Document:

Exhibit 10.7

Exhibit 10.7

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (the “Agreement”), entered into as of the 1st day of April, 2011, by and
between ONE CURA WELLNESS TRUST, INC., a California not-for-profit Company (“Buyer”), and
RURAL HOSPITAL ACQUISITION LLC, an Oklahoma limited liability company (“Secured Party”).

RECITALS

WHEREAS, this Pledge Agreement has been executed and delivered pursuant to that certain Stock
Purchase Agreement dated as of April 1, 2011 (the “Purchase Agreement”), by and among
Buyer, RHA Anadarko, LLC, RHA Stroud, LLC and Secured Party, and is subject to the terms and
conditions of the Purchase Agreement. Capitalized terms used in this Agreement that are not
otherwise defined have the meanings ascribed to them in the Purchase Agreement; and

WHEREAS, pursuant to the Purchase Agreement, Buyer has purchased from Secured Party, of even
date herewith, all of the issued and outstanding preferred and common shares (the
“Shares”) of RHA Stroud, LLC (the “Company”) owned by Secured Party, in payment for
which the Company has executed a promissory note of even date herewith in favor of Secured Party in
the principal amount of Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000) (the
“Note”); and

WHEREAS, to secure the payment and performance of all obligations of the Company under the
Note, Buyer wishes to pledge to Secured Party all of its right, title and interest in and to all of
the Shares;

NOW, THEREFORE, for and in consideration of the above premises, and for other good and
valuable consideration, the receipt and sufficiency of which being hereby acknowledged, the parties
hereto do hereby agree as follows:

1. Warranty. Buyer hereby represents and warrants to Secured Party that except for
the security interest created hereby, Buyer owns the Shares free and clear of all liens, charges
and encumbrances, and that Buyer has the unencumbered right to pledge the Shares.

2. Security Interest. Buyer hereby unconditionally grants and assigns to Secured
Party, its successors and assigns, a continuing security interest in the Shares. Buyer has
delivered to and deposited with Secured Party herewith all of its right, title and interest in and
to the Shares, together with certificates representing the Shares and a stock power endorsed in
blank by Buyer, as security for (i) all obligations to Secured Party hereunder; and (ii) payment
and performance of all obligations under the Note, or any extension, renewal, amendment or
modification thereof. Beneficial ownership of the Shares, including, without limitation, all
voting, consensual and dividend rights, shall remain in Buyer until the occurrence of a default
under the terms hereof (as defined in Section 4, below) and until Secured Party shall notify Buyer
of Secured Party’s exercise of voting rights to the Shares pursuant to this Agreement.

 

 

 

3. Additional Shares. In the event that, during the term of this Agreement:

(a) any stock dividend, stock split, reclassification, readjustment, or other change is
declared or made in the capital structure of the Company, all new, substituted, and additional
shares, or other securities, issued by reason of any such change and received by Buyer or to which
Buyer shall be entitled by virtue of Buyer’s ownership of the Shares shall be immediately delivered
to Secured Party, together with stock powers endorsed in blank by Buyer, and shall thereupon
constitute Shares to be held by Secured Party under the terms of this Agreement; and

(b) subscriptions, warrants or any other rights or options shall be issued in connection with
the Shares, all new stock or other securities acquired through such subscriptions, warrants, rights
or options by Buyer shall be immediately delivered to Secured Party and shall thereupon constitute
Shares to be held by Secured Party under the terms of this Agreement.

4. Default. In the event of a default under the terms of this Agreement or the Note
(any of such occurrences being hereinafter referred to as a “Default”), subject to Buyer’s
right to cure described below, Secured Party may take possession of the Shares and may sell or
otherwise dispose of the Shares or make other commercially reasonable disposition of the Shares or
any portion thereof. Notwithstanding the foregoing, Buyer shall have ten (10) days from the date
it receives written notice of any payment default under the Note, or thirty (30) days from the date
it receives written notice of any non-payment default under the Note or this Agreement, to cure the
applicable default.

5. Additional Rights of Secured Parties. In addition to its rights and privileges
under this Agreement, Secured Party shall have all the rights, powers and privileges of secured
parties under the Uniform Commercial Code.

6. Return of Shares to Buyer. Upon payment in full of all principal and interest on
the Note and full performance by Buyer of all covenants, undertakings, and obligations under this
Agreement, Secured Party shall return to Buyer all of the Shares and all rights received by Secured
Party as agent for Buyer as a result of its possessory interest in the Shares.

7. Buyer’s Obligations Absolute. The obligations of Buyer under this Agreement shall
be direct and immediate and not conditional or contingent upon the pursuit of any remedies against
any other person, nor against other security or liens available to Secured Party or its successors,
assigns or agents. Buyer hereby waives any right to require that an action be brought against any
other person or to require that resort be had to any other security in favor of Secured Party or
any other person prior to any exercise of rights or remedies hereunder.

 

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8. Voting Rights.

(a) For so long as the Note remains unpaid, after a Default (subject to Buyer’s right to cure
described in Section 4), (i) Secured Party may, upon five (5) days prior written notice to Buyer of
its intention to do so, exercise all voting rights, and all other ownership or consensual rights of
the Shares, but under no circumstances is Secured Party obligated by the terms of this Agreement to
exercise such rights, and (ii) Buyer hereby appoints Secured Party, which appointment shall be
effective on the fifth day following the giving of notice by Secured Party as provided above,
Buyer’s true and lawful attorney in fact and IRREVOCABLE PROXY to vote the Shares in any manner
Secured Party deems advisable for or against all matters submitted or which may be submitted to a
vote of shareholders. The power of attorney granted hereby is coupled with an interest and shall
be irrevocable.

(b) For so long as Buyer shall have the right to vote the Shares, Buyer covenants and agrees
that it will not, without the prior written consent of Secured Party, (i) vote or take any
consensual action with respect to the Shares which would constitute a default under this Agreement,
(ii) cause, permit, or allow any significant assets of the Company to be leased, sold, conveyed,
pledged, hypothecated, transferred or otherwise encumbered or disposed of, at less than its fair
market value, or (iii) cause, permit or allow the Company to be dissolved or liquidated or to
acquire, be acquired by, merged or consolidated into or with any other person.

9. Miscellaneous. All of the provisions contained in Article 7 of the Purchase
Agreement shall apply equally to this Agreement as if such provisions were restated in full in this
Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 
	 	 	ONE CURA WELLNESS TRUST, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	SECURED PARTY:
	 
	 	 	 	 
	 	 	RURAL HOSPITAL ACQUISITION LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

 

3Exhibit 10.8

Exhibit 10.8

MANAGEMENT SERVICES AGREEMENT

This Management Services Agreement (this “Agreement”) is made and entered into
effective as of April 1, 2011 (the “Effective Date”), by and between RHA Anadarko, LLC, an
Oklahoma limited liability company (the “Company”), and First Physicians Business Solutions
LLC, an Oklahoma limited liability company (the “Manager”), in connection with that certain
Stock Purchase Agreement dated as of April 1, 2011 (as amended to date, the “Purchase
Agreement”), by and among One Cura Wellness Trust, Inc., a California not-for-profit
corporation (“Buyer”); the Company, RHA Stroud, LLC, an Oklahoma limited liability company
(“RHA Stroud”), and Rural Hospital Acquisition LLC, an Oklahoma limited liability company
(“Seller”).

RECITALS

A. The Company is the owner and operator of an acute care hospital facility located at 1002 E.
Central, Anadarko, Oklahoma 73005 (the “Hospital”), where it provides a variety of
inpatient and outpatient services; and

B. Manager is in the business of furnishing management and support services to hospitals; and

C. As of April 1, 2011, the Buyer entered into the Purchase Agreement with the Seller to
acquire all ownership interests of the Company and the Hospital; and

D. The Company desires to engage Manager, and Manager desires to furnish to the Company, the
management and support services described in this Agreement for the purpose of assisting the
Company in managing the provision of health care services to patients of the Hospital, upon the
terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the mutual representations, warranties,
agreements, and covenants in this Agreement, and other good and valuable consideration exchanged
between the parties, the receipt and sufficiency of which are hereby acknowledged, the parties
intending to be legally bound agree as follows:

AGREEMENTS

1. DEFINITIONS. As used in this Agreement, the terms defined in Section 10(o)
have the meanings ascribed to them therein (unless specifically defined or the context clearly
requires otherwise). Capitalized terms used in this Agreement that are not otherwise defined have
the meanings ascribed to them in the Purchase Agreement. Other terms may be defined elsewhere in
this Agreement and have the meanings so ascribed to them.

 

 

 

2. RELATIONSHIP OF PARTIES.

(a) Appointment as Manager. Upon the terms and subject to the conditions set forth in
this Agreement, the Company hereby grants, and Manager hereby accepts, the sole and exclusive right
and obligation to furnish or perform, or arrange for the furnishing or performance of, the
Management Services (as defined in Section 3(a) below) during the Term (as defined in
Section 5(a) below). Subject to the authority and responsibility reserved by the Company
under Section 3, the Company authorizes Manager to furnish or perform, or arrange for the
furnishing or performance of, the Management Services in whatever manner Manager reasonably
determines is appropriate under the circumstances. The Company will not interfere with or prevent,
or act in any way that could reasonably be foreseen to interfere with or prevent, Manager from
carrying out its responsibilities under this Agreement.

(b) Company Approval. For purposes of this Agreement, when any approval, consent,
waiver, notice, or other action or decision is required by or from the Company, the term “Company”
means the Board of Managers. If there is no duly constituted Board of Managers or the Board in
office fails or refuses to act within a reasonable time period under the circumstances of the
applicable action or decision, Manager may rely upon the action or decision of the sole member of
the Company.

(c) Independent Contractors. The Company and Manager intend to act and perform under
this Agreement as independent contractors with respect to each other. Neither of them will have or
exercise any control or direction over the method by which the other party carries out its
responsibilities under this Agreement. This Agreement is not intended to create any Company, joint
venture, agency, or employment relationship between the parties or any of their respective
employees, agents, independent contractors, or representatives. The Manager agrees to pay as they
become due all federal and state income taxes as well as all other taxes due and payable on the
compensation earned by the Manager hereunder.

(d) No Payment for Referrals. The parties agree that the benefits to Manager under
this Agreement do not require, are not payment or compensation for, in cash or in kind, and are not
in any way contingent upon, the admission, referral, or any other arrangement for the provision of
any item or service offerred by Manager to the Company or any patients of the Hospital. It is the
intent and good faith belief of the parties hereto that this Agreement complies with the
Medicare/Medicaid Anti-Kickback Statute, and in particular the Personal Services Safe Harbor. It
is also the intent and good faith belief of the parties that this Agreement complies with the
provisions of the Stark Law, and in particular the Stark Exceptions for personal services and
indirect compensation arrangements, and does not in any manner violate the Stark Law.

(e) Use of Name, Logos, Etc. During the Term, Manager may use all the names,
trademarks, logos, and symbols of the Company identifying the Hospital, including without
limitation, the right to represent to the general public and the health care industry specifically
that Manager manages the Hospital.

(f) Manager’s Competitive Activities. The Company acknowledges that Manager and its
Affiliates are currently in the business of developing, acquiring, owning, and
operating acute care hospitals and other health care facilities apart from the Management
Services that Manager is furnishing to the Company under this Agreement. Nothing in this Agreement
will prohibit Manager or any of its Affiliates from developing, owning, or operating hospitals or
other health care facilities or from providing hospital development and management services to
other Persons.

 

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3. MANAGEMENT SERVICES.

(a) General Description. Subject to the authority and responsibility reserved by the
Company under this Section 3, Manager will, for the account of and in the name and on
behalf of the Company, furnish or perform, or arrange for the furnishing or performance of, the
following management and support services described in this Section 3(a) (the
“Management Services”):

(i) General Operational. Manager will furnish the basic day-to-day management,
administrative and support services relating to financial and operating matters as
reasonably necessary for the Company to conduct its business of owning and operating the
Hospital.

(ii) Governmental Authorizations. Manager will assist the Company in obtaining
and maintaining, in the name of and on behalf of the Company, all necessary Permits required
for the Hospital to be in compliance with all Applicable Laws.

(iii) Certifications and Accreditations. Manager will assist the Company in
obtaining and maintaining all appropriate certifications, provider numbers and approvals
from all regulatory authorities having jurisdiction over the Hospital and/or its operations.
Manager will also assist the Company in obtaining and maintaining accreditation by the
Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”) and/or any other
accrediting agencies designated by the Company from time to time.

(iv) Condition of Hospital. Manager will maintain the equipment and facilities
of the Hospital in accordance with applicable industry and accreditation standards.

(v) Operating Plan. For each full or partial fiscal year of the Company,
Manager will prepare and deliver to the Company a proposed annual operating plan for the
Hospital reflecting in reasonable detail a proposed operating and capital budget for such
fiscal year, including, the anticipated revenues and expenses, capital expenditures, and
sources and uses of capital, together with any operational goals and objectives, for the
Hospital (the “Operating Plan”). Manager must prepare and deliver the Operating
Plan for the fiscal year of the Company ending December 31, 2011, within thirty (30) days
following the Effective Date. The Company and Manager will each use commercially reasonable
efforts to finalize the Operating Plan for the 2011 fiscal year prior to July 31, 2011.
During the remainder of the Term, Manager will prepare and deliver the proposed Operating
Plan for each of the following fiscal years of the Company at least sixty (60) days prior to
the expiration of the current 

 

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fiscal year. Manager and the Company will each use commercially reasonable efforts to finalize the
Operating Plan with the Company’s approval for each of the subsequent fiscal years prior to
January 1 of the applicable fiscal year. If the Company and Manager are unable to agree
within the time period provided on a proposed Operating Plan, then with respect to the
disputed items therein only, the same items in the last approved Operating Plan must be used
until otherwise agreed. The Parties shall use commercially reasonable efforts to operate
the Hospital within the parameters of the Operating Plan.

(vi) Hospital Staff. Manager, or Manager’s Affiliate, shall lease to the
Company all physician and non-physician personnel (the “Hospital Staff”) as are
reasonably necessary for the efficient and effective operation of the Hospital pursuant to a
separate Staff Leasing Agreement with Company of even date herewith. All of the Hospital
Staff (except for personnel provided by the Company in order to fulfill its duties
hereunder) shall be employees and independent contractors of the Manager, and not the
Hospital. Manager will be solely responsible for selecting, hiring or otherwise engaging,
supervising, promoting, discharging, terminating, and replacing the Hospital Staff. The
Hospital Staff may be furnished on either a full or part-time basis as determined to be
appropriate by Manager for the Hospital under the circumstances. No employees or
independent contractors of the Company may be employed or engaged by the Company to furnish
any services at the Hospital without Manager’s prior approval.

(vii) Medical Director. Manager will assist the medical director appointed by
the Company after consulting with Manager (1) with respect to the hiring, disciplining, and
discharging of all physicians and other clinical personnel employed or engaged in
furnishing services at the Hospital, (2) with the provision of clinical staff orientation
and education, (3) to ensure that clinical staff are assigned duties based on their
education, training, competency, and job descriptions, and (4) with the development and
implementation of all clinical policies and procedures, including patient rights and
patient/staff grievance.

(viii) Systems. Manager shall assist with the design, implementation,
supervision and revision of all management, operational, financial and informational systems
in order to conduct the physical and administrative operations of the Hospital, including
but not limited to those required for billing and collection of charges, accounting,
purchasing and medical records maintenance.

(ix) Insurance. Manager will assist the Company in obtaining and reasonable
and customary insurance coverage with a carrier that meets all statutory requirements to do
business in the State of Oklahoma with limits consistent with Applicable Laws. Such
insurance coverage to be procured by the Company with Manager’s assistance includes, but is
not limited to, professional liability and general liability coverage for the operation of
the Hospital, and workers‘ compensation, short-term disability and professional liability
insurance for the respective members of the Hospital Staff pursuant to the Staff Leasing
Agreement. Manager and its Affiliates will be endorsed as additional insureds on the
commercial general liability and professional liability policies of the Company described
above, including any excess (umbrella) policies to the extent applicable. The insurance
coverages required above, through a
policy or endorsement, will include a provision that the policy and endorsements
relevant to this Agreement may not be canceled or modified without thirty (30) days’ prior
written notice to Manager. The Company will furnish a certificate of insurance to Manager
prior to the commencement of the Management Services, showing compliance with the provisions
of this Section 3(a)(ix).

 

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(x) Legal Actions.

(A) Manager will, with approval from the Company, institute, in its own name or
in the name of the Company as directed by the Company, any and all lawsuits and
similar proceedings necessary or desirable for and in the best interests of the
Hospital, including without limitation, defending any claims asserted by any third
parties against the Hospital, Manager, the Company or the officers, directors,
employees, or any Affiliate of Manager and the Company.

(B) Manager will, with approval from the Company, take reasonable and necessary
steps to protect, settle, or litigate to final judgment or other resolution in any
appropriate court or other tribunal any such lawsuit or similar proceeding affecting
the Hospital.

(xi) Bank Accounts; Deposits and Disbursements. Manager will establish and
maintain one or more bank accounts in the name of the Company in which all receipts from
the Hospital’s business operations must be deposited (the “Bank Accounts”). Manager
is authorized to withdraw funds from the Bank Accounts in connection with any cash
management program followed by Manager and to pay authorized expenses of the Company and the
Hospital, including without limitation, payment of any Management Fees and Reimbursable
Expenses (as defined in Section 4(b) below) due and payable to Manager under
Section 4, as well as payment of any principal and interest that is due under the
New Notes relating to the loan indebtedness of the Company to Seller. Manager is further
authorized to withdraw funds from the Bank Accounts to comply with contractual obligations
to which the Company is subject and, to the extent necessary, to maintain the licensure and
accreditation of the Hospital. Manager will have no liability or obligation for performing
any of its responsibilities under this Agreement which involve making payments to third
parties or incurring fees, costs, expenses, or charges unless the Company has sufficient
funds available in the Bank Accounts to pay the third party or reimburse Manager. Subject
to the foregoing, at the direction of the Company, Manager will withdraw and disburse to the
Company any excess funds in the Bank Accounts from time to time.

(xii) Billing and Collection. The Company hereby appoints Manager as the
Company’s agent and attorney-in-fact, with full power of substitution, for the purpose of
billing and collecting from patients and Third-Party Payors for the medical and related
healthcare services furnished at the Hospital. Manager will oversee and supervise all
billing and collection activities for the Hospital. In addition, Manager shall cause to be
prepared and submitted, with the reasonable assistance of the Company, in a proper manner
and in a timely fashion any cost reports required to be submitted pursuant
to the requirements of Third-Party Payors or any authority having jurisdiction over the
Hospital.

 

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(xiii) Financial and Other Books and Records. Manager will supervise the
accounting and bookkeeping services for the Company in the operation of the Hospital,
including, but not limited to, all actions necessary to (A) maintain the books of account,
including all journals and ledgers, check register, and payroll records, (B) post all
patient and other charges, including necessary analyses and corrections, (C) establish
adequate receivable, credit and collection policies and procedures, (D) process vendors’
invoices and other accounts payable, (E) prepare payroll checks from time sheet summaries,
(F) prepare monthly bank reconciliations, and (G) establish patient direct and Third-Party
Payor billing procedures. The books of account for the Hospital will be maintained on an
accrual basis in accordance with GAAP consistently applied.

(xiv) Periodic Financial Statements. Manager will prepare and make available
on a regular basis to the Company unaudited financial statements reflecting the operations
of the Hospital for the applicable period.

(xv) Equipment and Supplies. Manager will purchase or lease, for the account
and in the name and on behalf of the Company, the equipment and supplies necessary for the
operation of the Hospital in compliance with any Applicable Laws.

(xvi) Service and Other Contracts. Manager will negotiate and execute, for
the account of and in the name and on behalf of the Company, contracts in the usual course
of business of the Hospital, including without limitation, linen Management Services
Agreements, equipment leasing and maintenance contracts, contracts for operating supplies
and other supply-chain management contracts, and contracts of insurance. The Company’s
prior approval (which will not be unreasonably withheld, conditioned or delayed) shall be
obtained in the event the aggregate contractual obligation over the term of the contract
either exceeds $50,000.00 or was not contemplated in the applicable Operating Plan.

(xvii) Third-Party Payor Contracts. Manager will negotiate and execute, for
the account of and in the name and on behalf of the Company, contracts for the provision of
inpatient and outpatient services at the Hospital with any Third-Party Payors.

(xviii) Community Awareness. Manager will develop and coordinate advertising
and promotional materials, internal and external public relations programs, sales and staff
development programs, community and Third-Party Payor awareness programs, and patient and
physician satisfaction programs.

(xix) Operating Standards. Manager will develop and institute standards,
procedures, and policies for admitting, discharging, and treating patients, for charging
patients for services and for collecting the charges from patients or Third-Party Payors.

 

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(b) Events Excusing Performance. In addition to any excuse under Applicable Laws,
Manager will not be liable to the Company for failure to perform its obligations under this
Agreement arising from any event beyond its control, regardless of whether foreseeable, including,
but not limited to, labor disturbance, war, fire or other casualty, accident, act of God,
governmental act or regulation, inability to obtain materials, failure of supply, failure of
subcontractors to perform, and any other cause or event reasonably beyond the control of Manager,
regardless of whether similar to the foregoing enumerated causes and events, for so long as such
events or circumstances continue and for a reasonable period of time thereafter.

(c) Use of Manager’s Affiliates. Manager may contract with any of its Affiliates for
the provision of goods or services under this Agreement so long as (i) the contracted for terms are
at least as favorable as those that would be obtained through an arms’ length negotiation with a
third-party provider, and (ii) Manager remains fully liable and responsible for the performance
thereof.

(d) Compliance with Applicable Laws. In furnishing or performing, or arranging for
the furnishing or performing, of the Management Services, Manager will comply with all Applicable
Laws.

(e) Company Reserved Authority and Responsibility. Manager expressly acknowledges and
agrees that the Company exercises, and at all times during the Term, will exercise the ultimate
control and direction of the operations of the Hospital, including without limitation, all medical
and professional matters of the Hospital. Manager will furnish the Management Services within any
reasonable parameters, policies, and procedures adopted by the Company of which Manager has been
notified so long as the parameters, policies, and procedures do not, in Manager’s reasonable
judgment, jeopardize the quality of patient care furnished at the Hospital or require Manager or
the Company to engage in any illegal or unethical acts.

(f) Nonsolicitation. The Company agrees that, during the Term and for a period of one
year after the termination of this Agreement, it will not, directly or indirectly, employ or
solicit for employment, or attempt to employ or solicit for employment, any Hospital Staff or any
other employees of Manager, without receiving Manager’s prior written consent. The Company
acknowledges that any breach of provisions of this Section 3(f) would cause immediate and
irreparable injury to Manager for which monetary damages are inadequate, difficult to compute, or
both. As such, the Company agrees the provisions of this Section 3(f) may be enforced by
specific performance, in addition to any other available legal or equitable remedy.

(g) No Manager Liability. Notwithstanding any provision of this Agreement to the
contrary, Manager is not, and will not become, responsible for any of the obligations, liabilities,
or debts of the Company or the Hospital by virtue of entering into this Agreement or furnishing the
Management Services.

 

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4. MANAGER COMPENSATION AND EXPENSE REIMBURSEMENT.

(a) Management Fees. In consideration of Manager’s services hereunder, the Company
shall pay to Manager the management fees (the “Management Fees”) described on Exhibit
A attached to this Agreement and incorporated herein by reference. The parties acknowledge and
agree that the Management Fees to be paid to Manager under this Agreement resulted from
arms’-length negotiations between the parties and such fees constitute fair market value
consideration for the services to be provided by Manager under this Agreement.

(b) Payment. The Management Fees for any particular month is due and payable in
arrears no later than the 15th day of the following month. For example, the Management
Fees for the month of June 2011 would be due and payable no later than July 15, 2011. Any
Management Fees due for a partial month will be pro-rated based on the number of days during the
month this Agreement was in effect.

(c) Reimbursable Expenses.

(i) Calculation. In addition to the Management Fees, the Company will
reimburse Manager, at cost without any markup, for:

(A) The out-of-pocket fees, expenses, costs, and charges incurred by Manager, for the
account of and in the name and on behalf of the Company, in the course of furnishing or
performing, or arranging for the furnishing or performance of, the Management Services;

(B) The direct, out of pocket fees, expenses, costs, and charges incurred by Manager in
the course of furnishing or performing, or arranging for the furnishing or performance of,
the Management Services;

(C) The direct costs incurred by Manager in employing a chief executive officer and
chief financial officer for the Hospital, including, without limitation, such executive
employees’ salary and incentive compensation (including bonus), any taxes payable by Manager
with respect to such compensation (including FICA, Medicare contributions or unemployment
taxes) and the cost of any benefits provided to such executive employees pursuant to any
Employee Benefit Plan;

(D) The fairly allocated portion of the fees, expenses, costs, and charges, including
indirect and overhead expenses and centralized resources that are utilized on a shared basis
among the Hospital and other acute care hospitals managed by Manager, incurred by Manager or
any of its Affiliates in furnishing or performing, or arranging for the furnishing or
performance of, the Management Services (the items described in (A) through (D) above are
collectively, the “Reimbursable Expenses”). But, the Company will not be obligated
to reimburse Manager for any portion of the fees, expenses, costs, or charges of Manager
that were not incurred specifically in connection with and for the purpose of furnishing the
Management Services, including, but not limited to, Manager’s salary and benefits expenses
for its senior executive level management.

 

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(ii) Payment. No less than once each month, Manager will deliver an invoice to
the Company for the Reimbursable Expenses setting forth the amount due,
together with a reasonably detailed description of the items and services included.
The Company’s payment to Manager of the invoiced Reimbursable Expenses is due and payable no
later than the 15th day following the date of the invoice.

5. TERM AND TERMINATION.

(a) Term.

(i) Initial Term. Unless extended under this Section 5(a) or earlier
terminated under Section 5(b) of this Agreement, the initial term (the “Initial
Term”) of this Agreement is for the period of seventy-eight (78) months, beginning at
12:01 a.m. (Central time) on the next day following the Effective Date.

(ii) Renewal Terms. Upon the expiration of the Initial Term, the term of this
Agreement will automatically renew and extend for additional five-year terms, upon the terms
and conditions then in effect, unless either party gives written notice to the other of its
election not to renew at least one hundred eighty (180) days prior to the applicable renewal
date. The term of this Agreement, including the Initial Term or any renewal term of this
Agreement, is referred to in this Agreement as the “Term.”

(iii) No Subsequent Agreements. If this Agreement is terminated within one
year following the Effective Date, the Company and Manager will not enter into an agreement
involving the Management Services within one year from the effective time of the
termination, unless the new agreement has the same terms, including the same Management Fees
and other compensation provisions for the Management Services.

(b) Grounds for Termination. This Agreement will terminate upon the occurrence of any
of the following conditions or events:

(i) Mutual Agreement. The Company and Manager may agree in writing to
terminate this Agreement at any time;

(ii) Without Cause by Either Party. Either may terminate this Agreement at any
time without cause by giving at least ninety (90) days’ advance notice to the other party
stating the effective time of termination of this Agreement;

(iii) Loss of Licensure. Manager may terminate this Agreement, at its sole
election if the Hospital or the Company fails to maintain its status as a properly licensed
healthcare service provider and/or facility. Moreover, if the Company intends to convert
the status of the Hospital to a federally qualified health center, it must obtain the prior
written consent of the Manager to any such change of status;

(iv) Exclusion from Third-Party Payor Programs. Manager may terminate this
Agreement, at its sole election, if the Company is barred or excluded as a provider in
Medicare or Medicaid or any other Third-Party Payor Programs;

 

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(v) Change of Control of Company. Manager may terminate this Agreement, if any
of the following occur with respect to the Company: (A) a merger or
consolidation of the Company with or into another entity; (B) the sale, license or
transfer of all or substantially all of the properties and assets of the Company or its
subsidiaries; (C) any acquisition by any person of beneficial ownership of a majority of the
equity of the Company (whether or not newly-issued shares or equity interests) in a single
transaction or a series of related transactions; (D) the redemption or repurchase of equity
interests representing a majority of the voting power of the outstanding shares of equity of
the Company; or (E) any other change of control of more than fifty percent (50%) of the
outstanding voting power of the Company.

(vi) Termination for Insolvency. By either party upon the filing of a petition
in voluntary bankruptcy or an assignment for the benefit of creditors by the other party or
upon other action taken or suffered, voluntarily or involuntarily, under any Applicable Laws
for the benefit of debtors by the other party, except for the filing of a petition in
involuntary bankruptcy against the other party which is dismissed within sixty (60) days
thereafter;

(vii) Termination of Business Associate Exhibit. The Company may terminate
this Agreement in accordance with the provisions of Article 4 of the Business Associate
Exhibit attached hereto as Exhibit B;

(viii) Good Reason by Company. The failure or refusal by Manager to faithfully
or diligently perform its responsibilities or obligations under this Agreement, following
written notice to Manager specifying the grounds for termination and the actions by Manager
that would allow Manager to cure the grounds and avoid termination, and giving Manager no
less than thirty (30) days to complete the actions to the reasonable satisfaction of the
Company; or

(ix) Good Reason by Manager. The failure or refusal by the Company to
faithfully or diligently perform its responsibilities or obligations under this Agreement,
following written notice to the Company specifying the grounds for termination and the
actions by the Company that would allow the Company to cure the grounds and avoid
termination, and giving the Company no less than thirty (30) days to complete the actions to
the reasonable satisfaction of Manager.

(c) Effects of Termination. In addition to the other specified effects of termination
of this Agreement:

(i) In the event the Company terminates this Agreement, it may during any notice period
prior to the effective time of termination, relieve Manager of its regular responsibilities
under this Agreement if there is a reasonably foreseeable risk of serious bodily harm to
patients from Manager continuing to furnish the Management Services during the notice
period.

 

10

 

(ii) If the Company terminates this Agreement without cause pursuant to Section
5(b)(ii), or if the Manager terminates this Agreement pursuant to Section 5(b)(v), then the
Company shall be obligated to pay to Manager (A) all Management Fees which have accrued
through the effective date of such termination and (B) a termination
fee equal to the product of the aggregate Management Fees paid to the Manager for the
12-month period ended on the last day of the month immediately prior to the month during
which the Company delivered notice of termination of the Agreement to the Manager (or, if
the Agreement has been terminated prior to the expiration of a 12-month period of the Term,
the amount of Management Fees paid for such shorter period will be annualized based upon the
average monthly fees paid during such shorter period), multiplied by four (4).

(iii) After termination, neither party will have any further rights, duties, or
obligations under this Agreement, except as specifically provided otherwise herein for
obligations that survive termination or are to be performed following termination of this
Agreement. Each party will remain liable and responsible to the other for all obligations
and duties arising or accruing under this Agreement prior to the effective date of
termination and for all acts and omissions of such party prior to such termination.

6. BOOKS AND RECORDS.

(a) Ownership of Manager’s Business Records and Systems. All business records,
information, software, and systems of Manager relating to the furnishing or performance of the
Management Services under this Agreement will remain the property of Manager or the applicable
Affiliate, as the case may be; provided, however, that the Company will be
entitled, until such time as such are destroyed in accordance with Section 6(b), upon
reasonable written request, to access such of Manager’s business records and systems and make
copies or extracts thereof of any such business records and information.

(b) Maintenance of Records. Except as otherwise provided in this Agreement, each
party will safeguard all records maintained by it pursuant to this Agreement for the minimum period
required by Applicable Laws from the date of the last activity recorded in such records and, prior
to destruction of any such records, will give the other party notice of the planned destruction
and, if such other party so elects and Applicable Laws so permit, will deliver the records to such
other party in lieu of destroying them.

(c) Government Access to Books and Records. Insofar as the provisions of Section 42
of the Code of Federal Regulations, or any successor regulation which governs access to books and
records of subcontractors of services to Medicare providers with a value or cost of $10,000 or more
during a twelve (12) month period is applicable to this Agreement, Manager will comply with the
following statutory requirements governing the maintenance of documentation to verify the cost of
the Management Services furnished under this Agreement:

(i) Until the expiration of four (4) years after the furnishing of the Management
Services under this Agreement, Manager will make available, upon written request of the
Secretary of the United States Department of Health and Human Services, or upon request of
the Comptroller General of the United States, or any of their duly authorized
representatives, this Agreement, and books, documents, and records of Manager that are
necessary to certify the nature and extent of such costs; and

 

11

 

(ii) If Manager carries out any of its responsibilities under this Agreement through a
subcontract, with a value or cost of $10,000.00 or more over a 12-month period, with an
organization related by common ownership or control, such subcontract must contain a clause
to the effect that, until the expiration of four (4) years after the furnishing of the
Management Services under the subcontract, the related organization must make available,
upon written request of the Secretary of the United States Department of Health and Human
Services, or upon request of the Comptroller General of the United States, or any of their
duly authorized representatives, the subcontract, and books, documents, and records of such
organization that are necessary to verify the nature and extent of such costs.

(iii) Nothing in this Section 6(c) will constitute the waiver of the
attorney-client or any similar privilege under Applicable Laws.

7. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF COMPANY. The Company represents,
warrants, and covenants to and with Manager that:

(a) Organization. It is a limited liability company duly organized, validly existing,
and in good standing under the Applicable Laws of its state of formation, with full power and
authority to conduct its business as it is now being conducted.

(b) Authority. It has the requisite right, power, authority, and capacity to execute,
deliver and perform its obligations under this Agreement. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary action on the part of the Company.

(c) Licensure. It now possesses a valid and unrestricted license to own and operate
the Hospital under the laws of the state in which the Hospital is located. If the Company intends
to convert the status of the Hospital to a federally qualified health center, it must obtain the
prior written consent of the Manager to any such change of status.

(d) No Medicare/Medicaid Exclusion. It has not been excluded, debarred, or suspended
or deemed ineligible to participate in Medicare, Medicaid, or any other Third-Party Payor Programs,
and is not the subject of any investigation regarding its participation in Medicare, Medicaid, or
any other Third-Party Payor Programs, and has not been convicted of any crime relating to any
Medicare, Medicaid, or any other Third-Party Payor Programs.

(e) No Conflict. Neither the making of this Agreement nor its performance by the
Company will violate any Applicable Laws to which it is subject.

 

12

 

8. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MANAGER. Manager represents,
warrants, and covenants to and with the Company that:

(a) Organization. It is a corporation duly organized, validly existing, and in good
standing under the Applicable Laws of its state of formation, with full power and authority to
conduct its business as it is now being conducted.

(b) Authority. It has the requisite right, power, authority, and capacity to execute,
deliver and perform its obligations under this Agreement. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary action on the part of Manager.

(c) No Medicare/Medicaid Exclusion. It has not been excluded, debarred, or suspended
or deemed ineligible to participate in Medicare, Medicaid, or any other Third-Party Payor Programs,
and is not the subject of any investigation regarding its participation in Medicare, Medicaid, or
any other Third-Party Payor Programs, and has not been convicted of any crime relating to any
Medicare, Medicaid, or any other Third-Party Payor Programs.

(d) No Conflict. Neither the making of this Agreement nor its performance by Manager
will violate any Applicable Laws to which it is subject.

9. INDEMNIFICATION.

(a) Indemnification by Manager. Manager will indemnify and hold harmless the Company,
its Affiliates, and their respective directors, officers, employees, representatives, agents, and
attorneys from, against, for and in respect of any and all damages, penalties, fines, interest and
monetary sanctions, losses, obligations, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys’ fees and other costs and expenses incident to
any investigation, claim or Proceeding (collectively, the “Company’s Losses”) suffered,
sustained, incurred, or required to be paid by any of them in connection with (i) a breach or
default of this Agreement by Manager, including a breach of any representation, warranty, or
covenant made by Manager in or pursuant to this Agreement, or (ii) Manager’s willful misconduct,
bad faith, or gross negligence in the performance of any of its obligations under this Agreement.

(b) Indemnification by Company. The Company will indemnify and hold harmless Manager
and its directors, officers, employees, representatives, agents, and attorneys from, against, for
and in respect of any and all damages, penalties, fines, interest and monetary sanctions, losses,
obligations, liabilities, claims, deficiencies, costs and expenses, including, without limitation,
reasonable attorneys’ fees and other costs and expenses incident to any investigation, claim or
Proceeding (collectively, the “Manager’s Losses”) suffered, sustained, incurred, or
required to be paid by any of them in connection with Manager’s performance of its obligations
under this Agreement other than Manager’s Losses resulting from Manager’s willful misconduct, bad
faith or gross negligence in the performance of its obligations under this Agreement.

(c) Notice of Loss. Except to the extent set forth in the next sentence, neither the
Company nor Manager will have any liability under this Section 9 with respect to a
particular matter unless a notice (the “Indemnification Notice”) setting forth in
reasonable detail the breach which is asserted has been given to the indemnifying party.
Notwithstanding the preceding sentence, failure of the indemnified party to give notice hereunder
will not release the indemnifying party from its obligations under this Section 9, except
to the extent the indemnifying party is actually prejudiced by the failure to give notice.

 

13

 

(d) Right to Defend.

(i) Upon receipt of notice of any investigation, claim, or proceeding for which
indemnification might be claimed by an indemnified party, the indemnifying party is entitled
to defend, contest, or otherwise protect against such investigation, claim, or proceeding at
its own cost and expense, and the indemnified party must reasonably cooperate in any such
defense or other action, including the assertion of any counterclaim or cross claim.

(ii) The indemnified party shall have the right, but not the obligation, to participate
at its own expense in a defense thereof by counsel of its own choosing, but the indemnifying
party is entitled to control the defense unless the indemnified party has relieved the
indemnifying party from liability with respect to the particular matter or the indemnifying
party fails to assume defense of the matter. If the indemnifying party fails to defend,
contest, or otherwise protect in a timely manner against any such investigation, claim, or
proceeding, the indemnified party shall have the right, but not the obligation, to defend,
contest, or otherwise protect against the same and make any compromise or settlement thereof
and recover the entire cost thereof from the indemnifying party including reasonable
attorneys’ fees, disbursements and all amounts paid as a result of such investigation,
claim, or proceeding or the compromise or settlement thereof; provided,
however, that the indemnified party must send a written notice to the indemnifying
party of any such proposed settlement or compromise, which settlement or compromise the
indemnifying party may reject, in its reasonable judgment, within thirty (30) days after its
receipt of the written notice.

(iii) A failure by the indemnifying party to reject such settlement or compromise
within such 30-day period will be deemed an acceptance of such settlement or compromise.
The indemnified party shall have the right to effect a settlement or compromise over the
objection of the indemnifying party; provided, however, that if (A) the
indemnifying party is contesting such claim in good faith, or (B) the indemnifying party has
assumed the defense from the indemnified party and the indemnifying party has a net worth in
excess of the amount being sought, the indemnified party must first waive, in a written
instrument reasonably acceptable to the indemnifying party, any right to indemnity
therefore.

(iv) If the indemnifying party undertakes the defense of such matters, the Indemnified
Party will not, so long as the indemnifying party does not abandon the defense thereof, be
entitled to recover from the indemnifying party any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other than the
reasonable costs of investigation undertaken by the indemnified party with the prior written
consent of the indemnifying party and other than such amounts incurred where a conflict of
interest is reasonably determined to exist by the indemnified party such that more than one
legal counsel is reasonably needed.

 

14

 

10. MISCELLANEOUS.

(a) Notices. All notices, consents, approvals, requests and other communications
under this Agreement must be in writing and will be deemed given (a) when delivered personally; (b)
on the fifth Business Day after being mailed by certified mail, return receipt requested; (c) the
next Business Day after delivery to a recognized overnight courier; or (d) upon transmission and
confirmation of receipt by a facsimile operator if sent by facsimile, to the parties at the
following addresses or facsimile numbers (or to such other address or facsimile number as such
party may have specified by notice given to the other party pursuant to this provision):

	 	 	 
	if to the Company:

	 	with copies (which will not
constitute notice) to:
	 
	 	 
	if to the Manager:

	 	with copies (which will not
constitute notice) to:
	 
	 	 
	First Physicians Business
Solutions, LLC

	 	Duane Morris LLP
	6608 North Western Avenue #252

	 	30 South 17th Street
	Oklahoma City, OK 73116

	 	Philadelphia PA 19103-4196
	Attention: David Hirschhorn

	 	Attention: C. Mitchell Goldman, Esq.
	Telecopy: (818) 337-7284

	 	Telecopy: 215-689-2407

Any such notice or other communication will be deemed to have been given and received (whether
actually received or not) on the day it is personally delivered or delivered by courier or
overnight delivery service or sent by telecopy or, if mailed, when actually received.

(b) Interpretation. The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the parties and will not in
any way affect the meaning or interpretation of this Agreement.

(c) Entire Agreement; Modification. This Agreement and the related documents
contained as exhibits and schedules hereto or expressly contemplated hereby contain the entire
understanding of the parties relating to the subject matter hereof and supersede all prior written
or oral and all contemporaneous oral agreements and understandings relating to the subject matter
hereof. The exhibits, schedules and recitals to this Agreement are hereby incorporated by
reference into and made a part of this Agreement for all purposes. This Agreement may be amended,
supplemented or modified, and any provision hereof may be waived, only by written instrument making
specific reference to this Agreement signed by the party against whom enforcement is sought.

 

15

 

(d) Amendments Required by Prospective Legal Events. In the event any Applicable Laws
are enacted or changed in any way that could reasonably be expected to have a material adverse
effect on the practical realization of the benefits anticipated by one or more parties to this
Agreement at the time it was entered into, the adversely affected party or parties, as the case may
be, must notify the others in writing of such change and the effect thereof. The parties will
promptly begin good faith negotiations to modify this Agreement to reflect such change. If an
agreement on a method for modifying this Agreement is not reached within thirty (30) days after the
date the written notice was received by the last of the other parties, the matter will be resolved
pursuant to the dispute resolution procedures set forth in Section 10(m). The resolution
must be either to (i) structure an amendment to this Agreement which will leave the parties as
nearly as possible in the same economic position in which they would have been under the original
terms of this Agreement, had the change not occurred; or (ii) if it is determined that the change
is so fundamental that amendment and continuation of this Agreement is not feasible, structure a
termination of this Agreement that will return the parties as nearly as possible to the economic
position in which they would have been had they not entered into this Agreement, without altering
in a material way the economic obligations or benefits derived from this Agreement by the parties
during the period it was in effect.

(e) Binding Effect; Assignment. This Agreement is a contract for the services of
Manager, and Manager may not assign this Agreement without the Company’s approval, which may be
withheld in the sole discretion of the Company. Subject to the preceding sentence, this Agreement
will be binding upon and inure to the benefit of the parties and their respective successors and
permitted assigns.

(f) Language Construction. The language in all parts of this Agreement will be
interpreted, in all cases, according to its fair meaning and not for or against any party hereto.
Each party acknowledges that it and its legal counsel have reviewed and revised this Agreement and
that the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party will not be employed in the interpretation of this Agreement.

(g) Waiver of Provisions. Any waiver of any terms and conditions hereof must be in
writing and signed by all the parties hereto. The waiver of any of the terms and conditions of
this Agreement cannot be construed as a waiver of any other terms and conditions hereof.

(h) Survival. All obligations, liabilities, limitations of liability, disclaimers and
other provisions which, by their nature, are intended to survive the expiration or termination of
this Agreement will survive and remain in effect beyond any expiration or termination thereof,
including without limitation, the obligations, liabilities, limitations of liability, disclaimers
and other provisions set out in the various provisions of Section 6 and Section 9
of this Agreement and this Section 10.

(i) Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision of this Agreement,
each of which will remain in full force and effect, so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in a manner materially adverse to
any party.

 

16

 

(j) Expiration of Time Periods. In the event that any date specified herein is, or
that any period specified herein expires on, a Saturday, a Sunday, or a holiday, then such date or
the expiration date of such period, as the case may be, will be extended to the next succeeding
Business Day.

(k) Remedies Cumulative. No right or remedy described or provided in this Agreement
or otherwise conferred upon or reserved to any party is intended to be exclusive or to preclude a
party from pursuing other rights and remedies to the extent available under this Agreement, at law
or in equity, and the same will be distinct, separate and cumulative and may be exercised from time
to time as often as occasion may arise or as such party may deem expedient.

(l) No Obligation to Third Parties. Except as provided otherwise in Section 9
with respect to indemnification obligations, this Agreement is for the sole benefit of the parties
hereto, and nothing expressed or implied will give or be construed to give any other Person any
legal or equitable rights, remedies, obligations or liabilities under or by reason of this
Agreement.

(m) Mandatory Mediation; Binding Arbitration; Governing Law; Venue; Attorney’s Fees.

(i) THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER EQUITABLE RELIEF, ANY
DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE BREACH HEREOF, SHALL, IF
NEGOTIATIONS AND OTHER DISCUSSIONS FAIL, BE FIRST SUBMITTED TO MEDIATION IN
ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL MEDIATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION (“AAA”) BEFORE RESORTING TO ARBITRATION. THE PARTIES AGREE TO CONDUCT
THE MEDIATION IN GOOD FAITH AND MAKE REASONABLE EFFORTS TO RESOLVE THEIR DISPUTE BY
MEDIATION. THE COMMERCIAL MEDIATION RULES OF THE AAA THEN IN EFFECT SHALL BE APPLIED. THE
PARTIES AGREE TO CONDUCT THE MEDIATION IN BEVERLY HILLS, CALIFORNIA, OR ANOTHER MUTUALLY
AGREED UPON LOCATION.

(ii) THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER EQUITABLE RELIEF, ANY
DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE BREACH HEREOF, SHALL BE SUBJECT TO
BINDING ARBITRATION, IF THE DISPUTE IS NOT RESOLVED BY THE MEDIATION REQUIRED UNDER
THE PRECEDING SECTION 10(m)(i), IN ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL
ARBITRATION RULES OF THE AAA, AND THAT JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THE ARBITRATION SHALL BE HEARD BEFORE
ONE (1) ARBITRATOR SELECTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES. THE
COMMERCIAL ARBITRATION RULES OF THE AAA THEN IN EFFECT SHALL BE APPLIED. THE PARTIES AGREE
TO CONDUCT THE ARBITRATION IN BEVERLY HILLS, CALIFORNIA, OR ANOTHER MUTUALLY AGREED UPON
LOCATION.

 

17

 

(iii) THIS AGREEMENT, AND ANY DISPUTE BETWEEN THE PARTIES RELATING HERETO, WILL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT
MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

(iv) The prevailing party in any mediation, arbitration, or litigation shall be
entitled to recover from the other party reasonable attorney’s fees, court costs, and the
administrative costs, fees, and expenses of the AAA, each as applicable, incurred in the
same, in addition to any other relief that may be awarded.

(n) Confidentiality. No party hereto will disseminate or release to any third party
any information regarding any provision of this Agreement, or any financial or business information
regarding the other (past, present, or future) that was obtained by the other in the course of the
negotiations of this Agreement or in the course of the performance of this Agreement, including,
but not limited to, any information relating to the internal operations of the Company with respect
to the Hospital, without the other party’s written approval; provided, however, the
foregoing will not apply to information which (i) is generally available to the public other than
as a result of a breach of this confidentiality provision; (ii) becomes available on a
non-confidential basis from a source other than the other party or any Affiliate or agent of the
other party, which source was not itself in violation of a confidentiality agreement by providing
such information; (iii) which is required to be disclosed by Applicable Laws or pursuant to court
order; provided, however, that Manager will provide the Company with prompt written
notice of the required disclosure and cooperate with the Company in its reasonable efforts to
resist or narrow the request for disclosure; or (iv) except as required in connection with reports
or filings with the United States Securities and Exchange Commission or any applicable state
departments of securities.

(o) Certain Definitions. As used in this Agreement, the following terms mean:

“Applicable Laws” means all applicable provisions of constitutions, statutes,
rules, regulations, ordinances, and orders of governmental entities and all orders and
decrees of courts, tribunals, and arbitrators and includes, without limitation, all health
care laws.

“Business Day” means any day other than a day on which banks in the State of
Oklahoma are authorized or obligated to be closed.

“Medicaid” means any state program pursuant to which health care providers are
paid or reimbursed for care given or goods afforded to indigent persons and administered
pursuant to a plan approved by the Centers for Medicare and Medicaid Services, or any
successor Governmental Entity exercising similar authority (“CMS”), under Title XIX
of the Social Security Act, as amended.

 

18

 

“Medicare” means any medical program established under Title XVIII of the
Social Security Act, as amended, and administered by CMS.

“Third-Party Payors” means Medicare, Medicaid, CHAMPUS, Blue Cross or Blue
Shield, managed care plans, any other private healthcare insurance programs or company and
any other individual or entity responsible for payment of inpatient and outpatient services
performed at the Hospital, as well as any future payor of any Third-Party Payor Programs.

“Third-Party Payor Programs” means Medicare, Medicaid, CHAMPUS, insurance
provided by Blue Cross or Blue Shield, managed care plans, and any other private health care
insurance programs and employee assistance programs, as well as any future similar programs.

(p) Counterparts. This Agreement may be executed in one or more counterparts
(including by facsimile or portable document format (.pdf)) for the convenience of the parties
hereto, each of which will be deemed an original, but all of which together will constitute one and
the same instrument.

(q) Acknowledgment. The parties to this Agreement agree and acknowledge that: (i)
they have each been independently advised by counsel in respect of the provisions of this
Agreement, or have had an opportunity to be so advised, and have voluntarily waived their right to
have such independent advice; and (ii) the parties have negotiated the provisions hereof on an
equal footing based on equal bargaining power.

11. HIPAA COMPLIANCE. The parties agree that, in order to comply with the Health
Insurance Portability and Accountability Act of 1996, Public Law 104-191 and regulations
promulgated thereunder by the U.S. Department of Health and Human Services, as may be amended and
in effect from time to time (“HIPAA”), each of them will satisfy its respective
requirements and obligations contained in the Business Associate Exhibit attached hereto as
Exhibit B. This Agreement and the Business Associate Exhibit are intended to be read and
construed in harmony with each other, but in the event any provision in the Business Associate
Exhibit conflicts with any provision in this Agreement, the provisions in the Business Associate
Exhibit will control the matter.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

19

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
Effective Date.

	 	 	 	 	 
	 	COMPANY:

RHA ANADARKO, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EIN:	 	 
	 
	 	MANAGER:

FIRST PHYSICIANS BUSINESS SOLUTIONS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	David Hirschhorn 	 
	 	 	Title:  	President and CEO 	 
	 
	 	EIN:	 	 

[Signature Page to Management Services Agreement]

 

 

EXHIBIT B

BUSINESS ASSOCIATE EXHIBIT

This Business Associate Exhibit (this “Exhibit”) supplements and is made part of the
Management Services Agreement to which it is attached as entered into between the Company and the
Manager. The Company is a “Covered Entity” and Manager is a “Business Associate” as those terms
are defined under HIPAA. The capitalized terms used in this Exhibit that are not otherwise
specifically defined have the meanings ascribed to them in the Agreement. Other capitalized terms
used in this Exhibit and not defined in the Agreement have the meanings ascribed to them under
HIPAA.

RECITALS

A. Business Associate regularly receives, uses and/or discloses Protected Health Information
(as defined below) in its performance of providing services pursuant to the terms of the Management
Services Agreement on behalf of Covered Entity, as described below. Both Parties are committed to
complying with the Privacy Regulations and the Security Regulations (as such terms are defined
below) under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the
Health Information Technology for Economic and Clinical Health Act (“HITECH Act”), each as amended
from time to time.

B. The Privacy Regulations and the Security Regulations require the Covered Entity to enter
into a contract with the Business Associate prior to the disclosure of Protected Health
Information.

C. The purpose of this Exhibit is to satisfy certain standards and requirements of HIPAA, the
Privacy Rule and the Security Rule, and the HITECH Act, including but not limited to, Title 45 §§
164.314(a)(2)(i), 164.502(e) and 164.504(e) of the Code of Federal Regulations (C.F.R.), and 42
U.S.C. §§ 17931(a) and 17934(a).

D. This Exhibit sets forth the terms and conditions pursuant to which Protected Health
Information that is provided, created or received by Business Associate from or on behalf of
Covered Entity will be handled between Business Associate and Covered Entity, and with third
parties, during the term of the Management Services Agreement and after its termination.

 

1

 

NOW, THEREFORE, in consideration of the mutual promises and obligations set forth herein, and
other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged,
the Company and Manager agree as follows:

	1.	 	DEFINITIONS

The following capitalized terms, as used in this Exhibit, shall have the meanings set forth
below. Capitalized terms used, but not otherwise defined in this Exhibit shall have the same
meaning as those terms in 45 C.F.R. §160.103, §164.304, §164.402 and §164.501, and 42 U.S.C. §
17921.

1.1 “Administrative Safeguards” shall have the same meaning as the term “administrative safeguards”
set forth in 45 C.F.R. §164.304, as such provision is currently drafted and as it is subsequently
amended or revised.

1.2 “Breach”, as used in Section 3.1(m), below, shall mean the unauthorized acquisition, access,
use, or disclosure of protected health information which compromises the security or privacy of
such information, except where an unauthorized person to whom such information is disclosed would
not reasonably have been able to retain such information. Such term does not include (a) any
unintentional acquisition, access, or use of protected health information by an employee or
individual acting under the authority of a covered entity or business associate if such
acquisition, access, or use was made in good faith and within the course and scope of the
employment or other professional relationship of such employee or individual, respectively, with
the covered entity or business associate and if such information is not further acquired, accessed,
used, or disclosed by any person; or (b) any inadvertent disclosure from an individual who is
otherwise authorized to access protected health information at a facility operated by a covered
entity or business associate to another similarly situated individual at the same facility, as long
as any such information received as a result of such disclosure is not further acquired, accessed,
used, or disclosed without authorization by any person.

1.3 “Breach of Security”, as used solely in Section 3.5 below, shall mean the unauthorized
acquisition or unauthorized use of unencrypted data or, encrypted electronic data and the
confidential process or key that is capable of compromising the security, confidentiality, or
integrity of personal information, maintained by a person or agency that creates a substantial risk
of identity theft or fraud against a resident of the commonwealth. A good faith but unauthorized
acquisition of personal information by a person or agency, or employee or agent thereof, for the
lawful purposes of such person or agency, is not a breach of security unless the personal
information is used in an unauthorized manner or subject to further unauthorized disclosure For
all other Sections of this Exhibit and the Underlying Agreement, Breach of Security shall have the
same meaning as the term “Breach” in 42 U.S.C. § 17921(1), 45 C.F.R. § 164.402 and Section 1.2 of
this Exhibit.

1.4 “Data Aggregation” shall have the same meaning as the term “data aggregation” set forth in 45
C.F.R. §164.501, as such provision is currently drafted and as it is subsequently amended or
revised.

1.5 “Electronic Health Record” shall mean an electronic record of health-related information on an
individual that is created, gathered, managed, and consulted by authorized health care clinicians
and staff (42 U.S.C. § 17921(5).

1.6 “Electronic Media” shall have the same meaning as the term “electronic media” set forth in 45
C.F.R. § 160.103, as such provision is currently drafted and as it is subsequently amended and
revised.

 

2

 

1.7 “Individual” shall have the same meaning as the term “individual” in 45 C.F.R. §160.103 and
shall include a person who qualifies as a personal representative in accordance with 45 C.F.R.
§164.502(g).

1.8 “Physical Safeguards” shall have the same meaning as the term “physical safeguards” set forth
in 45 C.F.R. §164.304, as such provision is currently drafted and as it is subsequently amended or
revised.

1.9 “Privacy Official” shall have the meaning as set out in 45 C.F.R. §164.530(a)(1), as such
provision is currently drafted and as it is subsequently amended or revised.

1.10 “Privacy Regulations” shall mean the Standards for Privacy of Individually Identifiable Health
Information at 45 C.F.R. parts 160 and 162 and part 164, subparts A and E, as such provisions are
currently drafted and as they are subsequently amended or revised.

1.11 “Protected Health Information” shall have the same meaning as the term “protected health
information” in 45 C.F.R. §160.103, limited to the information created or received by Business
Associate from or on behalf of Covered Entity.

1.12 “Required by Law” shall have the same meaning as the term “Required by Law” set forth in 45
C.F.R. §164.103, as such provision is currently drafted and as it is subsequently amended or
revised.

1.13 “Secretary” shall mean the Secretary of the Department of Health and Human Services or his or
her designee.

1.14 “Security Incident” shall have the same meaning as the term “security incident” set forth in
45 C.F.R. §164.304, as such provision is currently drafted and as it is subsequently amended or
revised, but shall not include, (a) unsuccessful attempts to penetrate computer networks or servers
maintained by Business Associate and (b) immaterial incidents that occur on a routine basis, such
as general “pinging” or “denial of service” attacks.

1.15 “Security Regulations” shall mean the Security Standards at 45 C.F.R. parts 160 and 162, and
part 164, subparts A and C, as such provisions are currently drafted and as they are subsequently
amended or revised.

1.16 “Technical Safeguards” shall have the same meaning as the term “technical safeguards” set
forth in 45 C.F.R. §164.304, as such provision is currently drafted and as it is subsequently
amended or revised.

1.17 “Unsecured Protected Health Information” shall have the same meaning as the term “unsecured
protected health information” set forth in 45 C.F.R. §164.402 and 42 U.S.C. § 17932(h), as such
provisions are currently drafted and as they are subsequently amended or revised.

 

3

 

	2.	 	PERMITTED USES AND DISCLOSURES OF PROTECTED HEALTH INFORMATION

2.1 Services. Subject to the limitations of this Exhibit and the Privacy Rule, including
without limitation, if applicable, the requirements set forth under 45 C.F.R. §164.504(e), and
which are incorporated herein in their entirety, Business Associate may use and disclose Protected
Health Information as necessary to perform its obligations under the Management Services Agreement,
provided that such disclosure would not violate the Privacy Rule if done by Covered Entity. All
other uses not authorized by this Exhibit are prohibited. Without limiting the generality of the
foregoing, Business Associate may disclose Protected Health Information for the purposes authorized
by this Exhibit only:

(a) to its employees, subcontractors and agents, in accordance with Section 3.1(c), below,

(b) as directed by Covered Entity, or

(c) as otherwise permitted by the terms of this Exhibit including, but not limited to, Section
2.2 below.

2.2 Business and Other Activities of Business Associate. Unless otherwise limited herein,
the Business Associate may:

(a) Use the Protected Health Information for the proper management and administration of
Business Associate and to fulfill any present or future legal responsibilities of Business
Associate provided that such uses are permitted under state and federal confidentiality law.

(b) Disclose the Protected Health Information to third parties for the proper management and
administration of Business Associate or to fulfill any present or future legal responsibilities of
Business Associate, provided that:

(i) the disclosures are Required by Law, or

(ii) Business Associate has received from the third party written assurances regarding the
confidential treatment of such Protected Health Information as required under 45 C.F.R.
§164.504(e)(4)(ii)(B)(1), and that the third party will notify Business Associate of any instances
of which it is aware in which the confidentiality of the Protected Health Information has been
breached. Business Associate may use Protected Health Information to report violations of law to
appropriate federal and state authorities, consistent with 45 C.F.R. § 164.502(j)(1).

(c) Use Protected Health Information to provide Data Aggregation services to Covered Entity as
permitted by 45 C.F.R. §164.504(e)(2)(i)(B). Except as otherwise provided in the Management
Services Agreement, this Exhibit or permitted under the Privacy Rule, the Security Rule and the
HITECH Act, under no circumstances may Business Associate disclose Protected Health Information of
Covered Entity to another covered entity absent the explicit authorization of Covered Entity.

 

4

 

(d) Create de-identified Protected Health Information in accordance with the standards set
forth in 45 C.F.R. § 164.514(b) and may use or disclose such de-identified data for any purpose.

(e) Without limiting the generality of the foregoing, Business Associate reserves the right at
its sole discretion to disclose an Individual’s Protected Health Information in response to and in
accordance with a valid authorization executed by such Individual that meets the requirements set
forth in the Privacy Rule.

	3.	 	OBLIGATIONS OF THE PARTIES WITH RESPECT TO PROTECTED HEALTH INFORMATION

3.1 Obligations of Business Associate. With regard to the use and/or disclosure of Protected
Health Information, Business Associate hereby agrees to do the following:

(a) Report to the designated Privacy Official of Covered Entity any use and/or disclosure of
the Protected Health Information that is not permitted or required by this Exhibit of which
Business Associate becomes aware. Oral reports shall be made within five (5) business days
following discovery, and shall be followed promptly by a written report based on subsequently
developed information.

(b) Use appropriate safeguards to maintain the security of the Protected Health Information
and to prevent use and/or disclosure of such Protected Health Information other than as provided
for by the Management Services Agreement and this Exhibit.

(c) Ensure that any subcontractor or agent to whom it provides Protected Health Information
received from, or created or received by Business Associate on behalf of Covered Entity under this
Exhibit agrees, in writing, to restrictions and conditions to those that apply to Business
Associate pursuant to this Section 3 with respect to such Protected Health Information.

(d) Make available all records, books, policies and procedures relating to the use and/or
disclosure of Protected Health Information received from, or created or received by Business
Associate on behalf of, Covered Entity to the Secretary, in a time and manner designated by the
Secretary, for purposes of the Secretary determining Covered Entity’s compliance with the Privacy
Regulations and the Security Regulations, subject to attorney-client and other applicable legal
privileges.

(e) To the extent that Business Associate possesses Protected Health Information in a
Designated Record Set, Business Associate agrees to make such information available to Covered
Entity pursuant to 45 C.F.R. § 164.524 and 42 U.S.C. § 17935(e)(1), as applicable, within five (5)
business days of receiving a written request from Covered Entity, provided, however, that Business
Associate is not required to provide such access where the Protected Health Information contained
in a Designated Record Set is duplicative of the Protected Health Information contained in a
Designated Record Set possessed by Covered Entity. Without limiting the foregoing, if Business
Associate is deemed to use or maintain an Electronic Health Record on behalf of Covered Entity with

 

5

 

respect to Protected Health Information, then, to the extent an individual has the right to request
a copy of the Protected
 Health Information maintained in such Electronic Health Record pursuant to 45 C.F.R. § 164.524
and makes such a request to Business Associate, Business Associate shall provide Covered Entity
with a copy of an individual’s Protected Health Information maintained in an Electronic Health
Record in an electronic format and in a time and manner designated by Covered Entity in order for
Covered Entity to comply with 45 C.F.R. § 164.524, as amended by §13405 of the HITECH Act.
Alternatively, upon request by Covered Entity, Business Associate may provide such individual with
a copy of the information contained in such Electronic Health Record in an electronic format and,
if the individual so chooses, transmit such copy directly to an entity or person designated by the
individual. In such cases (i) Business Associate may charge a fee to the individual for providing
a copy of such information, but such fee may not exceed the Business Associate’s labor costs in
responding to the request for the copy; and (ii) the provisions of 45 C.F.R. § 164.524, including
the exceptions to the requirement to provide a copy of Protected Health Information, shall apply
and Business Associate shall comply therewith as if Business Associate were the Covered Entity.

(f) To the extent that Business Associate possesses Protected Health Information in a
Designated Record Set, Business Associate agrees to, within twenty (20) business days of receiving
a written request from Covered Entity, make such information available to Covered Entity for
amendment pursuant to 45 C.F.R. § 164.526

(g) Business Associate agrees to document such disclosures of Protected Health Information and
information related to such disclosures as would be required for Covered Entity to respond to a
request by an Individual for an accounting of disclosures of Protected Health Information in
accordance with 45 C.F.R. § 164.528 and 42 U.S.C. § 17935(c), as applicable. Business Associate
agrees to provide Covered Entity, within twenty (20) business days of receiving a written request
from Covered Entity, such information as is requested by Covered Entity to permit Covered Entity to
respond to a request by an Individual for an accounting of the disclosures of the Individual’s
Protected Health Information in accordance with 45 C.F.R. §164.528 and 42 U.S.C. § 17935(c), as
applicable. Without limiting the foregoing, effective as of the applicable date set forth under
§13405(c) of the HITECH Act, if Business Associate is deemed to use or maintain Protected Health
Information in an Electronic Health Record on behalf of Covered Entity, then Business Associate
shall maintain an accounting of any disclosures made through such Electronic Health Record for
treatment, payment and health care operations, pursuant to the requirements of the HITECH Act, as
applicable to Business Associates Upon written request by Covered Entity, Business Associate shall
provide such accounting to Covered Entity in the time and manner specified by the HITECH Act.
Alternatively, if Covered Entity responds to an Individual’s request for an accounting of
disclosures made through an Electronic Health Record by providing the requesting Individual with a
list of all business associates acting on behalf of Covered Entity, then Business Associate shall
provide such accounting directly to the requesting Individual in the time and manner specified by
the HITECH Act.

(h) Except as otherwise provided in this Exhibit, in the event Business Associate receives a
written access or amendment, request directly from an Individual, with respect to Protected Health
Information subject to this Exhibit, Business Associate will promptly redirect the Individual to
Covered Entity.

 

6

 

(i) Subject to Section 4.3 below, return to Covered Entity or destroy, within thirty (30)
calendar days of the termination of this Exhibit or the Management Services Agreement, the
Protected Health Information received from Covered Entity, or created or received by Business
Associate on behalf of Covered Entity, in its possession and retain no copies (which for purposes
of this Exhibit shall include all backup tapes or files).

(j) Disclose to its subcontractors, agents or other third parties, and request from Covered
Entity, only the minimum Protected Health Information necessary to perform or fulfill a specific
function permitted hereunder in accordance with 42 U.S.C. § 17935(b) and the regulations
promulgated thereunder. Without limiting the foregoing, to the extent required by the HITECH Act,
Business Associate shall limit its use, disclosure or request of Protected Health Information to
the limited data set (as defined under HIPAA) or, if needed, to the minimum necessary to accomplish
the intended use, disclosure or request, respectively. Effective as of the date the Secretary
issues guidance on what constitutes “minimum necessary” for purposes of HIPAA, Business Associate
shall limit its use, disclosure, or request of Protected Health Information to only the minimum
necessary as set forth in such guidance.

(k) To the extent practicable, establish procedures in order to mitigate, to the greatest
extent possible, any deleterious effects from any improper use and/or disclosure of Protected
Health Information that Business Associate reports to Covered Entity.

(l) Report to the designated Privacy Official of Covered Entity, any Security Incident of
which Business Associate becomes aware. Oral reports shall be made within five (5) business days
following discovery, and shall be followed promptly by a written report based on subsequently
developed information. Business Associate will provide reasonable assistance to Covered Entity
with respect to disclosure of such incident in accordance with law applicable to business
associates, including without limitation the requirements of the HITECH Act applicable to Business
Associates.

(m) Notify Covered Entity, of any Breach of Unsecured Protected Health Information within two
(2) business days of the day on which the Breach is known to Business Associate, or, by exercising
reasonable diligence, would have been known to Business Associate. Such notice shall identify each
individual whose Unsecured Protected Health Information has been, or is reasonably believed by
Business Associate to have been accessed, acquired, used, or disclosed during the Breach, and, and
any particulars regarding the Breach that Covered Entity would need to include in its
notification, as such particulars are indentified in 42 U.S.C. § 17932 and 45 C.F.R. § 164.404.
Business Associate will cooperate with Covered Entity with respect to disclosure of such Breach in
accordance with law applicable to business associates, including without limitation the
requirements of the HITECH Act, applicable to business associates; provided, however, that Covered
Entity shall have sole control over the timing and method of providing notification of such Breach
to the affected individual(s) or others as required by the HITECH Act. Business Associate shall
reimburse Covered Entity for its reasonable costs and expenses in providing the notification,
including, but not limited to, any administrative costs associated with providing notice, printing
and mailing costs, and costs of mitigating the harm (which may include the costs of obtaining
credit monitoring services and identity theft insurance for a period not to exceed one year) for
affected individuals whose Protected Health Information has or may have been compromised as a
result of the Breach. In order to be reimbursed by
Business Associate, Covered Entity must provide to Business Associate a written accounting of
Covered Entity’s actual costs and, to the extent applicable, copies of receipts or bills with
respect thereto.

 

7

 

(n) Comply with all requirements of Subtitle D of the HITECH Act that relate to privacy and
are made applicable to covered entities, all of which requirements are equally applicable to
business associates and which are incorporated herein in their entirety.

3.2 Compliance with the Security Regulations. Business Associate shall implement
Administrative Safeguards, Physical Safeguards, and Technical Safeguards that reasonably and
appropriately protect the confidentiality, integrity, and availability of Protected Health
Information maintained or transmitted as Electronic Media that the Business Associate creates,
receives, maintains, or transmits on behalf of the Covered Entity, as required by, and set forth
more specifically in, the Security Regulations. Business Associate will comply with the provisions
of 45 C.F.R. §§ 164.308, 164.310, 164.312 and 164.316 relating to implementation of administrative,
physical and technical safeguards with respect to Electronic Protected Health Information in the
same manner that such provisions apply to a HIPAA covered entity. Business Associate will also
comply with any additional security requirements contained in the HITECH Act that are applicable to
a business associate.

3.3 Compliance with Certain Provisions of the HITECH Act.

(a) Effective as of the date upon which the Secretary promulgates final regulations
implementing the provisions of Section 13405(d) of the HITECH Act, Business Associate shall not,
directly or indirectly, receive remuneration in exchange for any Protected Health Information of an
individual, except pursuant to a valid written authorization signed by or on behalf of such
individual, or as otherwise permitted under the HITECH Act or such implementing regulations.

(b) With respect to written communications occurring after February 17, 2010, Business
Associate shall not Use or Disclose Protected Health Information for the purpose of making such a
communication about a product or service that encourages recipients of the communication to
purchase or use the product or service, unless such communication: (a) complies with the
requirements of subparagraph (i), (ii) or (iii) of paragraph (1) of the definition of marketing
contained in 45 C.F.R. § 164.501, and (b) complies with the requirements of subparagraphs (A), (B)
or (C) of Section 13406(a)(2) of the HITECH Act. Covered Entity shall cooperate with Business
Associate to determine if the foregoing requirements are met with respect to any such marketing
communication.

3.4 Obligations of the Covered Entity. With regard to the use and/or disclosure of
Protected Health Information by Business Associate, Covered Entity hereby agrees to do the
following:

(a) Provide Business Associate with the Notice of Privacy Practices that Covered Entity
produces in accordance with 45 C.F.R. §164.520, as well as any changes to such notice. In
addition, Covered Entity will notify Business Associate of any limitation(s) in its notice of
Privacy Practices, in accordance with 45 C.F.R. § 164.520, to the extent that such limitation(s)
may affect Business Associate’s use or disclosure of Protected Health Information.
Covered Entity will provide such notice no later than fifteen (15) days prior to the effective
date of the limitation.

 

8

 

(b) Notify Business Associate of any changes in, or revocation of, authorization provided to
Covered Entity by an Individual to use or disclose Protected Health Information, if such changes
affect Business Associate’s permitted uses and disclosures. Covered Entity will provide such
notice no later than fifteen (15) days prior to the effective date of the change. Covered Entity
will obtain any consent or authorization that may be required by the Privacy Rule, or applicable
state law, prior to furnishing Business Associate with Protected Health Information. If applicable
to services provided to or on behalf of Covered Entity, inform Business Associate of any opt-outs
exercised by any individual from fundraising activities of Covered Entity pursuant to 45 C.F.R. §
164.514(f).

(c) Notify Business Associate of any arrangements permitted or required of Covered Entity
under the Privacy Regulations that may impact in any manner the use and/or disclosure of Protected
Health Information by Business Associate under this Exhibit, including any restriction on the use
or disclosure of Protected Health Information that Covered Entity has agreed to in accordance with
45 C.F.R. §164.522 or 42 U.S.C. § 17935(a). Covered Entity will provide such notice no later than
fifteen (15) days prior to the effective date of the restriction. If Business Associate reasonably
believes that any restriction agreed to by Covered Entity pursuant to this Section may materially
impact Business Associate’s ability to perform its obligations under the Management Services
Agreement or this Exhibit, the Parties will mutually agree upon any necessary modifications of
Business Associate’s obligations under such agreements. Without limiting the foregoing, in the
event that Covered Entity is required to comply with a restriction on the disclosure of Protected
Health Information pursuant to §13405 of the HITECH Act, then Covered Entity shall, to the extent
needed to comply with such restriction, provide written notice to Business Associate of the name of
the individual requesting the restriction and the Protected Health Information affected thereby.
Upon receipt of such notification, Business Associate shall not disclose the identified Protected
Health Information to any health plan for the purposes of carrying out payment or health care
operations, except as otherwise Required by Law.

(d) Covered Entity will not request Business Associate to use or disclose Protected Health
Information in any manner that would not be permissible under the Privacy Rule, the Security Rule
or the HITECH Act if done by Covered Entity, except as permitted pursuant to the provisions of
Section 2.2 of this Exhibit.

3.5 Compliance with Red Flag Regulations and Breach Notification Law. Business Associate
acknowledges that Covered Entity has adopted an Identity Theft Prevention Program as required under
16 C.F.R. Part 681 for certain covered accounts that may be accessed in accordance with this
Exhibit. Accordingly, if applicable, Business Associate will report to the designated Privacy
Official of Covered Entity any Breach of Security with respect to any Personal Information created
or received by Business Associate from or on behalf of Covered Entity of which Business Associate
becomes aware. Oral reports shall be made within five (5) business days following discovery, and
shall be followed promptly by a written report based on subsequently developed information.

 

9

 

	4.	 	TERM AND TERMINATION

4.1 Term. This Exhibit shall become effective on the Effective Date and shall continue in
effect until all of the Protected Health Information provided by Covered Entity to Business
Associate, or created or received by Business Associate on behalf of Covered Entity is destroyed or
returned to Covered Entity, or, if it is infeasible to return or destroy the Protected Health
Information, protections are extended to such information in accordance with the termination
provisions in Section 4.3. In addition, certain provisions and requirements of this Exhibit shall
survive its expiration or other termination in accordance with Section 6.3 herein.

4.2 Termination for Cause. As provided in 45 C.F.R. §164.314(a)(2)(i)(D) and
§164.504(e)(2)(iii), upon either Party’s knowledge of a material breach by the other Party of this
Exhibit, such Party will provide written notice to the breaching Party detailing the nature of the
breach and providing an opportunity to cure the breach within thirty (30) business days. Upon the
expiration of such thirty (30) day cure period, the non-breaching Party may terminate this Exhibit
and, at its election, the Management Services Agreement, if cure is not possible.

4.3 Effect of Termination.

(a) Except as provided in Section 4.3(b) below, upon termination of this Exhibit or the
Management Services Agreement for any reason, Business Associate shall return or destroy all
Protected Health Information received from Covered Entity, or created or received by Business
Associate on behalf of Covered Entity. This provision shall apply to Protected Health Information
that is in the possession of subcontractors or agents of Business Associate. Business Associate
shall retain no copies of the Protected Health Information.

(b) In the event that Business Associate determines that returning or destroying the Protected
Health Information is infeasible, Business Associate shall provide to Covered Entity notification
of the conditions that make return or destruction infeasible. Upon mutual agreement between the
Parties that return or destruction of Protected Health Information is infeasible, Business
Associate shall extend the protections of this Exhibit to such Protected Health Information and
limit further uses and disclosures of such Protected Health Information to those purposes that make
the return or destruction infeasible, for so long as Business Associate maintains such Protected
Health Information.

 

10

 

	5.	 	INDEMNIFICATION. The Parties agree to indemnify and hold harmless each other and each
other’s respective employees, directors, officers, subcontractors, agents or other members of
its workforce (each an “indemnified party”) against all actual and direct losses suffered by
the indemnified party and all liability to third parties arising from or in connection with
any breach of this Agreement or of any warranty hereunder or from any negligence or wrongful
acts or omissions in relation to this Agreement, including failure to perform its obligations
under the Privacy Regulations, the Security Regulations, or the HITECH Act, by the
indemnifying party or its employees, directors, officers, subcontractors, agents or other
members of its workforce. Accordingly, on demand, the indemnifying party shall reimburse any
indemnified party for any and all actual and direct losses, liabilities, lost profits, fines,
penalties, costs or expenses (including reasonable attorneys’ fees) which may for any reason
be imposed upon any indemnified party by reason of any suit, claim, action, proceeding or
demand by any third party which results from the indemnifying party’s breach hereunder. The
Parties’ obligation to indemnify any indemnified party shall survive the expiration or
termination of this Agreement for any reason.

	 
	6.	 	MISCELLANEOUS

6.1 Integration of Terms and Conditions. This Exhibit shall be and hereby is incorporated
into the provisions of the Management Services Agreement. Any provisions of the Management
Services Agreement not inconsistent herewith shall also apply to this Exhibit as if they were one
and the same document. In the event of any inconsistencies as to matters addressed in this
Exhibit, the terms and conditions of this Exhibit shall prevail.

6.2 Relationship of Parties. Business Associate, in furnishing services pursuant to the
Management Services Agreement, is acting as an independent contractor, and Business Associate has
the sole right and obligation to supervise, manage, contract, direct, procure, perform or cause to
be performed, all work to be performed by Business Associate under this Exhibit. Business
Associate is not an agent of Covered Entity, and has no authority to represent Covered Entity as to
any matters, except as expressly authorized in this Exhibit. Nothing in this Exhibit will confer
any right, remedy, or obligation upon anyone other than Covered Entity and Business Associate.

6.3 Survival. The respective rights and obligations of Business Associate and Covered
Entity under Section 4, 5 and 6 of this Exhibit shall survive the termination of this Exhibit
indefinitely.

6.4 Amendments; Waiver. The Parties agree to take such action as is necessary to amend
this Exhibit from time to time as is necessary for the Parties to comply with the requirements of
the Privacy Regulations, the Security Regulations, the HITECH Act, or applicable federal or state
confidentiality laws or regulations. Notwithstanding anything herein to the contrary, this Exhibit
may not be modified, nor shall any provision hereof be waived or amended, except in a writing duly
signed by authorized representatives of both Parties. A waiver with respect to one event shall not
be construed as continuing, or as a bar to or waiver of any right or remedy as to subsequent
events.

 

11

 

6.5 Interpretation; Regulatory References. Any ambiguity in this Exhibit shall be
resolved in favor of a meaning that permits the Parties to comply with the Privacy Regulations, the
Security Regulations, the HITECH Act, or applicable federal or state confidentiality laws or
regulations. Any reference in this Exhibit to a section in the Privacy Regulations, the Security
Regulations, or the HITECH Act means the section as in effect or as amended. In the event of
inconsistency between the provisions of this Exhibit and mandatory provisions of the Privacy Rule,
the Security Rule or the HITECH Act, as amended, or their interpretation by any court or regulatory
agency with authority over Business Associate or Covered Entity, such interpretation will control.
Where provisions of the Exhibit are different from those mandated in the Privacy Rule, the Security
Rule, or the HITECH Act, but are nonetheless permitted by such rules as interpreted by courts or
agencies, the provisions of this Exhibit will control.

6.6 Severability. If any provisions of this Exhibit are unenforceable, invalid or violate
applicable law, such provisions shall be deemed stricken and shall not affect the enforceability of
any other provisions of this Exhibit.

 

12

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