Fiscal Year 2007 
 Providence Service Corporation 
  

																		
	 GSA
	  	 Program
	  	 Program Funding Source
	  	 Program Description
	  	 CFDA
No
	  	 Federal
Agency
	  	 Compensation
Methodology
	  	 Contract Type
	  	Contract
Amount
	 5
	  	TXIX Children	  	Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations	  	Network Services	  	93.779	  	CMS, DHHS	  	1/12th of Annual	  	 Block Purchase -
 Network
	  	$	6,957,848
	 5
	  	TXIX Children	  	Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations	  	Network Services	  	93.779	  	CMS, DHHS	  	l/9th of Annual	  	Block Purchase -Network	  	$	500,000
	 5
	  	TXIX Children	  	Comprehensive Medical and Dental Plan	  	Network Services	  	93.779	  	CMS, DHHS	  	1/12th of Annual	  	Block Purchase -Network	  	$	6,852,000
	 5
	  	TXIX Children	  	Comprehensive Medical and Dental Plan	  	Network Services - RTC Differential	  	93.779	  	CMS, DHHS	  	l/9th of Annual	  	Block Purchase -Network	  	$	88,000
	 5
	  	TXIX Children	  	DES / DD Arizona Long Term Care System	  	Network Services	  	93.779	  	CMS, DHHS	  	1/12th of Annual	  	Block Purchase -Network	  	$	383,800
		  		  		  		  		  		  		  	 Program Total:
	  	$	14,781,648
	 5
	  	TXXI Children	  	Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations	  	Network Services -Title 21	  	93.767	  	CMS, DHHS	  	1/12th of Annual	  	Block Purchase -Network	  	$	789,817
		  		  		  		  		  		  		  	 Pro gram Total:
	  	$	789,817
	 5
	  	Non-TXIX Children	  	Block Grant for Community Mental Health	  	Federal	  	93.958	  	SAMHSA, DHHS	  	l/12th of Annual	  	Block Purchase -Network	  	$	260,068
	 5
	  	Non-TXIX Children	  	Block Grant for Community Mental Health	  	Flex Funds	  	93.958	  	SAMHSA, DHHS	  	l/12th of Annual	  	Block Purchase -Network	  	$	54,720
	 5
	  	Non-TXIX Children	  	State	  	Children	  		  		  	l/12th of Annual	  	Block Purchase -Network	  	$	177,537
	 5
	  	Non-TXIX Children	  	State	  	Children Mental Health	  		  		  	l/12th of Annual	  	Block Purchase -Network	  	$	48,000
		  		  		  		  		  		  		  	 Program Total:
	  	$	540,325
		  		  		  		  		  		  		  		  	 	 
		  		  		  		  		  		  		  	 Provider Total:
	  	$	16,111,790
		  		  		  		  		  		  		  		  	 	 

 CFDA Number: Catalog of Federal Domestic Assistance 
 NOTE for Providers with Title XIX and Title XXI Funding: Both Title XIX and Title XXI funds are subject to a state matching funds requirement. The exact state dollar
amounts and percentages are not determined until year end in the ADHS confirmation. CPSA treats all Title XIX and Title XXI funds as federal until ADHS confirms the state match at year end. 
 Payments to providers are subject to modification should CPSA funding from ADHS be revised. 
 Version: 20061115-02 
  

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