Filed 01/30/18 Case 16-10015 #66 MARC A. LEVINSON, CSB NO. 57613 J. LARSEN, CSB NO. 123994 ORRICK, HERRINGTON SUTCLIFFE LLP 400 Capitol Mall, Suite 3000 Sacramento, California 95814-4497 Telephone: (916) 329-4910 Email: clarsen orrick.com I-IAGOP T. BEDOYAN, CSB NO. 131285 LISA HOLDER, CSB NO. 217752 Klein, DeNatale, Cooper, Rosenlieb Kimball LLP 5260 N. Palm Avenue, Suite 201 Fresno, California 93704 Telephone: (559) 438-4374 Facsimile: (661) 326-0418 E-mail: hbedoxan@kleinlaw.com lholder kleinlaw.com Attorneys for Healthcare Conglomerate Associates, LLC UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA, FRESNO DIVISION In re: Case No.: 16-10015-A-9 SOUTHERN INYO HEALTHCARE Chapter 9 DISTRICT, Doc. No. Debtor. Date: To Be Scheduled Time: To Be Scheduled Place: Dept. A, Courtroom 11 US. Bankruptcy Court 2500 Tulare St. Fresno, CA 93721 Ill Doc 407 Filed 01/30/18 Case 16-10015 Doc 407 EXHIBITS IN SUPPORT OF ADMINISTRATIVE EXPENSE CLAIM OF HEALTHCARE CONGLOMERATE ASSOCIATES, LLC ARISING OUT OF 2 REJECTION OF EXECUTORY CONTRACT (11 U.S.C. 503(b] AND 507?a?2n 3 4 Document Description in Index Exhibits Page 5 il Management Services A Agreement 3'51 6 Management Fees 52-53 7 Travel Expenses 54-58 8 MSA Termination Fee 59-62 9 ?0 Dated: January 3?9 2018 KLEIN, DENATALE, GOLDNER, COOPER, 11 ROSENLIEB KIMBALL LLP AND ORRICK, HERRINGTON SUTCLIFFE LLP HAGOP T. BEOYAN 15 Attorneys for Healthcare Conglomerate AssociatesFiled 01/30/18 Case 16-10015 Doc 407 EXHIBIT MANAGEMENT SERVICES AGREEMENT PAGES 3 - 51 Filed 01/30/18 Case 16?10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 Management Services Agreement between HealthCare Conglomerate Associates, LLC and Southern lnyo Healthcare District Exhibit A Page i Doc 407 Case 16-10015 Doc 327 Filed 01/30/18 Case 15-10015 Filed 10/17/17 MANAGEMENT SERVICES AG REEMENT This Management Services Agreement is made and entered into eliective as of January 2. 2016 t?Etl'octivo Date?). by and between HealthCaro Conglomerate Associates. LLC. a California limited liability company (Eonagor?). and Southern lnyo Hoatthcare District (the "smug?: TA 8: WHEREAS. the District owns and operates an acute care hospital. a clinic. and a skilled nursing facility at 501 East Locust Street in Lone Pine. California (the together with the Other Facilities: WHEREAS. the parties have determined that Manager's provision at services in accordance with the terms at this Agreement will runner the ability of the District (1) to provide for elilcient delivery at health care services: serve the best interests at the communities served by the District: and (3) entrance the ability of the parties to eiiocliveiy and provide health care tor the communities served by the District: WHEREAS. the parties Inland that this arrangement will allow them to achieve a number at mutually bene?cial obioctlves. including the following: it) turther the development of a community- residonts oi the communities served by the District: (3) respond to the health care needs and cost concerns or community residents by allowing evaluation at existing services and addition of new services. as deemed appropriate by Manager: (4) achieve elticienciss through coordination. consolidation. or reorganization. as appropriate. at certain identi?ed health care services: and (5) Improve the capacity of the parties and their to recruit and retain physicians necessary to serve the health care needs at the community. develop linkages with other providers and payers. and expand the geographical service area or the District; WHEREAS. Manager has heretofore expended considerable often and resources. including. but not limited to. ?nancial resources to review and analyze information regarding the Hospital provided by the District; and WHEREAS. the District desires to engage Manager. and Manager desires to be engaged. to manage the Operations of the District upon the terms set forth in this Agreement. NOW. THEREFORE. tor and in consideration or the premises and the mutual undertakings and representations herein contained and for other good and valuable consideration. the receipt and su?iclency of which are hereby acknowledged. the parties hereto. intending to become legally bound. hereby agree as follows: AGREEMENT 1. Definitions. Ali capitalized terms not de?ned elsewhere in this Agreement shall have the following meanings. unless a dtifcrent meaning clearly appears from the context: ?Ai?igte' means any other iirm. partnership. association. corporation. joint venture or public body. directly or indirectly controlling or controlled by. or under direct or indirect common control with. the District or Manager. The term 'controt.? when used with respect to CONFIDENTML AND PROPRIETARY HealthCare Conglomerate Associates recourse? Exhibit A Page 4 Filed 01/30/18 Case 16?10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 32? particular Permn. means the possession. directly or indirectly. ot the power to direct or cause the direction of management in the policies of such Person whether through the ownership of voting stock. by contract or otherwise. and the terms ?controtling" and "controlled' have meanings correlative to the foregoing. ?Wag? shall have the meaning set torth in ?ction id) means those buildings and other structures in which the Operations. now or hereafter are conducted. together with such other buildings and structures now or hereafter owned. leased or otherwise operated by the District that Manager elects. to its sole and absolute discretion. to operate hereunder. by notice to the District from time to time. is) "cute! Restructuring Bugger" shall have the meaning set forth In what 51am. (0 ?Que" means the Centers tor Medicare and Medicaid Services. to) shall have the meaning set forth in Mine?eld). ?Compliance Eiag" shall have the meaning set forth In W. ?Consultants" shall have the meaning set forth in mum. (ti means any Person. who acting stone or with others. has the ability to directly or indirectly in?uence. direct. or cause the direction of the management. expenditure of money. or policies of a Person submitting an Acquisition Proposal. including any shareholder owning. directly or indirectly. legally or beneficially. more than 5% of the equin of such Person submitting an Acquisition Proposal. a management company or similar service provider (together with a Person who is a Controlling Person of such management company or other business entity) and any other individual who. because of a relationship of any nature with the Person submitting an Acquisition Proposal or its owners. or managers. is in a position at actual control or authority with respect to the Person submitting an Acquisition Proposal. without regard to whether the individual is formally named as an owner. manager. director. o?icer. provider. consultant. contractor. or employee at the Person submitting an Acquisition Proposal. (it) shall have the meaning set forth in mm. 'QEngm? shall have the meaning set forth In Section Sib?iim (to) ?My? shall have the meaning set forth in WEIRD. account shall have the meaning set forth in mm. shall have the meaning set forth In Section 10in). (P) shall have the meaning set forth in Sagilgg Milli!)- means United States generally accepted accounting principles and practices as in effect from time-to-tima as applied by Manager. shall have the meaning set forth in W. 2 CONFIDENTIAL AND PROPRIETARY t-leetthCare Conglomerate Associates enemies? Exhibit?L Page 5 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 authority" means any federal. State or local judicial. executive or legislative body or governmental municipality. department. commission board. agency or authority. Including government contractors for federal health programs. and Including without limitation. the State of California - Health and Human Services Agency Of?ce of Statewide Health Planning and Development. ?Governmental means a Depository Account established for the sole purpose of receiving checks. wire transfers and other forms of electronic payments governed under the Social Security Act (42 U.S.C. 1395 et seq.). including payments under Medicare. Medicaid and TRICAREICHAMPUS. and payments administered or regulated by the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services (collectively ?Govergmongi Health Forge?). means the Health insurance Portability and Accountability Act of 1998 and the regulations promulgated pursuant thereto. ?Mtg!? shall have the meaning set forth in the Recitals. Law? means California Health and ?afgiy ?32000 et seq.. Including those provisions of the to skilled nursing facilities. (it) ?ineligible Persgg? shall have the meaning set forth in Section 5m. ?Jeopardy; Event? shall have the meaning set forth in Sggtigg 10pm"). (2) means any constitutional provision. statute. ordinance. or other law. rule. regulation. interpretation. ludgrnent. decree. or order of any Governmental Authority or any settlement agreement or compliance agreement with any Governmental Authority. including Hospital Law. as the foregoing may be revised. replaced or amended from time to time. (ea) has the meaning set forth in the Preamble. (bb) ?Manage; Qatault? shall have the meaning set forth in 543%. (cc) shall have the meaning set forth in Seg?og 3331(1). (dd) shall have the meaning set forth in sells 4 l? . (as) shall have the meaning set forth in 3mm}. tlfi shall have the meaning set forth in aroma) (gg ?gig" means the Office of inspector General of the Department of Health and Human Services. (hh) 'Ogerallng Contracts" shall have the meaning set forth in Segi?g dinuli). (ll) 'ngum?grm? shall have the meaning set forth in 5mm. CONFIDENTIAL AND PROPRIETARY lteaithCare Conglomerate Associates successes a Exhibit_. Page 4 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 32? (II) means the healthcere and other operations and programs which are conducted at the Hospital and the Other Facilities. as the same may be modified by Manager from time to time during the Operating Period. (kit) ?cher Facilities" means these facilities and businesses Identified on EM A_to this Agreement. together with such other facilities and clinics owned. leased or othenrvise operated by the District that Manager elects. in its sole and absolute discretion. to manage hereunder. by notice to the District from time to time. (It) "Person? means an association. a corporation. a limited liability company. an Individual. a partnership (general or limited). a trust. a hospital district organized under the Hospital Law. or any other entity or organization. including a Governmental Authority. (mm) "Eli!" shall have the meaning set torth in ?egi_gn 315mg). (nn) ?3319" means the State of (oo) '?usp?gded? shall have the meaning set forth In ?g?tigp (pp) 'Termiggtion Fee? shall have the meaning set forth in Section 2- Mashhad. W. The Initial term or this Agreement shall commence on the Effective Date and end on the date live (5) years thereafter (as such initial term may be renewed pursuant to Section the ?Operating Period?). Extension Dangling [291ng Upon completion of the Operating Period or of any subsequent renewal Operating Period. this Agreement shall automatically renew for additional five (5) year periods unless either party shall send a written notice of intent not to renew the Agreement to the other party not less than six (6) months prior to the and ot the initial Operating Period or then current renewal Operating Period. as applicable. Each renewal Operating Period shalt be on the same terms and conditions set forth herein. Notwithstanding the foregoing. nothing herein is intended to permit the Operating Ported to exceed beyond any time period as is under applicable Law. or under any tax-exempt bond financing requirements with respect to bonds hereatter issued by the District. in the event the Operating Period exceeds any permissible time period. than the Operating Period shall be contormed to the maximum time period permitted under applicable Law. to) [gevwgi?ty 91 Agreement. The District acknowledges and agrees that Manager is entering into this Agreement in reliance on the long term nature of this Agreement. and further acknowledges that the rights. duties. powers and authority of each of the parties hereto. are Intended to be non-terminahle throughout the Operating Period. except in accordance with the express provisions of this Agreement. The District acknowledges that neither party will achieve the benefits intended to be achieved it the District has any continuing right or power to terminate this Agreement. or the relationship hereby created. except in accordance with the express provisions or this Agreement. Accordingly. the District. as a aubstanllal inducement to Manager to enter into this Agreement and provide Its proprietary systems and knowledge. hereby irrevocably waives and relinquishes any right. power or authority existing at law or In equity to terminate this Agreement. except in strict accordance with the express provisions of this Agreement. The parties further CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates somerset 4 Page 7 4., Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/1771? Case 16-10015 Doc 32? hereby adtnowtedge that any breach of this Section will cause inoperable and permanent damage to Manager. not compensabie by money damages. 3. So at ilitos ft artios. mm. The District hereby engages and appoints Manager. and Manager hereby accepts such engagement. to exclusively provide day-to-day management services to and for the District with respect to the Hospital and the Other Facilities. Anything herein to the contrary notwithstanding. Manager's authority hereunder shall be limited as described in Sectigg 31b). and Manager shalt otherwise perform its services hereunder in accordance with ?ggliog 5. Manager?s duties shall include but are not limited to financial and operating system management. preparation of proposed annual budgets. purchasing. contracting support and relationship management. expansion of the Hospital and the Other Facilities or the services offered. preparation and implementation of staffing plans. recruitment of personnel. and supervision of the dey?to-day Operations of the Hospital and the Other Facilities. Manager shall perform its services hereunder in accordance with the District Bylaws. the policies lawfully adopted by the Board of Directors of the District {the ?Governing Body') and applicable Law. it Is understood and agreed that to the extent that Hospital Law is In conflict with any of the District's Bylaws. then Hospital Law shall control or (ii) the District?s Bylaws or policies con?ict with the terms hereof. the terms hereof shall control. general anlrol of the Qstricl. Manager expressly acknowledges and agrees that the District exercises. and at all times during the Operating Period. shall exercise the ultimate control and direction of the Operations. Subject to the provisions of ?ggtiog Manager shall operate within the reasonable parameters. policies and procedures adopted by the Governing Body and communicated to Manager by the District. (and provided that such parameters. policies and procedures do not. in Manager's reasonable Judgment. leopardize the quality of patient care provided at the Hospital and the Other Facilities. or require Manager or the District to engage in any illegal or unethical acts. or breach any express provision of this Agreement or any other agreement of the parties). Notwithstanding the ultimate control to be exercised by the Governing Body. Manager shall comply with its obligations under this Agreement. provided that the District shall not interfere with its ability to do so. (it) Notwithstanding anything to the contrary herein. any change in the licensure type. payment model chosen by the Hospital. classi?cation or operations of the Hospital other than as a Medicare participating critical access hospital (matter as a sole community hospital. as applicable) and skilled nursing facility. shall be subject to the prior written approval of the Governing Body and Manager. District shall timely furnish Manager with sufficient funds to timely pay the expenses relating to the Operations. Including funding of both operating expenses and non-operating expenses. Notwithstanding the foregoing. the District shall not be in default in Its obligations to furnish Manager with sufficient funds to pay its 5 CONFIDENTIAL AND PROPRIETARY 6 HeelihCere Conglomerate Associates scenerseu ExhibitL Page 8 Filed 01/30/18 Filed 10/17/17 (0) (W) Case 16-10015 Case 16-10015 operating and non-operating expenses relating to the Operations ii the District has insufficient revenue ayaiiabie for such purposes from the Operations and borrowings (and the District may. but shall not be required to. borrow funds to pay shortages in funds available to pay expenses relating to its Operations). Subject to the more expedient funding requirements set forth in if iunds in the Master Account are insuf?cient. Manager shall notify the District of the need for funds by submitting Manager's fund request to the District and the District shall supply the requested funds within three (3) days of Manager's notice to the District of the need for same. provided that for unanticipated Emergent Expenses. Manager shall have the right to provide a shorter notice period. Manager shall not be obliged to fund the District expenses hereunder or provide funds to accommodate shortfalls in revenue. however. Manager may. in its sole and absolute discretion. advance funds as provided in ?gment 311111111). Manager shall not be In default hereunder if Manager's failure to comply with the terms of this Agreement is due to the tacit of adequate funds provided by the District. The District shall assure that its funds are used to support the Hospth and the Other Facilities and to provide charitable care therein and are not diverted to other uses. nggeratigg and (Ill) The District and its Governing Body shall and timely cooperate in good faith with Manager and shall be responsive and available to Manager during the Operating Period in order that Manager can carry out its duties and obligations hereunder. in any Instance in which the (or the Govemlng Body) has an obligation to provide input or decide an issue. or provide (or withhold) its approval or consent under the terms of this Agreement. the District (or the Governing Body) shall do so in accordance with the provisions of Section 11(0). Unless a speci?c period of time is set forth herein for a particular act. a reasonable period of time for the District to provide input or decide an Issue. or provide (or withhold) its approval or consent shalt generally be within five (5) to seven (7) calendar days. in addition to its obligation to provide funds. the District will timely provide Manager with the necessary equipment. information and other resources to enable Manager to fully and timely perform its services hereunder. Betaiiogehig. 0) Except as otherwise required by applicable Law or as specificatty authorized hereunder. the District shall not interfere. directly or 6 CONFIDENTIAL mo PROPRIETARY HealthCare Conglomerate Associates MOMMA Doc 407 Doc 327 Page 9 Filed 01/30/18 Filed 10/17/17 (ill) Case 16?10015 Case 16-10015 Indirectly. with Manager?s decisions or the daily Operations. and shall not interfere with Manager's ability to perform its obligations hereunder. Except upon request of Manager. individual members of the District's Governing Body shall not issue directions to Manager. except following and in accordance with the formal actions of the District's Governing Body. The District representatives' communications. formal and informal. regarding Manager and the Operations with Persons associated or affiliated with the Operations or Manager. shalt be conducted exclusiveiy with Persons designated by Manager's chief executive officer. Neither the District nor its Governing Body. on the one hand. our Manager or any of the other Manager Parties on the other hand. shall (nor cause or encourage others to) disclose confidential or negative Infonnatlon regarding. or take any action or omit to take any action that to materially detrimental to the reputation of (anything which might tend to bring a party into public dtsrepute. hatred. contempt. scorn. scandal. or ridicule. or which might tend to reflect unfavorably on or otherwise degrade such party). the other or matte any statements. verbally. in writing or otherwise. that defame. disparage or in any way criticize the personal or business reputation. practices. or conduct of the other. to anyone other than the Manager's chief executive officer or the District's President. or as may be required under Hospital Law. Notwithstanding the foregoing. negative information may be discussed within of?cial District Governing Body meetings and in connection with its internal operations. provided that If such information is used in a non-confidential forum. the party bringing up such information shall use reasonable efforts to verify the veracity and objectivity of such information prior to disclosing same in a non-confidential forum. However. nothing herein shall prevent the any party from testifying truthfully in a legal proceeding or governmental administrative proceeding. The parties acknowledges and agrees that this prohibition extends to statements. written or Verbal. made to anyone. including but not limited to. the news media. bondholders. industry competitors. strategic partners. vendors. employees (past and present}. and clients. The parties acknowledge that: (1) this Section is a material provision of this Agreement: (2) any breach of this Section shall be a material breach of this Agreement. and (3) a breach of this Section would cause irreparable harm. CONFIDENTIAL AND PROPRIETARY Conglomerate Anecdotes 505081584 Doc 407 Doc 327 Page {0 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 ti fas IMte. (I) All medical and professional matters relating to the care and treatment of patients requiring professional medical judgment shall remain the responsibility of the District medical dlrectoris) and medical staff of the Hospital (the (ii) Subject to WILL Manager shall provide such oversight and support as Manager. in its sole and absolute discretion. deems appropriate for the Medical Staff's administrative affairs. Including monitoring the performance of professional services by the Medical Staff and other licensed personnel. (Ill) The District retains control and authority over all appointments to the District's Medical Staff. the granting of clinical privileges at the District to the extent required by applicable Law and applicable accreditation standards. and any actions taken with respect to Medical Stait members. including appeals of actions. Notwithstanding the foregoing. the Chief Executive Officer or his or her designee may grant an individual temporary clinical privileges for a period not to exceed the greater of one hundred twenty (120) days or (ii) such period as is allowed under applicable Law. all in accordance with accreditation agency requirements and the District's Bylaws. ff} mm. The District acknowledges that while Manager shall expand its commercially reasonable efforts in performing its obligations under this Agreement. Manager does not guarantee any particular results. notwithstanding projections which may be made by Manager. Manager?s protections and forward looking statements are based on estimates and expectations. and reasonably available competitive. financial. economic and other data. and Is a result are inherently uncertain. Actual results could differ materially from those anticipated as a result of a variety of factors. Manager shall use Its commercially reasonable judgment in providing the services required under this Agreement. The parties acknowledge that implementation of the District's charitable care purposes may not permit the maximization of the District's profits. Manager shell. for and on behalf of the District. use commercially reasonable efforts to matte recommendations and take actions required hereunder to assist the District to comply In all material respects with any material Law respecting the Hospital and the Other Facilities. The District covenants that it will. in good faith. consider all of Manager's recommendations regarding the Operations. and will support and implement. through policies andior other appropriate actions of the Governing Body. the recommendations It deems reasonably appropriate. The District is a California Health Care District organised and operating under the Hospital Law with. later alts. a charitable mission. and it has under the Hospital Lew certain responsibilities and obligations. including. but not limited to. obligations to provide charity care and Indigent care. At all times. Manager. in managing the District. snail follow the charity and indigent care policies and obligations of the District (provided that the Hospital and the Other Facilitiee' ?nancial obligations in that regard shall not be materially changed unless such change is required by applicable Law) and shall assist the District in meeting all of the District?s required obligations under Hospital Law. the District will notify Manager of any changes to any poiicy. procedure. or the District Bylaws which may impact Manager's rights or obligations under this Agreement. including but not limited to. those affecting the Hospital and the Other Facilities' charity care obligations. CONFIDENTIAL AND PROPRIETARY HealthCere Conglomerate Associates soaoarssr.4 Exhibit?AQ? Page i Filed 01/30/18 Filed 10/17/17 4? Case 16-10015 Case 16-10015 Duties of ManagerManager shall provide a Chief Restructuring Officer (thief est us in 0 co to provide the administrative and management services for the Heepitai and the Other Facilities during its period of restructuring. and until such time as the Manager has determined that this position is no longer necessary because the restructuring has been completed. Such Chief Restructuring Officer shall carry out the usual and customary duties of such position within the health care industry- The Chief Restructuring Officer shall be an employee or an independent contractor of Manager. Emanuel- (M District shall remain the exclusive employer contractor of the personnel of the Hospital and the Other Facilities. Without limiting the generality of the provisions in W. all employees shall be employees of District for purposes of District's benefit programs or plans now existing or herealter created. including compensation and payment and withholding of federal. state and local income. social security. unemployment. Medicare. other payroll and employment taxes. Section 125 plans. Section 403(b) annuities. workers' compensation and health insurance. District ls solely responsible for the administration of employee bene?ts. benefit plans and programs for its employees. All wages. salaries. bene?ts and other expenses and charges incurred in connection with the District's employees shall be borne by the District. In compliance with applicable Lew. Manager shall have the sole right and obligation to hire. tire and supervise all District employees. including a chief executive officer for the Hospital. and the licensed administrator for the skilled nursing facility. and to determine their compensation. Manager shall also have the sole right and obligation to recruit. employ. train. discipline. assign and reassign District employees. as needed for the Operations. and shalt provide oversight and consultation regarding performance standards. personnel policies. and employee benefits. Manager shall be responsible for the development and Implementation of policies and practices. in conformity with the terms of this Agreement and in accordance with applicable Law. relating to personnel management services only. including without limitation. enrolling. recruiting. interviewing. selecting. training. evaluating. replacing. supervising. disciplining. reassigning and terminating District employees. subject to Governing Body approval of such policies as may be required pursuant to 22 C.C.R. 72521 or patient care policy committee approval as may be required pursuant to 22 c.c.n. 72523. 9 CONFIDENTIAL AND PROPRIETARY 0) Conglomerate Associates Doc 407 Doc 32? Page Filed 01/30/18 Filed 10/17/17 (V) (VI) al Case 16-10015 Case 16-10015 Manager shall confer with the District in determining the general range oi the number and quali?cations of employees required for the ef?cient and effective operation of Hospital and the Other Facilities and In establishing and revising in-service training programs. and job descriptions. all In order to accomplish the goals and objectives of Hospital and the Other Facilities. However. Manager shall have the ultimate authority to hire. tire and set the terms of employment for all such employees. To discourage nepotism and con?icts of Interest. the District and its representatives agree that they shall not request or require that Manager: (I) hire or tire any speci?c employee or (it) select. reject or promote an employee or contractor (or its' personnel) based on the Individuals political or beliefs or as a reward for political services or as a form oi political patronage. directly or indirectly. Likewise. the District shall not reier potential employees or contractors to Manager for hiring or engagement. Manager may hire or retain any consultants. accountants. attorneys or other protesslonai personnel (collectively. 'Qogsultants') which Manager. In Its sole and absolute discretion. is necessary or appropriate to assist Manager In carrying out its duties and responsibilities under this Agreement subject to the requirements of 22 C.C.R. 72511. The expense of any Consultants so retained shall be an expense of the District. but Manager shall not retain any such Consultants without the approval of the Governing Body. ii the cost of such services shall exceed 5100.000 in any calendar year for such services. unless otherwise set iorth in the approved Annual Budget. lSaie and art a .Manager shall assist in the implementation oi the Hospital and the Other Facilities' patient safety. quality. and periormance measurement program. Manager shall provide oversight and facilitate the Hospital and the Other Facilities? patient safety. quality. regulatory readiness. Infection controlipreventlon. and service excellence performance metrics. Manager activities shall include: (I) Coordination. data coilectionianalysis and recommendetionf facilitation oi evidence-based practices to address the following: (1) Clinical program measures. hospital-acquired conditions. and other priority patient populations: (2) Patient and staff safety. including the reduction of preventable adverse events; (3) Infection control and prevention services to include electronic surveillance. tracking and transmission of required data: (4) Regulatory and accreditation readiness and compliance tracking; (5) Evidence-based policy and procedure development; and 10 CONFIDENTIAL AND PROPRIETARY i-iseithCare Conglomerate Associates 60808155? Doc 407 Dec 327 Exhibit_A__, Page?L Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 (6) Patient satisfaction and loyalty. (ll) Manager will also recommend strategies to enhance the Hospital?s patient safety and quality department Infrastructures. assist the Hospital and the Other Facilities In Implementation of evidence?based order sets. and disseminate best practices. The District shall be responsible for all expenses associated with surveys. licensure. pennits. and accreditation. (ttl) Manager shall use reasonable efforts. on a consultative basis. to guide or direct the District In maximizing Its total performance score under the Federal government's value-based purchasing programs. Including but not limited to the clinical process of core measures. the patient experience at care dimensions: and in connection with the Consumer Assessment of Health Care Providers and Systems surveys. mm. Manager shall recommend standard formats for all charts. Invoices. and other terms used in the Operations. Manager shall make reasonable eticrts to ensure that such standard tonne remain current as to applicable Law. as well as Industry standards. ?gvgme gygle Manager shall provide advice. direction. and reasonable assistance to the District and assist it In overseeing its revenue cycle management for the Hospital and the Other Facilities. Services provided by Manager include making recommendations regarding Hospital and the Other Facll?les': (I) Charge master or similar schedule of charges; (it) Adjustment coding: (ill) Patient 1 client billing and collections; and (iv) Coding and billing compliance audits. All direct. out-of-pccket tees. expenses and charges incurred in connection with actual revenue cycle management shall be the District expenses. (0 Anthem- Manager shall be responsible for preparation. presentation. monitoring. and reporting of the annual operating and capital budgets (collectively. the ?Annual Budget?). Each proposed Annual Budget shall set forth an estimate of operating revenues and expenses (including capital expenses) for the next ?scal year. together with an explanation of anticipated changes in utilization. charges to patients and clients. payroll rates and positions. non-wage cost increases. and all other factors differing significantly from the then-current year. Manager shall be responsible for the oversight and review of the Annual Budgets. with final recommendations presented to the Govemtng Body for approval. Each Annual Budget will be created 1 1 CONFIDENTIAL AND PROPRIETARY HeaiIhCam Conglomerate Associates ooacersus Page l?i Filed 01/30/18 Filed 10/17/17 Case 16-10015 Case 16-10015 and implemented to coincide with the District's Ilscai year Once approved. Manager shall thereelter establish a plan necessary to implement suclr Annual Budget. Subject to the limitations set forth in Section Manager shall take commercially reasonable eilorts to oversee the management or the Hospital and the Other Facilities so that the actual revenues. costs. and expenses of the operation and maintenance of the Hospital and the Other Facilities shall be consistent with the approved Annual Budget. Inclusion at any item wittrin the Annual Budget shall constitute all necessary approval of the Governing Body tor Manager to take such act to etiectuaie the budgeted item. anything to the contrary heroin. Manager strait trove the right. in its sole and absolute discretion. to make any expenditures necessary on an emergent basis to avoid or mitigate damage to the Hospital and the Other Facilities. obtain equipment repairs or to avoid or mitigate Inlury or potential injury to Persons or property or that are necessary on an emergent basis to comply with any Law or to cure or prevent any violation at any Lew. whether or not provided for or within the amounts provided tor In the approved Annual Budget tor the applicable year (collectively. the ?Emergent Eg?nccs") Manager shall use its reasonable efforts to give the District advance notice oi any such Emergent Expenses. and in any event. shall give notice as soon as reasonably practicable alter such expenditures. but in no event iaterthan ?fteen (15) days. is) MAE-stints. The District shall maintain one or nrere banlr accounts (the is?) at one or more iinonclei institutions (8 ?mg. together with resident trust lund accounts as required pursuant to 22 C.C.R. 72529. The District shall cause all amounts received by or on behalf oi the District in connection with the operation. maintenance. or ownership of the Hospital and the Other Facilities (the to be deposited In the Depository Accounts and resident funds to be deposited into the resident trust fund accounts. However. Collections received trorn Governmental Health Payers shall be deposited into a separate Govemmenlal Depositon Account. Funds In the Governmental Depository Account shall be transiened. on a daily basis to a Depository Account (other than the Governmental Depository Account.) (1) The District shall enter into an agreement with each Depository to cause the Depository to receive such payments and deposit them into Governmental Depository Account In the name at the District. and sweep the proceeds oi such account on a daily basis. into the Depository or Master Account as designated by Manager. (2) The ioregoing instructions oi the District with respect to the Government Depository Account shall be revocable. at the 12 CONFIDENTIAL AND PROPRIETARY 0 HealthCare Conglomerate Associates 6080815341 Doc 407 Dec 327 Page If Filed 01/30/18 Filed 10/17/17 (it) (til) (W) Case 16-10015 Case 16-10015 solo Instruction of the District. to the extent required by applicable Law: provided. however. that. unless otherwise required by applicable Law. if the District revokes such Instructions. it shall be in material default of this Agreement and Manager shall. In addition to all other rights hereunder. be entitled to seek an order or judgment from a court of proper Jurisdiction for specilic periormance to sweep the Governmental Depository Account pursuant to this Agreement. Manager. acting in the District's name and as agent of the District. as provided in Section gtih] shall make or direct to be made timely deposits. in the Depository Amounts or the Master Account of all Collections which Manager receives. The District shall provide disposition instructions to the Depository to transfer. at the end of each business day during the Operating Period all amounts in the Depository Account into a bank account controtled by Manager (the Except for the transfers to the Master Account. the District shall not remove. disburse. transier. use. pledge. hypothecete. grant a lien on or security interest in. or otherwise encumber any funds In the Depository Accounts or Master Account. The District shaii execute such documents as any Depository or Manager may reasonably require. including without limitation. a limited power of attorney. to permit the Depository to receive the Collections. endorse any checks. drafts. notes. money orders. cash. insurance payments. and other instruments relating to such Collections. deposit the Collections into the Depository Account. and to transfer the Collections each day from the Depository Account into the Master Account. The District shall be responsible for all fees. costs and expenses incun'ed In connection with maintaining the Depository Account. including all tees. costs and expenses of a lockbox which may be deemed desirable and appropriate by Manager: provided. however It and to the extent permitted by applicable Law. at the request at Manager. the Collections or any part thereoi. shall be deposited directly Into the Master Account. Manager is hereby authorized to make payment ircm the Master Account or other accounts of the District. including the Depository Account. to itself and Its Af?liates at any amounts due to It or any of them by the District under this Agreement or otherwise. including. without limitation. the Management Fee. and the reimbursement oi expenses and advances. and the District acknowledges that any amounts due to Manager or any of Its Atiillates under this Agreement. including without limitation. any Management Fee. shall be senior in priority. and shall not be subordinate to the payment of. any amount due to any other creditor of Company. unless otherwise agreed to In writing by Manager and shall be paid as provided In W. 13 CONFIDENTIAL AND PROPRIETARY 0 HealthCare Condoms-rite Associates 5080815011 Doc 407 Doc 32? Page Filed 01/30/18 Filed 10/17/17 (hi Case 16-10015 Case 16-10015 (vi) Manager shall have no liability or responsibility for any loss resulting from the insolvency. malfeasance or non-feasance of any Depository with respect to the District banlt accounts. (vii) Manager shall have the right to metre disbursements from the Master Account. the Depositon Account and other the District bank accounts. on behalf of the District In such amounts and at such times as the same are required to operate the Hospital and the Other Facilities. as provided In Section Lilli and to pay the expenses and debts incorred in connection therewith. It the District talis to timely advance funds tor to pay expenses. Manager shall have the right. in its sole and absolute discretion. but not the obligation. to advance such funds. as provided In Will. Char so at A la. (I) Manager shall assist the District in billing and collecting tor all less payable with respect to all services. equipment. devices and supplies provided to patients and clients at the Hospital and the Other Facilities. Including the enforcement of the rights at the Hospital and the Other Facilities andtor the District as creditor under any contract or In connection with the rendering at any service In accordance with the District's shanty care policies. All out-ot-pocket costs and expenses relating to the billing and collection services. including without limitation. any fees or expenses payable to collection agencies. shall be for the account of the District. (it) The District shall direct all third party payers to provide Manager with copies of all remittance advices In electronic format or in such other format as shall be agreeable to Manager. (ill) The District hereby irrevocably appoints Manager during the Operating Period as Its true and lawful attomey-ln-tact to take the following actions for and on behalf of and in the name of the District and agrees to execute the Limited Power of Attorney. attached hereto as amen and any other instrument reasonably requested by Manager to evidence such appointment to: (1) Bill patients and third party payers (Including reimbursement or indemni?cation from insurance companies and plans. and other third party payers or fiscal intermediaries) In the name and provider numberis) of the District: (2) Collect in the name of the District from patients. insurance companies and all other third party payers (other than from Governmental Health Payers). all charges resulting from the provision at items and services rendered to patients of the Hospital and the Other Facilities. and to collect capitaled payments and all other charges. tees or salaries resulting trorn or related to the Operations. including but not limited to any and all Incentive funds and funds from shared risk and 14 CONFIDENTIAL AND PROPRIETARY 0 HealthCare Conglomerate Associates Doc 407 Doc 327 Exhibit--. 1 Page t?l Filed 01/30/18 Filed 10117117 0V) Case 16-10015 Case 16-10015 bonus pools under any risk sharing arrangements wherein the District is the provider of medical services. in whole or in part: (3) Take possession of and endorse in the name of the District all cash. notes. checks. money orders. insurance payments. and any other instruments received as payment at accounts receivable for deposit into the Depository Account or Master Account or other account. as applicable; (4) Deposit all such Collections directly into the Depository Account or the Master Account. other than with respect to Governmental Health Payer receivables; (5) Deposit Governmental Health Payer receivables Into the Governmental Depository Account; Make withdrawals from the Depository Account and other the Depository Accounts for such purposes as are consistent with the provisions of this Agreement; (7) Place accounts tor collection. settle and compromise claims. and Institute legal action for the recovery at accounts: and (8) Execute all instruments or documents necessary or appropriate in connection with the above. With respect to Government Health Payer patients and clients. Manager shall bill the Governmental Health Payers for same in the name of and on behalf of the District. At the District's expense. Manager shall be entitled to obtain the assistance of one or more billing andior collection agencies to bill andior collect sums due to the District. In accordance with the District's charity care policies and applicable Law. including. without limitation. Section 900? oi the Patient Protection and Affordable Care Act. (vi) Manager. on behalf of the District. may. in its name or in the name of the District. but In any event at the expense of the District. appeal or contest any action taken by any Governmental Authority against the District andlor the Operations. including. without limitation any overpayment claims. or contest by legal proceedings the validity of any Law adverse to the District andl'or the Operations: provided. however. that it Manager pursues any such appeal or contest. or asserts any such legal proceeding. the District shall adequately secure and protect Manager lrorn all loss. cost. damage or expense by bond or other means satisfactory to Manager it any action taken by any Govemmentel Authority against the District andior the Operations related to such action could result In a less. cost, damage. or expense to Manager. Notwithstanding the foregoing. Manager shall not pursue any such appeal or contest. or assert any such legal proceeding. which involves in excess of 5100.000. without that obtaining the prior approval at the Governing Body. which will not be unreasonably withheld. 15 CONFIDENTIAL AND PROPRIETARY 0 Haaithara Conglomerate Associates 8050015844 Doc 407 Doc 327 Page [8 Filed 01/30/18 Filed 10/17/17 (1) Case 16-10015 Case 16-10015 Wm. (it (til) (W) Manager shall provide oversight oi the District?s funds in connection with the timely payment of the District's liabilities and other obligations. including wages of District employees. subject to conformance with applicable Law relating to the use of public funds. Manager shall review the payables ot the District and shall cause payment thereot to be made from the Depository Account. the Master Account and tar from funds otherwise provided by the District. It the District fails to timely advance funds for such expenses. Manager shall have the right. in Its sole discretion. but not the obligation. to advance such Funds. as provided in Sectign 3111?)? i. The District hereby grants to Manager. to the extent permitted by applicable Law. throughout the Operating Period. an exclusive special power of attorney and appoints Manager. to the extent permitted by applicable Law. the District's exclusive true and lawtut agent and attorney?in-fact. and Manager hereby accepts such special power of attorney and appointment. to: it) sign checks. drafts. bank notes or other instruments on behalf of the District. (It) matte withdrawals from the Depository Account. the Master Account or other the District accounts (other than resident trust fund accounts. which shall be held solely for the benetit of applicable residents) for payments specified in this Agreement and (ill) designate. remove. and change such signatories on such accounts as Manager deems necessary or appropriate from time to time. Upon request at Manager. the District strait execute and deliver to any applicable ?nancial institution such additional documents or instruments as Manager may reasonably request to evidence or effect the special power of attorney granted to Manager by the District pursuant to this Section. The special power of attomoy granted herein is coupled with an interest and shalt be irrevocable except with Manager's written consent. It is speci?cally agreed and understood. however. that Manager's obligations under this Section 4 are subject to availability at the District tends to make such payments. Nothing contained herein shall obligate Manager to make any such payments from its own tunds or resources or to advance any monies whatsoever to the District. It the District [site to timely advance Manager strait have the right. in Its sole and absolute discretion, but not the obligation. to advance such funds. as provided in Secliog 41mm). Notwithstanding the toregoing. no advance of lands hereunder shall cure the District's default resulting from a failure to timely provide funds as required hereunder. but it is understood that pursuant to Segtigg arbmin. the District may not be In default tor the fa?ure to timely provide funds as set forth therein. Manager shalt not be liable either primarily or as guarantor for debts oi the Hospital or the Other Facilities. or the District under the terms of this Agreement. The District shall be responsible tor payment at all legal fees and re AND PROPRIETARY HealthCare Conglomerate Associates 6m31554.? Doc 407 Doc 32? Exhibit?L Page lot Filed 01/30/18 Filed 10/17/17 Case 16-10015 Case 16-10015 collection fees incurred by Manager if the District falls to pay Its invoices timely. Elegge 0! ngli. Manager shall not engage in any ?nancial lending. financing or banking actions that result in liens. mortgages. lines of credit. security Interest or financial obligations In the name of the District. without the prior written consent of the Governing Body. Prior to requesting consent for approval. Manager shall provide a detailed proposal to the Governing Body describing the amount of required funding. the purpose of the ?nancing. the strategic plan to generate suf?cient revenue to repay such financing and all other alternatives evaluated to obtain sufficient funding. (1) Notwithstanding anything in this Agreement to the contrary. in the event the District falls to timely advance funds as required hereunder andfor meet any of its payment obligations under this Agreement. Manager shall have the right. but not the obligation. in its sole and absolute discretion. to advance funds or agree to undertake to advance funds to any Person. as a loan to the District to meet the shortfall caused by the District?s failure. As set forth In Section 40)(lv). such advance of funds by Manager. however. shall not cure any default. it any under Section 3(b)(ill). of the District as a result of its failure to timely provide funds. All some advanced by Manager pursuant to such agreements or undertakings shall be for the District's account. The District shall pay Manager interest on all advanced funds at the rate set forth in Wand the principal upon demand by Manager. Any advance made shall be evidenced by a promissory note Issued by the District in an amount equal to the amount advanced. (2) To the extent permitted by applicable Law. to the extent Manager advances funds. this Agreement constitutes a security agreement pursuant to which the District provides Manager with a lien on all accounts receivable of the District. and any and all of the District's other assets. as specified by Manager. to the extent allowed by Law. and Manager shall have the right to file a Uniform Commercial Code financing statement with respect to such obligation without the signature of the District. in addition. Manager may request that it be provided with additional collateral for any advanced funds. District agrees that Manager?s security interest in the accounts receivable and any other assets shall be In a first priority position. Except as provided in Section 4am). Manager shall not. under any circumstance. in the name of. or on behalf of. the District borrow any money or execute any promissory note. bill of exchange or other obligation. or dispose of any asset of the District not in the ordinary 17 CONFIDENTIAL AND HealthC-sre Conglomerate Associates 5060315804 Doc 407 Dec 327 Exhibit_z Page Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Dec 327 course of business. without the consent of the Governing Body; and only to the extent allowed by all applicable Law. ik) WW. Manager shall provide oversight of the Infonnatlon technology activities associated with the Hospital and the Other Facilities. Manager shall be responsible for oversight oi the selection. negotiation. Installation. and implementation of the information technology systems and structures at the Hospital and the Other Facilities consistent with the Annual Budget. Manager seek approval from the Governing Body of any new systems andror lamination of any existing agreements. which approval shall not be unreasonably withheld. The District shell be responsible for the direct expense of all hardware and software for the Information technology echvities oi the Hospital and the Other Facilities. The District shall be responsible for the cost oi maintenance and support or all such hardware and software. as watt as the training oi Manager and the District employees. physicians and other applicable personnel on systems and software provided. however. that Manager shall not incur any expense in excess of 5100.000 unless set forth in the approved Annual Budget or otherwise approved by the Governing Body. For avoidance of doubt. Manager shall not perform the Information technology maintenance for the District under the terms of this Agreement internal Audit. Manager shall provide oversight of the District?s routine audits of internal procedures and systems. including auditing of billing. Intomtation systems. payroll. and other areas as identi?ed and stroll perform such inramal audits as Manager. in its reasonable discretion. deems necessary tor the purposes of providing its services hereunder. External audits, If requested by and performed for the District. shall be the responsibility of the District. All direct. out-ef-pecltet fees. expenses and charges Incurred in connection with such external and Internal audits shall be a District expense. All Internet endior external audit expenses in excess of 510.000 shall be approved by the Geveming Body. unless sueh expenses are set forth in the approved Annual BudgeL gore Manager shall provide recommendations regarding managed care contracts and rates. and assist the District in the negotiation and consummation of such contracts. and monitoring or contract effectiveness and compliance. (It) QW- (1) Manager shall assist the District In negotiating and securing all third party Operating Contracts necessary or desirable for the proper and efficient management and operation of the Hospth and the Other Facilities. (it) Notwithstanding W1. Manager may enter into. or modify. supplement. amend. discharge. or terminate. or grant waivers er releases of obligations under such contracts. leases. licenses. instruments. and other agreements ('Ogegtigg in the name of and at the expense of the District. as may be deemed necessary or advisable by Manager for the furnishing of all professional. consulting. and stalling services. concessions. drugs. supplies. utilities, equipment. property maintenance. insurance and other products. goods. and services as may be necessary or appropriate from time to time for the maintenance and operation of the Hospital and the Other Facilities. or as may otherwise be necessary or appropriate to carry out Manager?s obligations under 18 AND PROPRIETARY 0 HeaIthCars Conglomerate Associates converse? Page 6" i Filed 01/30/18 Filed Case 16-10015 Case 16-10015 this Agreement. Subject to the terms heraol. Manager is hereby expressly authorized, as the District's agent. to execute and deliver any of such Operating Contracts In the name of and on behalf of the District. and presentation of a copy of this Agreement shall constitute conclusive evidence of such agency: provided. however that. Manager Is also authorized to enter this and maintain In Its own name any national and regional contracts In which the District may participate. as well as such other contracts for the District which. In the iudgment of Manager. are advisable to be entered Into in Manager?s name. Upon Manager's request. the District shall execute such agreements. contracts. leases. Instruments. documents and other Agreements as Manager shall are desirable to facilitate the operation and management of the Hospital and the other Facilities. With respect to all cost and expenses associated with Operating Contracts In Manager's name. the District shall reimburse Manager for all such costs and expenses and I or pay such costs and expenses directly. at Manager's discretion. Manager ls expressly authorized to contract. in the name and on behalf of the District. for the provision by Manager or Its Affiliates of any services to be provided with respect to the Operations. the event of a termination of this Agreement which results In no further relationship between the District and Manager. Manager shall cause any contracts. Including Operating Contracts. it has entered Into in Its own name to manage and operate the Hospital and the Other Facilities pursuant to this Agreement for the bene?t of the District to be assigned to the District and the District shall assume the obligations under all such agreements and shall indemnify Manager from and against any liability webmaster. amounts which exceed the line items set forth In any approved Annual Budget shall be subject to approval by the Govemlng Body. such approval not to be unreasonably delayed or denied (unless the items or services that are the subject of the Contract in excess of $100,000) have been approved previously In the Annual Budget. The expense of such third party contracts shall be a direct expense of the District. Manager shall not be obliged to pay for any the District purchases from its own funds nor shall Manager be obliged to guarantee. directly or indirectly. any debts of the Hospital or the District under the terms of any purchasing arrangement. if the District falls to timely pay amounts due under such arrangements. Manager shall have the right. in Its sole discretion. but not the obligation. to advance the funds necessary to satisfy such obligations. as provided In ?gction ?il?ll?l. insurance. Manager shall consult with the District as to the type of insurance or self-insurance. amount of coverage thereunder. deductibles andror self-Insured retentions therefor. premiums therefor. and issuers thereof to be carried with respect to the Hospital and the Other Facilities and the Operations. Approval of any change to the types or limits of insurance 19 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates 605081584 It Doc 407 Doc 32? Exhibit A Page- Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 coverage tor the District shall be made by the Govemlng Body. he District shall. solely at Its own expense. obtain and maintain In full force and eil'ect throughout the Operating Period the following policies of insurance or sell-Insurance coverage: Comprehensive general liability insurance. including personal injury and property damage liability Insurance naming the District and Manager as Insureds. (0) Property and casually Insurance. including coverage ior all Buildings and their contents. including boiler Insurance naming the District and Manager as insureds. it deemed necessary by the District or Manager. comprehensive automobile liability insurance naming the District and Manager as insureds. Worker?s compensation and employer's liability insurance and other similar Insurance naming the District and Manager as Insureds for the District's and Manager's employees. Protessionai liability insurance covering all Operations and. to the extent available. directors and insurance. naming the District and Manager (and Manager's executive employees) as named insureds. The professional liability insurance shall attord minimum protection {which may be eiiecluated through primary andlor excess coverage) of not less than 51.000.000.00 combined single limit for damage in any one occurrence and not less than 53.000.000.00 aggregate for all occurrences. The insurer must be licensed by the Caliiomia Department oi Insurance and have a general policyholders rating at not less titan a-x or better by Best's Key Rating Guide and with a claims paying ability rating irorn oi at least AA or an equivalent rating from another rating agency acceptable to Manager. Manager may require that the District obtain from the insurer a statement as to good standing with the Caitiomin Department of Insurance. Commercial umbrella or excess liability coverage and. to the extent available. regulatory Insurance coverage. covering all Operations. naming the District and Manager as named insureds. The commercial Umbrella and Excessive Liability insurance shall afford minimum protection (which may be effectuated through primary andror excess coverage} of not less than 51.000.000.00 combined single llrnil for damage in any one occurrence and not less than 53.000.000.00 aggregate tor all occurrences. insuring Manager and the District and their respective employees and representatives In connection with Operations. The Insurer must be licensed by the Calliomla Department of Insurance and have a general policyholders rating of not less than A-X or better by Best's Key Rating Guide and with a clalrns paying ability rating from of at least AA or an equivalent rating from another rating agency acceptable to Manager. Manager may require that the District obtain from the insurer a statement as to good standing with the California Department of Insurance. insurance Specifications. The foregoing insurance shall meet the following speci?cations subject to the provisions oi the District's joint powers agreements In BETA Healthcare Group and ALPHA Fund: (I) All such policies of insurance shail be in such amounts as are deemed necessary by the District and Manager (but in no event less than the amounts set forth above) and shall contain a waiver of rights of subrogetion clause against Manager and the District. to the maximum extent permitted under applicable Laws. The parties and 20 CONFIDENTIAL AND PROPRIETARY 0 HealthCare Conglomerate Associates measles? Exhibit?L. Page 9:3 Filed 01/30/18 Filed 10/17/17 (ill) (W) Case 16-10015 Case 16-10015 their respective Al?iietes strait not assert against the others. and each does hereby waive with respect to the others. any claims for any losses. damages. liabilities or expenses (including attomeys' tees) Incurred or sustained by any at them on account at damage or iniury to Persons or property arising out at the ownership. operation andtor maintenance at the Hospital and the Other Facilities. to the extent that the same would be covered and paid by the insurance required to be canted hereunder. The District shall present such policies at insurance to Manager tor review. upon request by Manager. Tire District shall cause Manager. and any Person at?iiated Manager. that Manager so directs. to be named as additional insureds on the liability insurance coverage described above and on any ?delity bend (it any). It is the intention oi the parties that the insurance and bonds (it any) maintained by the District wittr respect to tire Operations shalt protect both the District and Manager and will Ire primary insurance tor both parties for any sort all tosses covered thereby. Certificates oi insurance for the above coverages and a copy at the bend (it any) and accompanying endorsement naming Manager andror Manager's employees (specifying trisrher position). as applicable, shalt be provided to Manager within thirty {30] days of the Eltecttve Date and therealler within thirty (30) days it] at policy or bend (it any) renewal or replacement and (it) at a request by Manager. All such policies shall provide that the subject policy may not be canceled. modi?ed or reduced (including. without limitation. any amendment that would reduce the scope or limit coverage or remove any endorsement to such policy or cause the same to no longer be In lull force and etlect) except upon not less than thirty (30) days prior written notice to Manager. Originals at each renewal policy or certi?cates therefore ironr the insurers evidencing the existence thereof strait he provided to Manager at least thirty (30) days prior to. but not later than. the expiration or lamination dates of the applicable policy. in addition. the District shall notiiy Manager In writing at any reduction or cancellation. increase at deductible or material modi?cation at any term or condition of any of insurance coverage required herein withm twenty-four (24) hours of receipL Manager reserves the right to procure. at the District?s cost. any or all oi the ioregolng required insurance coverage. it the District tails or reiuses to do so. or it Manager In its sate discretion determines that Manager?s procuring at such insurance is most ellicient earlier in the ?nancial benefit of Manager andlor the District. Manager is not required to act under this Section ?up! and shall not be ilatrte tor its letters to effect or maintain recommended Insurance upon the District's taltUre to do so. Manager may obtain similar coverages for its bene?t by taking out policies with such insurance companies as may be selected by Manager. Notwithstanding anything herein to the contrary. any 21 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates 6080! Doc 407 Doc 32? Exhibit?A:? Page wt Filed 01/30/18 Filed 10/17/17 (Vii (vii) Case 16-10015 Case 16-10015 insurance obtained by Manager hereunder may. at Manager's election. cover only Manager's interest. All direct. out-ot-pocltet tees. expenses and charges incurred in connection with obtaining such insurance shall be the District expenses If. during the Operating Period. the District is covered by general liability. protesslonal liebitity. or other Insurance on a ?claime made" basis. then at least ten (1 0) days before the termination of this Agreement. the District shall procure and maintain. at the District's sole cost and expense. on extended reporting endorsement or ?tell" Insurance coverage tor a period of at least four (4) years alter the termination date at this Agreement. with coverage limits and deductible amounts equivalent to those required hereunder on the date immediately preceding the termination of this Agreement for such coverage tor general. professional and other liability claims reported after the termination ol this Agreement but concerning services provided during the Operating Period or the term at the claims made policy. The District shall provide Manager with a certi?cate evidencing such coverage no later than ten (10) days before the termination at this Agreement. The District shall be named as the primary insured party on each policy ol tail insurance and Manager shall be named as an additional insured. This Section will survive the termination or expiration of the Agreement. To the extant any insurance is placed through a self-insurance program or captive insurance program. the District shall assure that such insurance shall comply with all applicable Law. it such sait- Insurance or captive program is domiciled outside the United States. and the District shall assure that such coverage shall be. as appropriate. rainsured by retnsurers acceptable to Manager. in Manager's sole and absolute discretion. 0) Manager strait be responsible for the oversight and management of the District's purchasing systems and procedures tor the Operations at the supervisory it management level. including but not limited to oversight of: (1) Capital purchasing: (2) Researching and negotiating equipment based on Hospital and the Other Facilities' needs. specifications. and the Annual Budget: (3) Reviewing oversight ct inventory par levels audits); andlor (4) Department purchasing structures and systems. 22 AND PROPRIETARY HealIhCars Conglomerate Associates Page Exhibit?L 1 Doc 407 Doc 32? Filed 01/30/18 Filed 10/17/17 (Ni (V) (it) (til) Case 16-10015 Case 16-10015 The District shall be responsible for the direct expense oi all purchases and for all purchasing expenses. including but not limited to utilities. concessions. drugs. equipment. supplies. furniture or furnishings. inventory items. linens. machinery. medicines. and services. In furtherance of the foregoing. all capital and other expenditures made shall be subject to the purchasing and procurement policies and procedures of the District. its Bylaws. and applicable Law. Marketing and gorninugicalions. (I) (It) (til) Manager shall provide consultation. advice and oversight related to marketing. advertising. and promotional issues. as well as marketing strategies and policies. as It deems necessary in its sole and absolute discretion. Manager shall: (1) Provide direction and advice regarding the marketing program for the Hospital and the Other Facilities which shall be reasonably designed to inform and educate health care professionals and the general public served by the District of the existence of one or more of the services offered by the District. (2) Cause. to the extent required by applicable Law. including internal Revenue Code 55010). a community needs health assessment to be prepared Identifying the health and welfare needs of the residents who reside In the communities served by the District. and propose an implementation strategy to meet the outstanding community health needs identi?ed in the assessment. (3) Cause to be prepared and distributed such descriptive booklets. brochures or pamphlets as Manager determines are necessary. in its sole and absolute discretion. to inform health care professionals and members of the public of the nature and requirements of State and Federal reimbursement programs for patients and how the same relate to the services offered at the District. All direct, out-oi-pocket fees. expenses and charges incurred in connection with marketing. advertising. and promotional activities shall be at the sole cost and expense of the District. Medical Manager shall be responsible for the oversight of the District's medical records activities at the executive levels. including development of department strategies and systems and planning. 23 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates 0000815? 4 Doc 407 Doc 327 Exhibit?AL.? Page 9.4 Filed 01/30/18 Filed 10/17/17 (it) (W) (V) Case 16-10015 Case 16-10015 During and following the expiration of the Operating Period. all records of the District shall remain the properly of the District. All patient medical records shall be treated as confidential so as to comply with all applicable Laws regarding the confidentiality of patient records. including. without limitation. the privacy standards promulgated under HIPAA. Manager shall be a ?Business Associate? of the District. as that term is de?ned in the regulations implementing I-IIPAA. and Manager?s use of ?Protected Health Information.? as that term is defined in the regulations implementing HIPAA Manager shall execute and comply with the Business Associate Agreement attached hereto as I 0. Manager shall notify the District at any data breach that may occur at the Hospital and the Other Facilities. alter Manager becomes aware of same. (2) mm. Manager agrees to prepare. cause to be prepared or othenvise make available reports regarding the Operations as follows: Within forty-live (45) days alter the and of each liscel quarter. Manager shall make available to the District the following Information: Relevant utilization statistics for the District for the prior quarter. Including but not limited to patient volume and payor mix; and (2) Financial statements and budget analysis for the District for the prior quarter. as provided in 71c). Manager shall provide to the Governing Body. on at least thirty (30) calendar days' notice. or sooner if necessary. to Implement such required action. a description of any needed or discontinued services. re?nancing proposals. expansion plans or material changes In operating procedures. The proposal shall explain the reasons for the proposed activity. (as) m. Subject to approval of the Governing Body for acts outside of the ordinary course of the Hospital and the Other Facilities' businesses. and (it) the terms hereof. Manager shall have the right to act as the agent of the District andior the Hospital and the Other Facilities in the procuring of licenses. permits and other approvals. the payment and collection of accounts and in all other activities necessary or appropriate or useful to Manager in the carrying out at its duties as specified herein. ibb) Advice. Manager shatl provide District with consultation and advice in connection with a potential tiling by District of a proceeding under Chapter 9 or the Bankruptcy Code. It such petition is filed. Manager shalt generally arrange and supervise the bankruptcy proceedings. The Chief Restructuring Of?cer shall serve as the representative of the District in connection with any such Chapter 9 bankruptcy proceeding. 24 CONFIDENTIAL AND PROPRIETARY 0 HesithCare Conglomerate Associates 3030815844 Doc 407 Doc 327 Page Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Dec 327 5- Loam-manages. (at gomgllangg Plan. Manager has received a copy of the District?s Compliance Policies and Procedures. including the Code of Conduct and the Physician Referral. Stark Law. and Anti-Kickback policies and procedures. Manager shall abide by these policies and procedures and applicable Law. Any recommendations andior revisions of such policies made by Manager must be approved by the Governing Body. Manager will be given prompt written notice of any changes made to the foregoing. Manager may develop and recommend changes to the District's existing Compliance Plan (the ?Qomg?gncc Ping") for implementation during the Operating Period. Any such recommendations and/or revisions to the Compliance Plan must be approved by the Governing Body. Manager shall use Its commercially reasonable to support the Compliance Plan. All costs at developing. implementing and maintaining the Compliance Plan shall be borne by the District. Goyorgrnogi On behalf of the District. Manager shall. subject to the limitations set forth heroin. use its reasonable commercial efforts to help assure that: (1) the District continuously complies with all material applicable Laws. including without limitation. Hospth Law. State and Federal False Claims Act. Civil Monetary Penalty Law. State and Federal Anti-Kickback statutes. State and Federal seii-retarrai prohibitions and applicable Medicare conditions of coverage andior participation and the District retains and maintains in good standing all necessary accreditations. licenses. permits. approvals and authorizations required for the ongoing operation of the Hospital and the Other Facilities. WM. Manager shall. subject to the limitations set forth herein. take all steps necessary to assist the District to continue meeting the applicable accreditation agency's accreditation standards. as they exist or may be changed from tlme-to-time. and as may be applicable to the Hospital and the Other Facilities' then current accreditationis). Manager shall have the right to select andlor change the applicable accreditation agency for the Hospital. and if applicable. the Other Facilities. in its sole and absolute discretion. Licensure. Manager shall not act in a manner which adversely altects the llcensure of the District by the State as a Medicare participating hospital and skilled nursing facility (or any other Medicare reimbursement designation as may be agreed to by the parties). Within thirty (30) days of receipt by the District or Manager oi any final report or written assessment concerning the licensure of the District by the State as a hospital or skilled nursing facility or the accreditation of the District. Manager shall furnish a copy of such report to the District. W. Manager shall comply with the applicable provisions of the Administrative Simpli?cation and Privacy Rules or the Health insurance Portability and Accountability Act at 1995. as amended. and regulations promulgated pursuant thereto. and any related or applicable privacy Law regarding medical Information and protected health informationDisclosure Obli a . Manager shall use reasonable commercial efforts to monitor that none of Manager?s or the District's employees employed at the Hospital and the Other Facilities have been sanctioned. debanad or suspended or otherwise deemed Ineligible to participate in Medicare. Medicaid or other Federal health care programs. and procurement. or non-procurement programs (collectively. an ?Ineligible Eerson"). Manager represents to the District that Manager is not an ineligible Person nor has any pending proceedings or received notice of any action or proceeding to exclude. debar. suspend. or otherwise declare Manager ineligible under any federally funded health program. Manager shall notify the District 25 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates seeders? a Exhibit A, Pageia Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 within three (3) business days alter becoming aware of any fact or circumstance that would matte Manager an Ineligible Person. (9) Ages )9 ?ecords. Manager shall. In accordance with Section 1395x(v)(1) of Title 42 Mandi the expiration or tour (4) years. or longer as may be required by applicable Law. after the termination of this Agreement. matte available upon written request to the Secretary of the United States Department or Health and Human Services, or. upon request. to the Comptroller General of the United States Accounting Of?ce. or any of their duly authorized representatives. a copy of this Agreement and such books. documents and records as are necessary to verify the nature and extent of the costs of the services provided by Manager under this Agreement. Manager iurther agrees that in the event Manager carries out any duties under this Agreement through a subcontract with a value or cost oi Ten Thousand Dollars (510.000) or more over a twelve-month period with a related organization. such agreement shall contain a clause to the eiiect that until expiration or tour (4) years. or longer as may be required by Law. after the iumlehlng of such services pursuant to such subcontract. the related organization shall make available upon written request to the Secretary of the United States Department of Health and Human Services. or. upon request. to the Comptroller General of the United States Accounting or any of their duly authorized representatives. a copy of such contract and such books. documents and records of such organizations as are necessary to verily the nature and extent of such costs. This Section is included pursuant to and is governed by the requirements of iederal Law. No attomey-cllent. accountant-client. or other iogal privilege will be deemed to have been waived by the parties or any oi the parties' representatives by virtue of this Agreement. Nothing contained in this Agreement shall require (directly or Indirectly. explicitly or implicitly) either Manager or Its Affiliates or the District or its Af?liates. to refer any patients to one another or to use the Hospital or the Clinics or Other Facilities as a precondition to receiving the bene?ts set forth herein 6. ?anagomont Fee. W. As Manager's tea for the performance oi the management services under this Agreement. Manager shall receive (in advance on the first day of each month) a fee (the ?Management Eea') in the amount of Sixty Five Thousand Dollars (586.000). Eileotive as of each January 1st. commencing January 1. 2017. the Management Fee shalt be increased as provided in are]. it! CONFIDENTIAL AND PROPRIETARY HealthCara Conglomerate Associates Filed 01/30/18 Filed 10I17ll7 lb) (0) (ll (Ill Case 16-10015 Case 16-10015 at at. means the index of the U.S. City Average Consumer Price index for Urban Wage Earners and Clerical Workers - Medical Care Services (1982-84 equals 100) published by the United States Department oi Labor. Bureau of Labor Statistics or any successor agency that shall issue such Index. In the extent that the CPI Is discontinued for any reason. the parties shall use such other index. or comparable statistics. on the cost of medical care services in the United States. as shall be computed and published by any agency of the United States or. if no such index Is published by any agency of the United States. by a responsible financial periodical oi recognized authority. Beginning on January 1. 2017. and every year thereafter. the Management Fee shall each be adjusted for In?ation as follows: (1) The than existing Management Fee shall be multiplied by the greater oi the CPI percentage Increase using the latest published data since the last adjustment or (ii) f'rve percent (2) The than existing Management Fee shall then be added to the CPI Increase and (3) The Net Adiusted Management Fee will then be multiplied by 1.01 to determine the Management Fee for the next ensuing calendar year. (4) For example. the latest published CPI in January 2017 leg. November 2016) will be compared to the CPI for November 2015 (assuming that was the latest available published data) and the 2016 Management Fee will be multiplied by the percentage difference. Assuming a three percent Increase. the Management Fee oi 365.000 would be increased by $1.950 tor a new Net AdJusted Management Fee at $66.050. That amount would then be multiplied by 1 01 resulting in a new Management Fee of $67,619.50. In addition to the Management Fee. Manager shall be reimbursed by the District for expenses expressly made reimbursable hereunder together with (Ii) other Usual. customary. and commercially reasonable out-of-pocltet expenses incurred on behalf of the District. In accordance with the approved Annual Budget. or with approval from the Governing Body. it such fees are in excess of the amount in the approved Annual Budget. Manager shall not be reimbursed for any indirect or overhead expenses of Manager or Its Affiliates. Operating gxr?gsgs. Except as otherwise provided In this Agreement. all of the costs and expenses of maintaining and operating the Hospital and the Other Facilities shall be the sole cost and expense of the District. and shall not be expenses of Manager. Expenses shall include. without limitation: 27 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates doubt!? .30 Doc 407 Doc 32? Doc 407 Filed 01/30/18 Case 16-10015 Doc 327 Filed 10} 17/17 Case 16-10015 (I) any opersUng or non-operating expense incurred In the provision of services to the District (unless speci?cally excluded hereunder): and (it) The cost of any employee or Consultant that provides services at or In connection with the Hospital or the Clinics or Other Facilities tor improved clinic pertormance. such as management. billing and collections. business of?ce consultation. amounting and legal services. including salaries. bene?ts. other compensation. travel costs. and other expenses. Late anme is. It payment at amounts due hereunder. including Management Fees. and reimbursement of other amounts. are not made on the due date. then interest shall accrue on any unpaid amounts tor each day beyond the due date at the rate at ten percent (10 it} per annum (simple interest). if) i debt ness . The obligations oi the District under this Agreement rank and shall rank at least senior in priority at payment to all other unsecured debt oi the District. Fund transfers and other payments received by the District strait be directed. regardless oi the payment purpose indicated in the payment document. awarding to the toiiowing priority ranking: (1) payment of the Management Fee. and other amounts due hereunder: (2) payment of any secured Indebtedness: and (3) all other debts of the District. Buoys agd accords. . Manager shall supervise the maintenance or the books ot account covering the operation at the District. Such books of account shall be maintained on an accrual trusts In accordance with (3MP. . Manager shalt be responsible for the oversight of Hospital and the Other Facilities' accounting lunctions. an ts. Manager stroll from time to time deliirer to the Governing Body. from the District's data. the reports and ttnancial statements reasonably requested by the Governing Body. as well as any other reports or ?nancial statements required try the terms at this Agreement. Oversight shall include consultation with respect to Hospital and the Other Facilities: General ledger! ?nancial accounting: (it) Accounts payable: (Iii) Payroll: as CONFIDENTIAL AND PROPRIETARY 0 t-leatIhCare Conglomerate Associates momma Filed 01/30/18 Filed 10/17/17 (9) (0 Case 16-10015 Case 16-10015 (iv) Facilitation of Hospital and the Other Facilities annual audit; fees paid to independent accountants. however. shall be the responsibility oi the District; Cost reporting. Year-end lntormalion required for preparation oi Medicare and MediCni cost reports shall be available to the District. and at the District's direction. to its accountants, prior to one hundred twenty (120) days into the year following the year for which they are prepared; and (vi) bank reconciliation. i ?nancial statements. Including Income statements. balance sheets. statement of cash ?ows. Such statements shall generally be available to the District by the 20st day of the month following the applicable period. (it) Quarterly ?nancial statements including unaudited tinanclal statements re?ecting the operations of the District for such quarter. Such statements shalt generally be available to the District by the 45th day following the end or each applicable quarter Quarterly statements shall also include Manager's usual and customary statistical and performance measures. Annual ?nancial statements. including an unaudited balance sheet or the District dated as oi the and of the fiscal year and a related statement of income or loss tor the District tor such fiscal year. Year- end income statements. shall be available to the District. and at the District's direction. to Its accountants. prior to ninety (90) days into the year following the year for which they are prepared. it the District so elects. such financial statements will be certi?ed in the customary manner by an independent certi?ed public accountant approved by the District. The expense at any such independent accountants shall be borne by the District. (ll) Manager shall respond. in writing. to any and all recommendations made by the District's independent auditors. which response shall either acknowledge that an audit proposal or recommendation has been Implemented or. it not. the reasons why not. Financial Reporting Expenses. Fees paid to independent firms and protessionals in connection with the foregoing together with the direct. out-oI-pociret fees. expenses and charges incurred In connection with the preparation at such shall be the District expenses. gt Records. Authorized agents of the District shall have the right at all reasonable times during usual business hours. at the District's expense. to audit. examine and 29 CONFIDENTIAL AND PROPRIETARY HeelihCare Conglomerate Associates 008061504 4 32. Doc 407 Doc 327 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 32? make copies of or extracts from the books at account of the District maintained by Manager. Such right may be exercised through any agent. independent public accountant or employee of the District designated by the District. Wily. The parties agree that: neither party will disclose any secrets or con?dential technology. proprietary inlormatlon. or trade secrets of the other party without the prior written consent of the transmitting party. except (I) to the receiving party's agents. advisers. auditors and representatives; or (it) as may be necessary by reason of legal. accounting or regulatory requirements beyond the reasonable control of the recipient party: and should this Agreement expire or terminate. neither party will talre or retain any papers. records. files. computer programs and software. other documents or copies thereof. or other confidential inforrnatlon of any kind belonging to the other party. except for copies of same as may be reasonably necessary to defend any anticipated litigation or respond to claims or pursuant to ordinary data backup or storage processes. 8. lgdomgl?gatlgg sing LiabilitiesManager does not hereby assume any of the obligations. liabilities or debts of the District or the Hospital or the Other Facilities. except as otherwise expressly provided herein. and shall not. by virtue of its performance hereunder. assume or become liable for any of such obligations. debts or liabilities. The District hereby agrees to Indemnity. defend and hold Manager harmless lrom and against any and all claims. actions. liabilities. losses. costs and expenses of any nature whatsoever. including reasonable attorneys' fees and other costs of investigating and defending any such claim or action. asserted against Manager on account of any of the obligations. liabilities or debts of the District or the Hospital or the Other Facilities. except for demands arising lrom Manager's willful misconduct. The District further hereby agrees to defend. hold harmless and indemnify Manager and Manager Parties from and against any and all claims. actions. liabilities. losses. costs and expenses of any kind imposed on account of or arising out of actions taken by Manager or Manager Parties In what Manager or any such Person reasonably believed to be within the scope or their responsibilities under this Agreement. except for acts of willful misconduct. However. to no event shall Manager or any Manager Parties be liable to the District for any loss oi use. goodwill. revenues or prolils. or any consequential. special. Indirect or incidental loss. damage or expense. or for punitive or exemplary damages. except for punitive or exemplary damages to the extant resulting from the williui misconduct of Manager or Manager Parties. This Section shall survive the expiration or termination of this Agreement. The iorsgolng indemnification is an addition to and not in limitation of the Indemni?cation provisions as they relate to agents of the District (it being agreed that Manager is an agent of the District for that purpose). as set forth In the District's Bylaws. and any other indemni?cation provisions set forth in this AgreementThe District is and shall be fully liable and legally accountable at all times to all patients and Governmental Authorities for all patient care and lunds and all other aspects oi the operation and maintenance of the Hospital and the Other Facilities. Manager shall have absolutely no obligation or duty to act for or on behalf of the District with respect to any matter which Is not directly related to Manager's obligation to provide the administrative and management services described herein to the Hospital and the Other Facilities. as and to the extent provided herein. Manager shall not be or become liable for any of the existing or future obligations. liabilities. or debts of the District. or for any oi the obligations ol the Hospital and the Other Facilities. This Section shall survive the expiration or of this Agreement. 30 CONFIDENTIAL AND PROPRIETARY 0 Healthcare Conglomerate Associates somerset; 3L Filed 01/30/18 Case 16-10015 Fil?d 10/17/17 Case 16-10015 or: a or a I fo Condtio of I I i eat. Notwithstanding anything contained herein to the contrary. in no event shall Manager be liable for any damages arising from. Incident to. or in connection with. the physical condition {Including the environmental common) of the Buildings or other structures owned or leased by the District. or the land upon which such Buildings or other structures are situated. or any oi the equipment located thereon. and any such damages as may arise shall be the sole responsibil:iy of the District. as a the District expense. except to the extent that Manager engages in willful misconduct in carrying out its responsibilities hereunder. in which event Manager's liability shall be limited to amounts not covered by applicable insurance policies. In connection with the foregoing. the District shell. with the assistance of Manager. comply with any and all applicable fire and safety codes. This Section shall survive the expiration or termination of this Agreement. a a rNo or Acso rissi of trailer .Menager shall not be responsible for the acts or omissions of any of the District's managers. of?cers. directors. Governing Body. agents. employees. contractors. subcontractors or any other Persons performing any work or rendering any services in connection with the operalion. management. ownership or other use of the Hospital and the Other Facilities. or any Consultants or other Persons engaged with respect thereto. This Section shall survive the expiration or termination of this Agreement. laafrCnuttant?F taObl I The District. and not Manager. shall be responsible for all fees and other compensation charged by Consultants and other Persons engaged by the District (or by Manager on behalf oi the District in accordance with the tonne hereof) to provide services related to the Hospital and the Other Facilities. Manager shall be responsible for reviewing such fees. and the District shall timely provide Manager with copies of all bills. Invoices. and other information relating to such tees. Beieagg. Because of the unique services to be provided by Manager hereunder. neither Manager nor any Manager Parties shalt be liable to the District lor any damages or loss at any irind including. without limitation: (it direct damages: til) consequential damages: loss of profits: (iv) business interruption; damage to property or death or Inlury to Persons from any cause whatsoever including. without limitation. professional liability or malpractice. acts oi vandalism. toss oi trade secrets or other con?dential Information. or (vi) damage. loss. or Injury caused by a defect in the structure of the Hospital and the Other Facilities. power failure. tire. strikes. shortage of supplies. or any cause whatsoever in or about the Hospital and the Other Facilities or any part thereof. unless such claims. losses. costs. damages or expenses are the result of the willful misconduct of Manager or Manager Parties. This Section shall survive the expiration or termination of this Agreement. a a . Manager strait indemnity. defend and hold the District harmless from and against any and all claims. actions. liabilities. losses. costs and expenses of any nature whatsoever. Including reasonable attomoys' fees and other costs of Investigating and defending any such claim or action. imposed on the District including Its of?cers. directors. partners. employees and agents on account of or arising out of any breach of the terms hereof by Manager. and resulting from the willful nriscunrluct oi Manager or any Manager Parties NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT ANY INDEMNIFICATION OBLIGATIONS). iN NO EVENT SHALL MANAGER BE LIABLE IN AN ACTION IN NEGLIGENCE. CONTRACT OR TORT OR BASED ON A WARRANTY OR OTHERWISE) FOR FAILURE TO REALIZE SAVINGS OR LOSS OF PROFITS. REVENUE. OR ANY OTHER PUNITIVE. SPECIAL OR CONSEQUENTIAL DAMAGES. AND til) DIRECT AND OTHER DAMAGES IN EXCESS OF THE AMOUNT OF MANAGEMENT 31 CONFIDENTIAL AND PROPRIETARY tilt HealthCara Conglomerate Associates somrssu Filed 01/30/18 Fired 10117117 Case 16?10015 Case 16-10015 FEES EARNED BY MANAGER UNDER THIS AGREEMENT DURING THE THREE (3) MONTHS PRIOR TO THE DATE OF THE APPLICABLE CLAIM FOR DAMAGES. IN EACH CASE. EVEN IF MANAGER HAS BEEN ADVISED OF POSSIBILITY OF SUCH DAMAGES. 10. Intentionally Datum; District Qgiagtt. The following occurrences shall each be deemed an event of deteult by the District (?Dietrigt unless waived in writing by Manager: (I) Material breach of any representation. wanenty. or covenant or the District contained within this Agreement. after giving written notice to the District. and the District '3 subsequent failure to cure the breach (it such breech ls capable of being cured) within sixty (60) days (or ten (1 0) days in the event of a monetary breach or thirty (30) days in the event of a breach oi any provision requiring the District to: provide the Manager with a consent or approval or (ii) execute an agreement or document hereunder): provided. however. that it the cure cannot reasonably be e?ectuated within the applicable cure period. a longer period shall be allowed not to exceed ninety (90) days. if the District has commenced to cure such breach in good faith or has otherwise provided adequate protection or security to protect Manager's Interest hereunder (which security shall be in Manager's sets and absolute discretion) within the applicable cure period. and the District is proceeding with due diligence to etiect a cure. The occun'ence of any of the toilowlng: the filing by the District of a voluntary petition under Chapter 9 oi the Bankruptcy Code (other than any filing made within thirty (30) days after the E?eclive Date). or the tiling of a petition for the appointment of a receiver for all or any of the property of the District. or the taking of any voluntary or involuntary steps to dissolve or suspend the powers at the District (unless such steps to dissolve or suspend are removed) within thirty (30) days, or the consent by the District to an order for relief under the Bankruptcy Code or the failure to vacate such an order for reilel? within sixty (60) days from and alter the date at entry thereof. or the entry of any order. judgment or decree. by any court oi competent jurisdiction. on the application of any creditor ot' the District or any other Person. adjudicating the District as a bankrupt. or to be insolvent. or approving a petition seeking reorganization or the appointment of a receiver. trustee or quuidator of all or a substantial part of the District's assets. if such order. Judgment or decree shall continue unstayed and in etieci for any period of sixty (60) days. in the event that the District tiles a petition under Chapter 9 of the Bankruptcy Code. the District agrees. to the extent permitted under applicable Law: not to reject this Agreement: to designate Manager as a vendor supplier that is critical to the District?s business and obtain a critical vendor order that waives or releases any preference liability; and provides administrative priority or other 32 CONFIDENTIAL AND PROPRIETARY HeatthCare Conglomerate Associates 6080315?! Doc 407 Doc 32? Page 35/ Filed 01/30/18 Filed 10717117 Case 16-10015 Case 16?10015 prefen'ed status. acceptable to Manager. with respect to Manager?s pro-petition claims (it any). and any and all funds advanced by Manager post-filing. lb] Liquidated damages (I) (ill) Each of the parties acknowledges that it Would be extremely dif?cult and Impractlcable, if not Impossible. tor Manager to ascertain with any degree of certainly the amount of damages that would be sutlered by Manager In the event of the occurrence of a District Default In the event this Agreement Is terminated as a result of any District Detault. the District shall pay a fee (the which too Is not a penalty. but rather ls liquidated damages In accordance with majestion 1611. which the parties have negotiated in good talth and have agreed is a reasonable fee under the circumstances. The Termination Fee shall be paid within live (5) days after the elfective date of the lamination of this Agreement. The Termination Fee shall be an amount equal to Thirty Tyre Thousand Five Hundred Dollars (3532.500) per month first increased by CPI. as provided below. and than multiplied by the remaining number of months in the Operating Period at the time of the lamination. discounted to its present value using the discount rate of the Federal Reserve Bank of San Francisco at the time of termination plus one percent (1 ?itrt. (1) means the Index of the U.S. City Average Consumer Price index for Urban Wage Earnars and Clerical Workers - Medical Care Services (1982-84 equals 100) published by the United States Department of Labor. Bureau of Labor Statistics or any successor agency that shall issue such index. in the event that the CPI is discontinued for any reason. the parties shall use such other Index. or comparable statistics. on the cost of medical care services in the United States. as shall be computed and published by any agency of the United States or. If no such index ts published by any agency or the United States. by a responsible llnanclal periodical of recognized authority. (2) in?ation Adjustment. The Termination Fee shall be adjusted for In?ation by multiplying the above stated Termination Fee by the CPI percentage increase between January 1. 2016 and the date the Termination Fee Ia payable. using the latest published data since the last adjustment If the District fails to pay the Termination Fee when due. then the Termination Fee. or any unpaid portion thereof. shall bear interest 33 AND PROPRIETARY HealthCere Conglomerate Associates Doc 407 Doc 327 Page 84 Filed 01/30/18 Filed 10/17/17 (M Case 16?10015 Case 16-10015 from the data such payment was required to be made until the data of payment at the interest rate set forth In Section If upon tannlnation of this Agreement. the District contends that the Termination Fee is not due and owing and Manager contends that same is due and owing. the District shall be obliged to deposit. within three (3) days. the amount of the Termination Fee into an Escrow account with a national bank with not lees than 550.000.000.000 in assets. The funds shall be released to the applicable party upon the sooner to occur at: mutual instructions of Manager and the District: final non-eppeaiable order of a court directing the release of the funds to a party: or to the District if Manager has not contested. In a judicial proceeding. that the funds are owed to It within twenty four (24) months of the lamination. This Section shall survive the expiration or termination of this Agreement. W. The following occurrences shall each be deemed an event of default by Manager (?Manager Default?). unless waived In writing by the District: 0) Material breach of any material covenant oi Manager contained within this Agreement. otter giving written notice to Manager. and Manager's subsequent failure to cure the breach within sixty (60) days; provided. however. that if the cure cannot reasonably be allectueted within such sixty (60) day period. a longer period shall be allowed. it Manager has commenced to cure such breach or has otherwise provided adequate protection or security to protect the District '5 interest hereunder. and Manager is proceeding to effect a cure. In determining whether a breach has occurred. the District shall exercise its reasonable discretion in good faith and shall use Its best efforts to assist Manager in effectuating a cure. The occurrence at any oi the loltowing: the tiling by Manager of a voluntary petition in or tor reorganization under the Bankruptcy Code. or the tiling of a petition for the appointment of a receiver for all or any substantial portion of the property of Manager. or the taking of any voluntary or involuntary steps to dissolve or suspend the powers of Manager (unless such steps to dissolve or suspend are removed) within sixty (60} days. or id) the consent by Manager to an order tor relief under the Bankruptcy Code or the failure to vacate such on order for relief within sixty {60) days from and alter the date at entry thereof. or the entry of any order. judgment or decree. by any court at competent Jurisdiction. on the application of any creditor of Manager or any other Person. adjudicating Manager as a or to be insolvent. or approving a petition seeking reorganization or the appointment of a receiver. trustee or ilquldator of all or a substantial part or Manager?s assets. it such order. judgment or decree shall continue unstayed and in eliect for any period of sixty (60) days. 34 AND PROPRIETARY Heaithere Conglomerate Associates WISE-4.4 Exhibit?? Page 37 Doc 407 Doc 327 Filed 01/39/18 Filed 10/17/17 Case 16-10015 Case 16-10015 rl art to ve is. (I) Notwithstanding anything herein to the contrary. Manager shall have the absolute right to terminate this Agreement. with or without ?cause.? upon at least thirty (30) days written notice to the District. (It) In the event either party should be determined by Governmental Authority to be in violation of any Law. by virtue of this arrangement or this arrangement is otherwise deemed illegal by a Court of competent jurisdiction in a final non-appearabfe determination ('Jaogardy gvegtg'). the panics strait use best shorts to negotiate an amendment to this Agreement to remove or negate the Jeopardy Event. If they are unable to do so within six (8) months. either party may terminate this Agreement by written notice to the other. In tire event that the District has insuf?cient funds to pay the expenses oi Operations. and Manager fails or refuses to fund same. it the licensure of the Hospital Is In imminent jeopardy of being suspended or revoked because of the failure to pay the expenses of Operations. than the District may laminate this Agreement upon not less than ten (to) days written notice to Manager (during which time period Manager may avoid termination by paying the expenses in question or otherwise making arrangements with the applicable licensing authority to avatd suspension or revocation of the Hospital's license). (Iv) The District may terminate this Agreement on not less than 30 days' notice to Manager in the event that Manager is excluded. debarrad. or otherwise irreilgible to participate In Federal healthcere programs as defined In #2 USC lSZOe-i?bff) or any state ireatthcare program. Encoders. (I) In the event either party to this Agreement deems the other party to be in default of its obligations hereunder. then said party shall be required to provide notice of the alleged default to the other party. which notice shall contain a detailed description at the alleged detauif. (II) If the claim of default is disputed by the party receiving such notice. within ten (10) business days thereatter the party receiving the notice shall give notice to the charging party that the party receiving such notice disputes ttrat the factual matters alleged constitute a default under this Agreement. If the parties cannot resolve such dispute within ten (10) business days thereafter (commencing on the date that the charging party receives notice of the dispute) the parties strait submit such matter to binding arbitration In Los Angeies County. California. in accordance with the American Health Lawyers Association Attemattve Dispute Resolution Service Rules and Procedure for Arbitration. and applying the Law of the State- Any determination by the arbitrator shall be final and binding upon the parties. and judgment thereon may be entered in any court having jurisdiction thereof. Tire costs of arbitration shalt be borne equally by the parties. During the pendency of any such arbitration and until trnal judgment thereon has been entered. this Agreement shall not be terminated as a result of the alleged doiautt which is In dispute. I grminatlgg. In the event of a party's failure to cure a default within the time allowed herein for curing such default. the non-defaulting party may Immediately terminate this Agreement by notice to tho defaulting party and none at the parties shall have any further obligations under this Agreement. except these obligations that by their terms or nature extend beyond the data of expiration or termination. provided. that the non-defaulting party shall have all rights and remedies available hereunder and at Law as a result of the default. It Is understood that 35 CONFIDENTIAL AND PROPRIETARY HealthCere Conglomerate Associates 0050515641 Doc 407 Doc 327 Exhibit Page :18. Filed 01/30/18 Case 16?10015 D0?2i07 Filed 10117117 Case 16-10015 Doc In the event of any monetary default by the District which is not cured within the speci?ed ten (10) day period. Manager may immediately laminate this Agreement by written notice to the District and may cease rendering any services hereunder to the District. all without any further liability to the District (wimout regard to whether Manager has advanced any funds pursuant to M. (ii) The parties may mutually agree at any time to laminate this Agreement. (Iii) This Agreement shall automatically terminate if: (1) The Operating Period hereunder has expired; or A substantial portion of the Hospital and the Other Facilities are destroyed or subject to condemnation such that the Operations are. in the sole and absolute discretion of Manager. materially impaired. (Iv) in the event of termination at this Agreement. Manager shall remove itself as a signatory on the District's accounts and turn over to the District within ten (10) business days tollowing the expiration or termination of this Agreement all business records oi the District pertaining to the District. All medical records strait be maintained by the District and shall remain the property of the District. 11. see a a. Agmgmenl. This Agreement constitutes the entire agreement between the parties with respect to the management of the Hospital and the Other Facilities and supersedes any and all prior agreements. either oral or written. between the parties with respect thereto. Begomaiigg. At the request oi either party and at the expense of the requesting party. the parties shall execute a short form memorandum at this Agreement which identities this Agreement. the parties. the Operating Period. the legal description of the real property upon which the Hospital and the Other Facilities are located. and such other matters as the parties may agree. Such memorandum shall be recorded in the Office of the County Recorder of inyo County. Califomla. at the expense oi the requesting party. Aggeeggenl. This Agreement and the rights and obligations of the parties hereunder are binding upon and shall inure to the bensiit of the parties hereto and their respective successors and permitted assigns- Except as previded in this Section. neither party shall have the right to assign its rights or delegate its duties hereunder unless it ?rst obtains the written consent of the other party hereto. Manager may. in its sole and absolute discretion. assign this Agreement. without the District's consent. to any Attiliate oi Manager. or to any other Person which is owned and controlled by Manager or the Controlling Persons oi Manager. or in connection with a Manager consolidation or sale by Manager to any Person of all or substantially all at Managers assets or ownership interests. Nothing herein prevents Manager tram subcontracting with third parties to perform any of the services required of Manager hereunder. Any assignment In violation of this Section shalt be null and void. 38 CONFIDENTIAL AND PROPRIETARY HealthCare Conglomerate Associates moarsau Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16-10015 Doc 327 W. This Agreement shall be deemed to be made In. and in all respects shalt be Interpreted. construed. and governed by and in accordance with. the Law of the State. The parties agree that the exclusive jurisdiction and venue of all actions claims. or other legal proceedings arising In any manner pursuant to this Agreement. shall be vested In the Superior Court of the County of Los Angeles in the State and in no other. Notwithstanding any other provisions contained In any other document executed simultaneously herewith. each party. for itseli. and all successor. assigns. heirs. executorsr or future parties at interest agree and accept the jurisdiction of these courts and waive any delense of personal jurisdiction. forum non conveniene. venue or similar defenses and irrevocably agree to be bound by any judgment rendered In the aforementioned Court; exciuslve of any and all other Federal or State courts. mm. The section and subsection headings contained In this Agreement are tor reference purposes only and shall not attest in any way the meaning or interpretation oi the Agreement. in mm. Except as otherwise expressly permitted herein. all notices required or permitted to be given hereunder shall be in writing (whether or not written notice Is specified herein) and shall be personally delivered. or mailed by United States mail. postage prepaid. registered or certi?ed. return receipt requested. or sent by a nationally recognized ovemight delivery service. or sent by electronic transmission system. Unless such Information is changed by written notice given by the a?ected party. any such notices shalt be sent to the following addresses: HeaIthCara Conglomerate Associates Attention: Benny Benzaevi. MI). 869 North Cherry Street Tulere. CA 93274 Email: Momma: Baker 8: Hostetter LLP Attention: Bruce R. Greene. Esq. 11001 Wilehlre Blvd.. Suite 1400 Los Angeles. CA 90026 Email: BGreene?baitertaw.corn Marmalade: Southern Inyo Heelthcare District Attendee: Chairman of the Board 501 E. Locust Street Lone Pine. CA 93545 Email: dickfedko?gmallcom a co Neva Cortell. LLP Attention: Scott Nave. Esq. 4580 east Thousand Oaks Blvd.. Suite 300 Weatiaite Village. CA 91382 Email: snave@navecorteil.com 37 CONFIDENTIAL AND PROPRIETARY HealthCere Conglomerate Associates academia Doc 407 F'Ied 01/30/18 Case 16-10015 I F'rled 10l17117 Case 16-10015 Doc 327 All notices sent by personal delivery shall be attentive and deemed served upon receipt thereof. All notices sent by mail shall be effective and deemed served three (3) calendar days alter being deposited in the United States mail. All notices sent by overnight delivery service strait be attective and deemed served when delivered by such overnight delivery service All notices sent by electronic transmission system shall be effective and deemed served on the day of transmission. ti on a business day and during business hours (9am until 6pm. PT) or otherwise an the next business day thereafter. (9) WW. All of the representations. and warranties. and those covenants and agreements contained In this Agreement which are .stated to survive termination or expiration of this Agreement. shall survive the expiration or the termination. tor any reason. of this Agreement No performance or execution at this Agreement. In whole or in part. by any party hereto. no course of dealing between the parties hereto or any delay or failure on the party of any party In exercising any rights hereunder or at Law or In equity. and no investigation by any party hereto. shall operate as a waiver of rights of such party. except to the extent expressly waived In writing by such party. (it) This Agreement may be executed in two or more counterparts. each of which shall be deemed to be an original. but all of which together shall constitute one and the same Instrument. Signatures transmitted by facsimile or e-mail or other digital means shall be accepted as original signatures. ti) (it Each and every provision of this Agreement Is severabie. and the invalidity of one or more at such provisions shall not. in any way. affect the validity or this Agreement or any other provisions hereof. it any clause or provision of this Agreement is Illegal. invalid or uneniorceebie. than and In that event. it is the Intention oi the parties herein that the remainder of this Agreement shall not be effected thereby. and It is also the Intention of the parties to this Agreement that in lieu of each clause or provision that is illegal. invalid or unentorceabie. there be added as a part of this Agreement a clause or provision as similar in terms to such illegal. invalid or unenforceable clause or provision as may be possible and be legal. valid and enforceable. (it) The parties hereby have made all reasonable efforts to ensure this Agreement represents and memorializes the complete and final agreement between the parties hereto. and that it complies with all applicable Law. In the event there Is a change in Law. or the interpretations thereof. whether by statute. regulation. agency or ludiciai decision. or otherwise. that has any material eitect on any term at this Agreement. or In the event that a party's reputable counsel (being legal counsel with at least ten (10) years' experience in Hospital Law) determines that any term at this Agreement poses a material risit of violating any Law. then the applicable tormts] of this Agreement shall be subject to renegotiation and either party may request renegotiation oi the affected term or terms of this Agreement. upon written notice to the other party. to remedy such condition. in the Interim. the parties shall perform their obligations hereunder in full 38 CONFIDENTIAL AND PROPRIETARY 0 HealthCere Conglomerate Associates q/ Filed 01/30/18 Case 16-10015 Doc 407 Filed 10717/17 Case 16-10015 Doc 32? compliance with applicable Law. The parties expressly recognIZe that upon request for renegotiation. each party has a duty and obligation to the other only to renegotiate the affected tennis) in good faith and. further. the parties expressly agree that their consent to proposals submitted by the other party during renegotiation efforts shall not be unreasonably withheld or delayed. The parties further expressly recognize that In any such renegotiation. the relative economics to each of the parties shall be preserved. Should the parties be unable to renegotiate the term or terms so affected so as to bring firthem into compliance with Law or the interpretation thereof within sixty (80) days of the date on which written notice of a desired renegotiation is given. then either party shall be entitled. after the expiration of said sixty (60) day period. to tennlnate this Agreement upon sixty (60) days' written notice to the other party. provided that such party has received an opinion of reputable legal counsel. which legal counsel and opinion are reasonably acceptable to the other party. that It is more likely than not that this Agreement violates applicable Law. Rigmg Bomadles. Any right. power or remedy provided it) under this Agreement or any party hereto shall be cumulative and in addition to any other right. power or remedy provided under this Agreement or existing in Law or in equity. including. without limitation. the remedies of injunctive relief and speci?c performance. (It) warm. This Agreement may only be amended by a writing signed by both parties. (ll) No failure by any party to insist upon strict compliance with any term of this Agreement. to exercise any option. enforce any right. or seek any remedy upon any default of any other party shall affect. or constitute a waiver of. the tirst party's right to insist upon such strict compliance. exercise that option. enforce that right. or seek that remedy with respect to that default or any prior. contemporaneous. or subsequent default; nor shall any custom or practice of the parties at variance with any provision of this Agreement affect or constitute a waiver of. any party's right to demand strict compliance with all provisions of this Agreement. Fags. if any action at law or in equity {or any arbitration proceeding required hereunder) is brought to enforce any of the terms of this Agreement. the prevailing party shall be entitled to recover reasonable attorneys? fees and costs In addition to any other relief. as determined by the applicable court or arbitrator. The foregoing includes reasonable attorney?s fees in connection with any bankruptcy proceeding (including relief from stay litigation). and In connection with any appeals. Contractor Statgs. Notwithstanding any provision contained herein to the contrary. Manager and the District each understand and agree that the parties hereto intend to act and parlorrn as independent contractors. Therefore. the District is not an employee or partner of Manager. Nothing in this Agreement shall be construed as placing the District in a 39 CONFIDENTIAL AND PROPRIETARY HealthCars Conglomerate Associated undersea 4 Filed 01/30/18 Case 16-10015 Doc 407 Fil'ed 10/17/17 Case 16?10015 Doc 327 relationship of employer-employee or partners with Manager. The parties snail not have the right to make any premises. warranties or representations. or to assume or create any obligations. on behalf of the other party except as otherwise expressly provided herein or as otherwise agreed. The District and Manager agree to be solely and entirely responsible for their respective acts and for the acts of any of their respective employees and agents. except as otherwise expressly provided herein. in) Amblguitlgs pug gagerIaigugs. This Agreement and any ambiguities or uncertainties herein. or the documents referenced herein. shall be equally and fairly interpreted and construed without reference to the identity of the party or parties preparing this Agreement or any of the documents referred to herein. on the express understanding and agreement that the parties participated equally in the negotiation of the Agreement and the documents referred to herein. or have had equal opportunity to do so. Accordingly. the parties hereby waive the benefit of Call[o[g ? gull gods Section 1654 and any successor or amended statute providing that in cases of uncertainty. language or a contract should be Interpreted most strongly against the party who caused the uncertainty to exist. (0) Except as herein Provided to the contrary. whenever this Agreement requires any consent or approval to be given by any party or any party must or may exercise discretion. the parties agree that such consent or approval shall not be unreasonably withheld. conditioned or delayed and such discretion shalt be reasonably exercised. except as otherwise provided herein. If no response to a consent or requast from Manager to the District for approval is provided to Manager within ten (10) days from the receipt by the District of the request. then the consent or approval of the District shall be deemed to have been given. W. In the event that any date speci?ed herein is. or (P) that any period specified herein expires on. a Saturday. a Sunday. or a State or federal 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. A business day is a day on which banks are required to be open for business In Los Angetes. California. All references In this Agreement to ?days? are to calendar days. unless business days are so indicated. M. Except with respect to payment obligations. neither party shall be liable nor deemed to be in default for any delay or failure In performance under this Agreement or other Interruption of service deemed resulting. directly or indirectly. from acts of God. civil or rnilttary authority. acts of public enemy. war. accidents. fires. explosions. earthquakes. floods. failure of transportation. machinery or supplies. vandalism. strikes or other worir Interruptions beyond the reasonable control of either party. However. both parties shall malts good faith efforts to perform under this Agreement in the eventof any such circumstances. mo mtg-Party geneftgg?gs. The rights. benefits. and obligations arising under or created by this Agreement are intended to apply to and shall only apply to the parties and to no other Persons. except as otherwise set forth herein. (3) W5. Except as expressly provided herein to the contrary. neither party shall be liable under this Agreement for consequential damages. incidental damages. indirect damages. or special damages or for loss of profit. loss of business opportunity or loss of income. Notwithstanding anything to the contrary contained in tilts Agreement. the parties hereto acknowledge and agree that the terms and provisions of this Section 11(5) shall not 40 CONFIDENTIAL AND PROPRIETARY 0 HealthCare Conglomerate Associates soeosrsau ?13 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10117/17 Case 16-10015 Doc 327 limit. ailer. modify. impair. or otherwise a?ect any of the remedies of Manager set forth in this Agreement. New. Notwithstanding any provision in this Agreement to the contrary. under no circumstances shall Manager or any Manager Party have any personal liability for any failure to perform any obligations arising out of or in connection with this Agreement or for any breach ot the tonne or conditions or this Agreement (whether written or implied). No personal judgment shall lie against Manager or any Manager Party and any judgments so rendered shall not give rise to any right of execution or levy against any of their assets. Any judgments rendered against Manager shall be satis?ed solely out or the assets of Manager. The foregoing provisions are not intended to relieve Manager irom the panormance or any of Manager's obligations under this Agreement. but only to limit the personal liability oi Manager and Manager Parties in case of recovery of a judgment against any at them. to) Adg?ioggi The provisions or this Agreement shall be self- operative and shall not require further agreement by the parties except as may be herein speci?cally provided to the contrary; provided. however. at the request ot a party. the other party or parties shall execute such additional instruments and take such additional actions as the requesting party may deem necessary to effectuate this Agreement. [Signatures on next page] 111 CONFIDENTIAL AND PROPRIETARY HeaIthCare Conglomerate Associates swarm ExhibitL Page Filed 01/30/18 Filed 10/17/17 Case 16-10015 Case 16-10015 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COINFIDENTIAL AND PROPRIETARY Conglomerate Annette: momma HEALTHOARE CONGLOHERATE ASSOCIATES, LLC 3? Name.- Yorel (Benny) Benzaevl. MD. Title: Manager SOUTHERN INYO HEALTHCARE DISTRICT 2 pijk?c?u?w Name: Richard P. Fedchenkc Title: Cp?man at Board of Directors By' a I a. Title: Mt; Title: Member of Board Directors Doc 407 Doc 327 Exhibit?L Page H5 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10717117 Case 16?10015 Doc 327 A LIST OF FACILITIES Acute care hospilai (with 4 beds). a mi heallhcare clinic. and a skilled nursing facility (with 33 beds) located at 501 East Locust Street. Lone Pine. CA 93545. Exhibit A 00500158: 4 Exhibit Page 4 Filed 01/30/18 Case 16?10015 Doc 407 Filed 10117117 Case 16-10015 Doc 327 IBI Limited Power at Attorney KNOW ALL MEN BY THESE PRESENTS. that in accordance with the terms of that certain Management Services Agreement. dated oi even date herewith. (the ?Agreement'). by and among HealthCare Conglomerate Associates. LLC (?Manager?) and Southern lnyo Healthcare District (the "District"). the District hereby makes. constitutes and appoints Manager as the District's true and lawful attorney-En-fact (the ?AttorneycIn-Fact') and in the District's name. place and stead to act in connection with any and all matters relating to any oi the following and with all requisite authority and power and as legally permissible: 1. To bill. collect. or cause to be collected. all amounts related to the operation of the Hospital and the Other Facilities. including. but not limited to. the accounts receivable. In the District's name. and. when deemed appropriate by the Attorney-ln-Fact. settle and compromise claims. and assign such other items to a collection agency. bring a legal action or take such other appropriate action against an obligee: 2. To recelve. take possession of. endorse in the name of the District. and deposit into the Depository Account. the Master Account or other account. as deemed appropriate by Manager. In accordance with the terms of the Agreement. any notes. checks. money orders. payments. insurance payments. and any other instruments received in payment of services provided at the Hospital and the Other Facilities. 3. To deposit all amounts collected into the Depository Account. Master Account or other account. as deemed appropriate by Manager. in accordance with the terms of the Agreement. 4. To sign checks. drafts. bank notes or other instruments on behalf of the District. and to make withdrawals from the Depository Account. Master Account or other applicable account for payments specified in this Agreement. 5. To execute any Instruments or documents or take such other or lurther action necessary or appropriate in connection with any at the above. This Power of Attorney is coupled with an interest. and shall give the Attorney-ln-Fact the power and authority to act in the District's name as fully as the District could do if present. The District hereby rati?es and con?rms and agrees to ralily and con?rm whatsoever the Attorney-ln-Fact shall do or purport to do by reason of these presents. Capitalized terms not delined herein shall have the meaning ascribed to them by the Agreement. Any provision hereof which may prove unenforceable under any Law shall not affect the validity of any other provisions hereof. Any photocopy of this Power ol Attorney shall have the same [area and sheet as the original. Exhibit somersu 4 Page L, 7 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10717117 Case 16-10015 Doc 327 IN WITNESS WHEREOF. I have hereunto as! my hand and seal effective WITNESS: 1: Southern Inyo Hoalthcaro District Signalur . g! '2 Print 1 By- Richard P. Fedchenko . Chairman of the Board of Directors 5 nalure. Pr LNgurd" 'Zbgr-g? (.3953; Exhibit Filed 01/30/18 Case 16-10015 Case 16-10015 Fil'ed 10117117 EXHIBIT Business Associate Agreement This Business Associate Agreement (?Agreemonli is entered into on . 2016 by and between. Southsm lnyo Healthcare District ("Covered Entity?) and HealthCare Conglomerate Associates. LLC (?Business Associate?). 1. De?nitions A. Catch-all definition: The following terms used in this Agreement shall have the same meaning as those terms in the HIPM Rules' Breach. Data Aggregation. Designated Record Set. Disclosure. Health Care Operations. individual. Minimum Necessary. Notice of Privacy Practices. Protected Health information. Required by Low. Secretary. Security incident. Subcontractor. Unsecured Protected Health information. and Use. 8. meantime: Business gem-Jets. ?Business Associate" shall generally have the same meaning as the term ?business associate? at 45 CFR 160.103. and In reference to the party to this Agreement. shall mean HealthCare Conglomerate Associates. LLC a California limited liability company. (ii) Covered Entity. "Covered Entity? shalt generally have the same meaning as the term ?covered entity? at 45 CFR 160.103. and in reierence to the party to this Agreement. shall mean Southern lnyo Healthcare District. ELEM. Rules" shall mean the Privacy. Security. Breach Noti?cation. and Enforcement Rules at 45 CFR Part 180 and Part 164. 2. Obligations and Activities ot Business Associate A. Business Associate agrees to: (it Not use or disclose Protected Health lnforrnation other than as permitted or required by the Agreement or as required by law; (it) Use appropriate safeguards. and comply with Subpart of45 CFR Part 164 with respect to electronic Protected Health information. to prevent use or disclosure of Protected Health Information other than as provided for by the Agreement; Report to Covered Entity any use or disclosure oi Protected Health information not provided tor by the Agreement at which it becomes aware. including breaches of unsecured Protected Health information as required at 45 CFR 164.410. and any security incident of which it becomes aware: (iv) in accordance with 45 CF and 164.308tbx2). if applicable. ensure that any subcontractors that create. receive. maintain. or transmit Protected Health information Exhibit 305081534?. Doc 407 Doc 327 Filed 01/30/18 Case 16-10015 92532437 Filed 10117l17 Case 16-10015 on behalfof the Business Associate agree to the some restrictions. conditions. and requirements that apply to the Business Associate with respect to such information; (it) Maire available Protected Health information in a designated record set to the Covered Entity as necessary to satisfy Covered Entity's obligations under 45 CFR 164.524; (vi) Make any amendmentts) to Protected Health Information in a designated record set as directed or agreed to by the Covered Entity pursuant to 45 CF 164.526, or take other measures as necessary to satisfy Covered Entity's obligations under 45 CFR 164.526; {vii} Maintain and make available the information required to provide an accounting of disclosures to the Covered Entity as necessary to satisfy Covered Entity's obligations under 45 CFR 164.528: To the extent the Business Associate is to carry out one or more of Covered Entity?s obligation(s) under Subpert of ?is CFR Part 184. comply with the requirements oi Subpart that apply to the Covered Entity in the performance of such obligetionts); and (lit) Make its internal practices, books. and records available to the Secretary for purposes of deten'nlning compliance with the HIPAA Rules. 3. Permitted Uses and Disclosures by Business Associate (I) Business Associate may only use or disclose Protected Health Information as necessary to perform the services set forth in its billing agreement with the Covered Entity. (it) Business Associate may use or disclose Protected Health Information as required bylaw. Business Associate agrees to make uses and disclosures and requests for Protected Health information consistent with Covered Entity's minimum necessary policies and procedures. (iv) Business Associate may not use or disclose Protected Health Information In a manner that would violate Subpart of 45 CFR Part 164 if done by Coveted Entity. 4. Permissible Requests by Covered Entity Covered Entity shalt not request Business Associate to use or disclose Protected Health information in any manner that would not be under Subpart of 45 CFR Part 184 if done by Covered Entity. 5. Term and Ten-nineties 19m. The Term of this Agreement shall be etioctive as of the date first above written. and shall terminate when all of the Protected Health information provided by the Covered Entity to the Business Associate. or created or received by the Business Associate on behalf of the Covered Entity. is destroyed or returned to the Covered Entity. 5080815844 Filed 01/30/18 Case 16-10015 Doc 407 Filed 10/17/17 Case 16?10015 Doc 327 (it) Termination [or Cause. Business Associate authorizes termination of this Agreement by Covered Entity. if Covered Entity determines business associate has violated a material term of the Agreement. Obligations of Business Associate Upon Termination. Upon termination of this Agreement for any reason. Business Associate shall return to covered entity or. if agreed to by Covered Entity. destroy all Protected Health Information received from Covered Entity. or created. maintained. or received by Business Associate on behalf of Covered Entity. that the Business Associate still maintains in any form. Business Associate shall retain no copies oi the Protected Health Information. (iv) ?rvival. The obligations of Business Associate under this Section shall survive the lamination of this Agreement. 5. Miscellaneous Beguiatom Reierences. A reterence in this Agreement to a section in the HIPAA Rules means the section as In effect or as amended. (ll) monument. The parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the Rules and any other applicable law. (til) lnlergretatiog. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules. The parties hereby execute this Agreement as authorized representatives of their respective entitles. COVERED ENTITY BUSINESS ASSOCIATE Southern lnyo Healthcere District HealthCare Conglomerate Associates. LLC WW By. Richard P. Fedclt tIto Yorai (Benny) Benzeevi. M.D. Its: Chairman of the Board of Directors Its: Manager Eat-Ill 600061551 4 Filed 01/30/18 Case 16-10015 Doc 407 EXHIBIT MANAGEMENT FEES PAGE552-53 Filed 01/30/18 Case 16-10015 Doc 407 MANAGEMENT FEES DATE AMOUNT DUE SOURCE JANUARY 2016 65,000.00 Management fee FEBRUARY 2016 65,000.00 Management fee MARCH 2016 65,000.00 Management fee APRIL 2016 65,000.00 Management fee MAY 2016 65,000.00 Management fee JUNE 2016 65,000.00 Management fee JULY 2016 65,000.00 Management fee AUGUST 2016 65,000.00 Management fee SEPTEMBER 2016 65,000.00 Management fee OCTOBER 2016 65,000.00 Management fee NOVEMBER 2016 65,000.00 Management fee DECEMBER 2016 65,000.00 Management fee JANUARY 2017 68,283.00 Management fee FEBRUARY 2017 68,283.00 Management fee MARCH 2017 68,283.00 Management fee APRIL 2017 68,283.00 Management fee MAY 2017 68,283.00 Management fee JUNE 2017 68,283.00 Management fee tX Whit?L? Page Filed 01/30/18 Case 16-10015 Doc 407 JULY 2017 68,283.00 Management fee AUGUST 2017 68,283.00 Management fee SEPTEMBER 2017 68,283.00 Management fee OCTOBER 2017 68,233.00 Management fee NOVEMBER 2017 63,283.00 Management fee Total management fees billed 1,531,l 13.00 Total management rees paid 3 (346,3 83.00) $1,184,730.00 53 Filed 01/30/18 Case 16-10015 Doc 407 EXHIBIT TRAVEL EXPENSES PAGESS4-58 Filed 01/30/18 Case 16-10015 Travel expenses to 8111 HCCA check no. date amount pilot/?ight date 1201 1.12.16 2,500.00 ?ight to Lone Pine - So. Inyo hospital - Garry Zinger FEIN 1203 1.24.16 2,500.00 ?ight to Lone Pine - So. Inyo hOSpital - Garry Zinger - 1207 1.28.16 55 2,500.00 ?ight to Lone Pine - So. Inyo hospital - Garry Zinger - FEIN cash 2.4.16 2,500.00 ?ight to Lone Pine - So. Inyo hOSpital - Garry Zinger - FEIN 1209 2.8.16 3 2,500.00 ?ight to Lone Pine - So. Inyo hOSpital - Garry Zinger - FEIN In! 1212 2.15.16 3 2,500.00 2.16.16 ?ight to Lone Pine - So. Inyo hospital - Garry Zinger FEIN- 1214 2.24.16 33 5,100.00 2.23.16 and 2.24.16 ?ights to Lone Pine (S. Inyo) - Garry Zinger - FEIN 1215 3.2.16 2,500.00 3.2.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - FEIN Doc 407 Page 54/ Filed 01/30/18 Case 16-10015 1221 3.16.16 3 4,500.00 3.9.16 and 3.16.16 ?ights to Lone Pine - So. Inyo hospital - Garry Zinger - 1223 3.25.16 5 4,500.00 3.24.16 ?ight (2 ?ights) to Lone Pine (S. Inyo) - Garry Zinger - FEIN 1231 4.13.16 2,500.00 4.13.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - FEIN - 1235 4.23.16 3 4,150.00 4.21.16 ?ight to Lone Pine and Bishop (S. Inyo) Garry Zinger - FEIN check 5.5.16 3 6,300.00 S. Inyo ?ights - Garry Zinger - FEIN - 4? 1237 5.13.16 2,500.00 5.11.16 ?ight to Lone Pine (S. 'Inyo) - Garry Zinger- FEIN- 1241 6.2.16 3 2,500.00 6.1.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger- FEIN- 1244 6.14.16 3,300.00 6.13.16 ?ight to Lone Pine (S. Inyo) and BishOp - Garry Zinger - FEIN 1245 6.14.16 2,500.00 6.15.16 ?ight to Lone Pine (S. inyo) - Garry Zinger - FEIN - 1250 6.29.16 5,000.00 6.27.16 and 6.29.16 ?ights to Lone Pine (S. Inyo) - Garry Zinger - FEIN Exhibit Page (3 Doc 407 53 Filed 01/30/18 Case 16-10015 1252 7.18.16 3 2,500.00 7.18.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - FEIN- - 1253 7.22.16 2,500.00 7.20.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger? 1255 7.27.16 2,500.00 7.28.16 ?ight to Lone Pine (S. Inyo) - Gan?y Zinger - FEIN - 1257 8.10.16 5; 2,500.00 8.10.16 ?ight taLane Pine Inyo) - Garry Zinger - u- 1258 8.31.16 2,500.00 8.31.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger FEIN 1260 9.8.16 55 2,500.00 9.7.16 ?i?glit to Lone Pine (S. Inyo) - Garry Zinger - FEIN 1261 9.16.16 5,000.00 9.14.16 and 9.16.16 ?ights to Lone Pine (S. Inyo) - Garry Zinger - FEIN - 1262 9.22.16 2,500.00 9.21.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - l. 1264 9.26.16 2,500.00 9.28.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - 1265 10.13.16 2,500.00 10.12.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - FEIN- Doc 407 Filed 01/30/18 Case 16-10015 1270 11.02.16 3 2,500.00 11.2.16 ?ight to Lone Pine (S. Inyo) - Garry Zinger - FEIN . 1271 11.16.16 2,500.00 11.16.16 ?ight to Lone Pine (S. Inyo)- Garry Zinger - 1280 12.6.16 31 2,500.00 12.6.16 ?ight to Lone Pine (S. Inyo)- Garry Zinger - EIN 1284 12.13.16 2,500.00 12.14.16 ?ight to Lone Pine (S. Inyo)- Garry Zinger - 1285 12.22.16 3 2,500.00 12.21.16 ?ight to Lone Pine (S. Inyo)- Garry Zinger - FEIN 1292 1.3.17 3 2,500.00 1.11.17 ?ight to Lone Pine (S. Iny0)- Garry Zinger - 1303 2.9.17 2,500.00 2.8.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - .- 1304 2.16.17 3 2,500.00 2.15.17 ?ight to Lorie Pine (S. Inyo)- Garry Zinger - FEIN - . 1318 3.7.17 2,500.00 3.8.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - .J. 1320 3.12.17 2,500.00 3.12.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - FEIN Doc 407 Filed 01/30/18 Case 16-10015 1323 3.13.17 3 2,500.00 3.14.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - 1" 1336 4.2.17 311 2,500.00 4.2.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - -. 1352 4.17.17 3 2,500.00 4.18.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - -- 1369 5.17.17 3 2,500.00 5.17.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - 1372 6.5.17 2,500.00 6.5.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - 1373 6.8.17 2,500.00 6.9.17 ?ight to Lone Pine (S. Inyo)- Gany Zinger - FEIN- a 1376 6.23.17 2,500.00 6.24.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - FE "h 1390 7.15.17 2,500.00 7.15.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - -. 1392 7.19.17 2,500.00 7.19.17 ?ight to Lone Pine (S. Inyo)- Garry Zinger - -- 1399 8.30.17 3 2,500.00 8.31.17 ?ight to Lone Pine (S. Inyo)~ Garry Zinger - FEIN - u. TOTAL 137,850.00 Doc 407 Filed 01/30/18 Case 16-10015 Doc 407 EXHIBIT MSA TERMINATION FEE PAGESS9-62 Doc 407 Case 16-10015 Filed 01/30/18 Contract start date Contract end date Jan?16 Contract term (months) Nov-l 7 Months in effect Total months in effect 2017 CPI 2016 Difference {2017 CPI - 20I6 CPIYZOIG CPI 23 Remaining months 246.72 1 240.140 6.581 0.02140 .2 9 (D 5 (U 60 Fee per month 5 32,500? 0.. 23 Increased by CPI 5 33,391 37 Multiplied by the remaining mumber of months 3 1,235,449 Discounted to "3 present value usmg the discount rate of the Fed Reserve Bank of San Francisco at the tune of tenntnatlon plus 1% (I 75% 3 1,201,474 Total (1 tie (before interest) 1,201,474 Doc 407 Case 16-10015 Filed 01/30/18 (ii) The Termination Fee shall be an amount equal to Thirty Two Thousand Five Hundred Dollars ($32,500) per month ?rst increased by CPI. as provided below. and then multiplied by the remaining number of months in the Operating Period at the time of the tenninatlon, discounted to its present value using the discount rate of the Federal Reserve Bank of San Francisco at the time of termination plus one percent (1) means the index of the US. City Average Consumer Price Index for Urban Wage Eamers and Clerical Workers Medical Care Services (1982-84 equals 100) published by the United States Department of Labor. Bureau of Labor Statistics or any successor agency that shall issue such index. in the event that the is discontinued for any reason. the parties shall use such other index. or comparable statistics. on the cost of medical care services in the United States, as shall be computed and published by any agency of the United States or. if no such index is published by any agency of the United States. by a responsible ?nancial periodical of recognized authority. (2) In?ation Adjustment. The Termination Fee shall be adjusted for in?ation by multiplying the above stated Termination Fee by the CPI percentage increase between January 1. 2016 and the date the Termination Fee is payable. using the latest published data since the last adjustment. If the District fails to pay the Termination Fee when due, then the Termination Fee, or any unpaid portion thereof, shall bear interest 33 ExhibitL Page Case 16-10015 Filed 01/30/18 FEDERAL RESERVE BANK OF SAN FRANCISCO BANKING DISCOUNT WINDOW Discount Rate ?Discount Rate? on Advances to Member Banks under Sections 13 and 1 3a of the Federal Reserve Act in Effect at the Federal Reserve Bank of San Francisco Visit the Federal Reserve Discount Window [35 for more information. The following is a list of rates of interest on our advances to, and discounts for, member banks and other depository institutions under Sections 13 and 13a of the Federal Reserve Act. Each rate (also referred to as the "discount rate?) was in effect until the next date indicated. Rate Effective Date per annum) 2017 December 14 2.00? 2017 June 15 1.75 2017 March 16 1.50 Exhi i Page Doc 407 UNITED STATES DEPARTMENT OF LABOR AmZIndex 1 FAQS Abmtas mamm so I Follew Us 3 1 What?s New: Release Calendar 1 Blog BUREAU OF LABOR STATISTICS :1 a Home Subjects Publications Economic Releases Students Beta Databases, Tables Calculators by Subject mm. a u: Change Output Options: Fm: 2010 10: 2017 3 aindude graphs alndude annual mags Dela ewe-dad on: January 22, 2010 (7:27:50 AM) CPI-Urban Wage Eamers and Clerical Workers (Current Series) Series 1d: menseo Hot Seasonally Adjusted Series nun: All items in Lee Mgelee-Riveraide-Onnge County. ca. urban wage earners and clerical workers. not. seasonally adjusted L0 ma: Lou Angelaa-Rivereide-Orenqe County, CA 8 Items All items 0 Base Period: 193244-100 7' LO 3 246- 3 (TS TI 0 3 244- El 92 ll ?g 242- 240- 2016 2017 Year Download: @555 ?ea-132.23% . Mar Jr Mr 10.. 1. Nov Dec 'Annual'mnfLAI-fz [2016 I 238.609 238.262. '239.'14'6l 239.536. 240.320 240.522: 240.500 240.267_: 240.651_ 241.932; 24000?9: 240.546 2.40.140 239.399.? 240.05 242-735- 244.254 244.93g 245.41; 240.153; 245.9001 246.681 247.260' 240.550 249.234 249.600_ 249.054 246.711_ 244.099 240.543 Filed 01/30/18