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HomeMy WebLinkAbout2013-392 Closing Documents - ACH-Asante ACH AND ASANTE AFFILIATION CLOSING DATE: AUGUST 1, 2013 ELECTRONIC CLOSING BOOK PARTIES: Asante Asante Stoloff Peter F. Stoloff, P.C., Counsel to Asante ACH Ashland MN Miller Nash LLP, Counsel Community to ACH Healthcare Services Foundation Ashland Drescher Allen G. Drescher, PC, Community Counsel to Foundation Hospital Foundation City City of Ashland Lohman David Lohman, Counsel to city All capitalized terms not otherwise defined herein shall have the definitions provided in the Agreement (as defined below). AFFILIATION AGREEMENT I. Affiliation Agreement, dated June 4, 2013, among Asante, ACH, Foundation, and City ("Agreement") 2. City Resolution No. 2013-15 Adopted June 4, 2013 3. ACH Resolution dated June 4, 2013 4. Foundation Resolution dated June 4, 2013 5. Asante Resolution dated June 3, 2013 EXHIBITS AND SCHEDULES 1 AFFILIATION AGREEMENT Exhibits 6. Exhibit 2.3 Asante's Mission Statement 7. Exhibit 9.1 Legal Description of Real Property Conveyed from City to ACH 8. Exhibit 9.1A Statutory Warranty Deed from City to ACH 9. Exhibit 9.1B Statutory Warranty Deed from City to ACH 10. Exhibit 9.2.1 - Legal Description of 317 Maple Street, Ashland, Oregon (Parcel III) 11. Exhibit 9.2.2 - Legal Description for 530 Catalina Street, Ashland, Oregon (parking lot) (Parcel VI) 12. Exhibit 9.2.3 - Legal Description to 628 North Main Street, Ashland, Oregon (Parcel VIII) 13. Exhibit 9.2.4 - Legal Description for 49 Talent Avenue, Talent, Oregon (Parcel XI, Tract A) PDXDOCS:2010687.1 14. Exhibit 9.2.4 - Legal Description for 49 Talent Avenue, Talent, Oregon (Parcel XI, Tract A) 15. Exhibit 9.2.5 - Legal Description for 209 North Pacific Highway, Talent, Oregon (Parcel X) 16. Exhibit 9.9 - Real Property Purchase and Sale Agreement (and Exhibits thereto) 17. Exhibit 27.3.2.1- Form of Restated Articles of Incorporation ACH 18. Exhibit 27.3.2.2 - Form of Restated Bylaws of ACH 19. Exhibit 32.4.1 Financial Statements of ACH ACH Schedules 20. Schedule 32.3.1 ACH Violations of Material Contracts Related to Delivery and Performance of Agreement 21. Schedule 32.3.2 Necessary Approvals Needed by ACH 22. Schedule 32.4.2 ACH Exceptions to Conformity with GAAP 23. Schedule 32.4.3 ACH Material Changes to Accounting Methods or Practices (from and after July 1, 2012) 24. Schedule 32.4.4 ACH Liabilities or Obligations Not Shown or Provided for in the ACH Financial Statements 25. Schedule 32.4.5 Assets of ACH Subject to Restrictions Imposed by the Donors of Specific Funds 26. Schedule 32.4.6 List of All Accounts in which Funds of the Plan are Attributable to the Plan are Restricted or Otherwise Held 27. Schedule 32.5 Interim Changes 28. Schedule 32.6 Adverse Legal Proceedings Involving ACH 29. Schedule 32.7.1 All ACH Material Governmental Licenses, Permits, Certificates, Consents and Approvals 30. Schedule 32.7.2 Notices to ACH Regarding Revocation, Termination, from any Governmental Authority, Suspension or Limitations of any License or Permit 31. Schedule 32.9 ACH Exceptions to Material Compliance 32. Schedule 32. 10.1 Real Property Owned by ACH 33. Schedule 32.10.2 List of Assets ACH Holds Without Free Title 34. Schedule 32.10.3 List of Real Property Leases in Which ACH is Tenant, Lessee, Subtenant or Otherwise in Possession 35. Schedule 32.10.4 List of Real Property Leases in Which ACH is Landlord 36. Schedule 32.10.5 Complete List of All Locations in Which or at Which ACH Owns and/or Operates Health or Other Services 37. Schedule 32.11 ACH Affiliates and Subsidiaries 2 PDXDOCS:2010687.1 38. Schedule 32.13.1 Complete List of All Binders and Policies of Insurance Maintained by ACH 39. Schedule 32.13.2 ACH Insurance Policies Not in Full Force and Effect 40. Schedule 32.14 Taxes 41. Schedule 32.15 ACH Employee Benefit Plans 42. Schedule 32.15.2 Disclosures Regarding Benefit Plans 43. Schedule 32.15.6 Post-Employment Benefit Plans 44. Schedule 32.16.1 Termination Proceedings Regarding Medicare and Medicaid 45. Schedule 32.16.2 ACH Contracts Not in Compliance 46. Schedule 32.17 ACH Accreditation 47. Schedule 32.18.1 Breach or Material Defaults 48. Schedule 32.18.2 List of Material Contracts 49. Schedule 32.19 Exclusions from Health Care Programs 50. Schedule 32.20.1 Exception to Material Compliance with Environmental Laws 51. Schedule 32.20.2 Notices of Violations of Environmental Laws 52. Schedule 32.20.3 Disclosure of Items Found on ACH Real Property 53. Schedule 32.20.4 List of Environmental Reports 54. Schedule 32.22 Employment Matters 55. Schedule 40.9 EIB and Seniority Agreement Regarding Employees 56. Section 41.15 Delivery - Asante ACH Medical Staff Bylaws Foundation Schedules 57. Schedule 35.3- Foundation Violations of Agreements and List of Necessary Approvals and Consents 58. Schedule 35.4 Foundation Financial Statements 59. Schedule 35.4.2 Foundation Accounting Methods Not Conforming with GAAP 60. Schedule 35.5 Legal Proceedings, Adverse Claims and Threatened Investigations Involving Foundation 61. Schedule 35.7 Laws, Regulations and Ordinances Foundation Is Subject to in Which it is Not in Compliance 62. Schedule 35.8.1 Foundation Real Property 63. Schedule 35.8.2 Exceptions to Title of Foundation Real Property 64. Schedule 35.8.3 Foundation Real Property Leased to ACH 3 PDXDOCS:2010687.1 65. Schedule 35.9.1 Foundation Insurance Policies 66. Schedule 35.9.2 Foundation Insurance Policies Not in Full Force and Effect 67. Schedule 35.11.1 Environmental Laws Foundation is Not in Compliance 68. Schedule 35.11.2 Notifications of Pending or Ongoing Investigations Involving Foundation Regarding Environmental Laws 69. Schedule 35.11.3 Disclosures of Items on Foundation Real Property Outlined in Section 35.11.3 of the Affiliation Agreement 70. Schedule 35.11.4 - Foundation Environmental Reports Asante Schedules 71. Schedule 33. 3.1 No Violations; Approvals 72. Schedule 33. 3.2 Necessary Approvals, Authorizations, and Consents 73. Schedule 33. 4.1 Asante Financial Statements 74. Schedule 33. 4.2 Nonconformance with GAAP 75. Schedule 33. 4.3 Material Changes to Accounting Methods or Practices 76. Schedule 33. 5 Legal Proceedings 77. Schedule 33. 7 Noncompliance with Law 78. Schedule 33. 9 Taxes 79. Schedule 33.10 Termination Proceedings Regarding Medicare and Medicaid 80. Schedule 33.11 Exclusion from Health Care Programs 81. Schedule 40.9 EIB and Seniority Agreement Regarding Employees City Schedules 82. Schedule 34.03 No Violations 83. Schedule 34.03.2 Necessary Approvals, Authorizations Etc. 84. Schedule 34.04.2 Financial Statements 85. Schedule 34.05 Legal Proceedings 86. Schedule 34.06 Noncompliance with Law 87. Schedule 34.07.1 City Real Property 88. Schedule 34.07.2 Exceptions to Title to City Real Property 89. Schedule 34.07.3 List of Real Property Leases by City 90. Schedule 34.08.1 Insurance 4 PDXDOCS:2010687.1 91. Schedule 34.08.2 Insurance Policies Not In Full Force and Effect 92. Schedule 34. 10.1 Noncompliance with Environmental Laws 93. Schedule 34.10.2 Written Notifications Regarding Pending Investigations Regarding Environmental Laws 94. Schedule 34.10.3 City Disclosures Regarding Section 34.10.3 95. Schedule 34.10.4 Environmental Reports CLOSING DELIVERIES 96. Written Consent of City, as sole member of ACH, approving Restated Articles and Bylaws 97. Restated Articles of Incorporation of ACH 98. Restated Bylaws of ACH 99. Certified Resolution Evidencing ACH's Adoption of Asante's Mission Statement 100. ACH Legal Opinion 101. ACH Board and Officer Resignations 102. Foundation Legal Opinion 103. City Legal Opinion 104. Recorded Deeds: (a) Warranty Deed from City to ACH for 278 & 280 Maple Street, Ashland, Oregon 97520 (b) Warranty Deed from City to ACH for 560 Catalina Drive, Ashland, Oregon 97520 (c) Warranty Deed from Foundation to ACH for 1209 N. Pacific Highway, Talent, OR 97540 (d) Warranty Deed from Foundation to ACH for 317 Maple Street, Ashland, OR 97520 (e) Bargain and Sale Deed from Foundation to ACH for 49 Talent Avenue, Talent, OR 97540 (f) Warranty Deed from Foundation to ACH for 530 Catalina Drive, Ashland, OR 97520 (g) Warranty Deed from Foundation to ACH for 628 N. Main Street, Ashland, OR 97520 105. Reciprocal Easement between ACH and Foundation 106. Termination of Lease 107. Bill of Sale from Foundation to ACH 108. Bill of Sale from City to ACH 109. Evidence City and Foundation are Named as Additional Insureds on Asante's Insurance 110. City Administrator's Closing Certificate 5 PDXDOCS:2010687.1 111. City Recorder's Closing Certificate 112. Asante Chief Executive Officer/President's Closing Certificate 113. Asante Chief Financial Officer's Closing Certificate 114. Asante Secretary's Closing Certificate 115. Asante Statement Per Section 14.3 of Affiliation Agreement 116. ACH Board Chair's Closing Certificate 117. ACH Secretary's Closing Certificate 118. ACH Treasurer's Closing Certificate 119. Foundation Executive Director's Closing Certificate 120. Foundation Secretary's Closing Certificate OTHER MATERIALS 121. IRS Form 8821 Transmittal Package 122. Asante Ashland Community Hospital Oregon Assumed Business Name Registration 6 PDXDOCS:2010687.1 CONFIDENTIAL AFFILIATION AGREEMENT THIS AFFILIATION AGREEMENT, including all xhibits, schedules and appendices hereto (the "Agreement"), is made and entered into this day of June, 2013 (the "Execution Date"), by and among the following entities and municipa ity: 1. Asante, an Oregon nonprofit public benefit corporation ("Asante"), located at 2650 Siskiyou Blvd., Medford, OR 97504. 2. Ashland Community Healthcare Services dba Ashland Community Hospital, an Oregon nonprofit public benefit corporation ("ACH"), with an address at 280 Maple Street, Ashland, OR 97520. 3. Ashland Community Hospital Foundation, an Oregon nonprofit public benefit corporation ("ACH Foundation"), with an address at 280 Maple Street, Ashland, OR 97520. 4. City of Ashland, an Oregon municipal corporation ("City"), with an address at 20 East Main Street, Ashland, OR 97520. RECITALS: ACH A. ACH is tax exempt under Section 501(c)(3) of the Code and is a nonprivate foundation under Sections 509(a)(1) and 170(b)(1)(A)(iii) of the Code which together describe a charitable hospital. The City is the sole member of ACH. ACH owns and operates Ashland Community Hospital, which is located in Ashland, Oregon. Ashland Community Hospital is licensed by the Oregon Health Authority ("OHA") Public Health Division as a general hospital for 49 beds and three satellite locations: (1) ACH Center for Family Medicine, 628 North Main Street, Ashland, OR 97520; (2) ACH Center for Internal Medicine, 560 Catalina Drive, Ashland, OR 97520; and (3) ACH Center for Family Medicine, 49 Talent Avenue, Talent, OR 97540. B. In addition, ACH owns and operates Ashland Home Health Agency, 1970 Ashland St, Suite 1, Ashland, OR 97520, which is licensed by the OHA Public Health Division as a home health agency. C. In addition, ACH owns and operates Ashland Community Hospital Hospice, 1970 Ashland St., Ashland, OR 97520, which is licensed by the OHA Public Health Division as a hospice. Page 1 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 D. In addition, ACH owns and/or operates health or other services in a number of locations as further described in Section 32.10.5 and Schedule 32.10.5. ACH FOUNDATION E. ACH Foundation is tax exempt under Section 501(c)(3) of the Code and is a nonprivate foundation under Sections 509(a)(1) and 170(b)(1)(A)(vi) of the Code, which together describe a public charity. ACH Foundation has members who are individuals, but ACH Foundation is an independent foundation in that neither ACH, the City, nor Asante are members of ACH Foundation. ACH Foundation's mission is to support ACH. F. Among the assets owned by ACH Foundation are five parcels of real property which are critical to the successful operation of ACH. Pursuant to and subject to the terms and conditions of this Agreement, at the Closing ACH Foundation will convey to ACH fee simple title to the five parcels as provided in Section 9.2 and its subsections. CITY G. The City is the sole member of ACH. H. Among the assets owned by the City are two parcels of real property which the City leases to ACH pursuant to a Facilities Lease dated June 18, 1996, as amended. Pursuant to and subject to the terms and conditions of this Agreement, at the Closing the City will convey to ACH fee simple title to the two parcels as provided in Section 9.1. ASANTE 1. Asante is tax exempt under Section 501(c)(3) of the Code and is a nonprivate foundation under Sections 509(a)(1) and 170(b)(1)(A)(iii) of the Code which together describe a charitable hospital. Asante owns and operates Rogue Regional Medical Center in Medford, Oregon and Three Rivers Medical Center in Grants Pass, Oregon. In addition, Asante is the sole member of certain affiliated health care organizations and fundraising foundations. Asante's mission is to provide quality healthcare services in a compassionate manner valued by the communities it serves. Asante's service area includes without limitation nine southern Oregon and northern California counties. J. Pursuant to a Letter of Intent dated February 13, 2013 and executed by the Parties on February 19, 2013 (the "Letter of Intent" or "LOI"), the Parties agreed to pursue a transaction in which ACH will affiliate with Asante and integrate with Asante, and in which Asante will become the sole member of ACH as of the Closing Date (as defined in Section 27.2 and its subsections) (the "Affiliation"). As a result of the Affiliation, ACH will continue to serve the health needs of the communities served by ACH. Page 2 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 K. Effective March 11, 2013, Asante and ACH entered into a Management Agreement pursuant to which Asante fully manages ACH. Upon the Closing of this Agreement, the Management Agreement will terminate, if not earlier terminated according to its terms. L. The Parties have entered into this Agreement for the affiliation and integration of ACH and Asante to achieve the following purposes, principles, vision and values: 1. Community Benefit. The Affiliation of ACH and Asante is being undertaken to serve the community interest and is being done in the best interests of all relevant constituent groups in the region. Specifically, the Parties desire to combine their efforts to further improve health care in the Ashland area as well as the delivery of patient and person-centered health care to the region and the enhancement of services availability and access. The Asante and ACH Board members believe this Agreement for the Affiliation of ACH and Asante will provide significant benefits to: i. The community by enhancing a community health resource (ACH) dedicated to having the ability to improve the health status of the population while managing the per capita costs to provide affordability; ii. The patients by providing access to a patient focused continuum of high quality, integrated healthcare services through convenient local primary care access points and specialty services; and iii. The physicians by creating growth opportunities for existing physician practices, increasing access to specialists, and assuring the continued availability of local primary care physicians and expanding practice support services. 2. Vision and Values. The Parties share the common values of the need for the strong involvement of community leaders in the delivery of health care. The Parties desire a healthcare system providing the Ashland area community with quality healthcare providers conveniently accessible and capable of meeting the full range of needs of the community. The Parties desire to combine their efforts to further improve health care in the Ashland area and surrounding communities as well as the delivery of patient and person-centered health care to the region and the enhancement of service availability and access. M. The transactions contemplated by this Agreement are exempt from the notice, public hearing and approval requirements of ORS 65.803 pursuant to ORS 65.803(4) because the City, which is a political subdivision of the state of Oregon, controls the operations of ACH. N. This Agreement is the Definitive Agreement between the Parties with respect to the Affiliation. AGREEMENT: NOW THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the Parties agree as follows: Page 3 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 1. Change of Membership. Effective as of the Closing Date, the City and ACH shall amend or restate the articles of incorporation and corporate bylaws of ACH (respectively, the "ACH Amended Articles" and "ACH Amended Bylaws") to provide that Asante shall be the sole member of ACH. This shall be deemed to be a transfer by the City of its sole membership interest in ACH to Asante. 2. Corporate Structure and Governance of ACH. The sole member of ACH shall become Asante, an Oregon nonprofit corporation that is exempt from federal income tax under Section 501(c)(3) of the Code. Effective as of the Closing Date, the City and ACH shall amend or restate ACH's articles of incorporation and corporate bylaws to conform to the forms attached hereto as Exhibits 27.3.2.1 and 27.3.2.2, respectively, which shall include provisions to the following effect: 2.1 Sole Corporate Member; Reserve Powers. Subject to the terms and conditions of this Agreement and effective as of Closing, Asante shall have all the powers, rights and authorities of the sole corporate member of ACH, including without limitation the reserve and related powers of Asante described in the ACH Amended Bylaws. 2.2 Board of Directors. The ACH board of directors shall be comprised of the same individuals as the Asante board of directors ("Asante Board"). The individuals who are from time to time members of the Asante Board shall serve simultaneously as the members of the board of directors of ACH (the "ACH Board") for so long as they serve on the Asante Board. The individuals who are ex-officio members of the Asante Board shall be ex-officio members of the ACH Board. The individuals who serve from time to time as the officers of Asante shall serve simultaneously as the corresponding officers of ACH. Additional governance provisions which will be contained in the ACH Amended Bylaws and in the corporate bylaws of Asante, as appropriate, are in Section 12 of this Agreement and its subsections. 2.3 Mission Statement. ACH shall adopt Asante's mission statement, as set forth in Exhibit 2.3 attached hereto, to reflect its affiliation with Asante. 2.4 Annual Meeting. The annual meeting of the ACH Board shall be held each year, during the same week as the Asante Board's annual meeting. 2.5 Fiscal Year. ACH's fiscal year end shall be changed to September 30 effective on the first September 30 following the Closing Date. 2.6 Asante Policies. ACH shall abide by, follow, and be subject to each of the policies, systems, and procedures of Asante, as the same may be changed from time to time, and operate as a part of the health care system comprised of hospitals and health care organizations owned and operated by Asante. 3. ACH Foundation. ACH Foundation shall retain its legal structure as an independent public benefit corporation until such time as ACH Foundation and Asante mutually agree to Page 4 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 affiliate more closely. During the period of time Asante operates ACH as a general hospital in accordance with OAR 333-500-0032(2)(a) (hereinafter "General Hospital"), but in no event longer then fifteen years after the Closing Date, Asante will maintain a staffed ACH Foundation office on the ACH campus, subject to the requirement that ACH Foundation exists to provide and does provide financial support exclusively to ACH. Asante, ACH, and ACH Foundation will each comply with the terms of any restricted grant or fund. For as long as Asante operates ACH as a General Hospital, but subject to the requirement that ACH Foundation exists to provide and does provide financial support exclusively to ACH continuously during the period of time Asante operates ACH as a General Hospital, if Asante fails to maintain a staffed office for ACH Foundation at ACH during the time that Asante operates ACH as a General Hospital, then at the time that Asante ceases to maintain a staffed office for ACH Foundation (the "Cessation"), Asante will pay to ACH Foundation the following sum: (1) if the Cessation occurs during the first three years after the Closing of this Agreement, Asante will pay to ACH Foundation a sum equal to the cost of operating ACH Foundation for the remaining balance of the first three years following the Closing of this Agreement, provided that such sum shall not be less than the cost of operating ACH Foundation for one year; or (2) if the Cessation occurs after the first three years following the Closing of this Agreement but prior to the expiration of 15 years following the the Closing of this Agreement, then Asante will pay to ACH Foundation a sum equal to the cost of operating ACH Foundation for one year. For the purposes of this Agreement, the cost of operating ACH Foundation will include the costs that ACH Foundation will incur to pay for staff, facilities, goods and services comparable to those provided for ACH Foundation at ACH on average, during the twelve months prior to the Cessation. 4. No Other Consideration. No other consideration not specified in this Agreement shall be provided by Asante to ACH, ACH Foundation, or the City. 5. Commitments by Asante in First Three Years. During the first three years after the Closing Date, Asante agrees to the following two commitments in Sections 5.1 and 5.2: 5.1 Operate ACH as a General Hospital; and 5.2 ACH Financial Operations. 5.2.1 Make minimum investments in ACH for capital improvements owned by ACH, of at least $10 million consisting of no less than $2.5 million invested within the first year after the Closing Date, no less than a cumulative total of $5.5 million invested within the first two years after the Closing Date, and no less than a cumulative total of $10 million invested within the first three years after the Closing Date. The term "capital improvements" for purposes of this Agreement shall mean any expenditure that would be appropriately capitalized based on generally accepted accounting principles ("GAAP"), and shall include without limitation capital costs associated with information technology and associated with the rental or development of medical office buildings rented or owned by ACH in Ashland and/or the equipping thereof. Page 5 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 5.2.2 Fund the Ashland Community Hospital Retirement Plan (the "Plan") in the amounts equal to at least an average of $900,000 annually. 5.2.3 Not cause any distributions of real property from ACH to Asante, or any other entity. 5.2.4 In the event of a reversion in Section 6 and its subsections or Section 8 and its subsections, ACH's cash balance on the date of reversion will be equal to or greater than ACH's cash balance on the Closing Date. 5.3 Verification; Audit. The investments by Asante shall be subject to written verification and/or audit of the amounts actually paid by Asante for investments in ACH in the fonn of capital improvements. Asante will provide the City and ACH Foundation with a written statement within 120 days after the end of the first 12 month period after the Closing Date showing the amount actually paid or spent by Asante for investments in ACH in the form of capital improvements during the first 12 months after the Closing Date, and the capital improvements on which the amount was paid or spent. Similar written statements shall be provided by Asante to the City and ACH Foundation within 120 days after the end of the second and third 12 month periods after the Closing Date. The City, ACH Foundation, or both of them may request an audit in writing to Asante within 30 days after receipt by the City and the Foundation of Asante's written statement for the applicable year in the first three years after the Closing Date. Whichever Party may request an audit, whether it is the City or the Foundation, shall be responsible for paying the costs and expenses of the audit unless the audit discloses an overstatement by Asante in excess of $10,000, in which case Asante will pay for the audit. Asante agrees to make available to the auditor Asante's books and records relating to the amounts paid by Asante for the investments in ACH in the form of capital improvements. 6. Event of Default Regarding Section 5.1; City's Reversionary Clause. In the event Asante does not operate ACH as a General Hospital, as evidenced by revocation by Oregon Health Care Licensure of ACH's license as a General Hospital, during the first three years after the Closing Date as provided in Section 5.1, and in the event Asante has not activated the reversionary clause as described in Section 8 (either or any of Sections 8.1, 8.2, or 8.3), the City shall have the right to activate the reversionary clause in this Section 6 ("City's Reversionary Clause"), in the City's sole discretion, by providing written notice to Asante and ACH Foundation within 30 days after the date, if any, that Asante does not operate ACH as a General Hospital at any time during the first three years after the Closing Date. 6.1 Effect of City's Reversionary Clause. In the event the City timely activates the City's Reversionary Clause as provided in Section 6, Asante agrees to do the following in Sections 6. 1.1 and 6.1.2: 6.1.1 Asante will orderly transfer its sole membership and operations in ACH to the City, and the City will thereafter have the right to deal with ACH in accordance with the City's rights as the sole member of ACH. Asante will orderly transfer its sole membership and operations in ACH by amending or restating the articles of incorporation and corporate bylaws of Page 6 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ACH, within 60 days of receipt of the City's written notice in Section 6 of activation of the City's Reversionary Clause, to provide that the City will be the sole member upon the date the amended or restated articles of incorporation are filed with the Oregon Corporation Division. The City shall have the right to review the amended or restated articles of incorporation of ACH in advance of Asante filing them, and the City shall have the right to comment to Asante on the amended or restated articles of incorporation for the purpose of assuring that the amended or restated articles will achieve their intended purpose of making the City the sole member of ACH. In addition, Asante will give the City access to and the right to copy or obtain electronic access to the books and records of Asante with respect to ACH and its operations, with the intent being that the City will be able to own and operate ACH in the event the City activates the City's Reversionary Clause. 6.1.2 Asante will pay to ACH $8 million, reduced by the amount of contributions in excess of an average of $900,000 annually paid by Asante to the Plan, such reduction not to exceed $2 million total, on or within 60 days after the date that the amended or restated articles of incorporation of ACH are filed with the Oregon Corporation Division, as described in Section 6.1.1; provided however that if Asante in its sole discretion pays the Umpqua Bank loan in full, Asante shall have no obligation to pay ACH the aforedescribed $8 million, as adjusted. 6.1.3 Upon payment of the $8 million, as adjusted, by Asante to ACH, the funding of at least an average of $900,000 annually to the Plan, and the filing of the amended or restated articles of incorporation of ACH with the Oregon Corporation Division as provided in Section 6.1.2, Asante shall have no further liability with respect to the Plan, to ACH, the City, ACH Foundation and/or to any persons or entities who are sponsors of, participants in, or beneficiaries of or with respect to or arising from the Plan, and all such liability shall thereafter be with and for the account of ACH and the City. This exoneration of Asante from liability shall be in addition to the satisfaction of liability provisions of Section 6.2. 6.2 Effect of $8 Million Payment, as Adjusted, by Asante. In the event the City activates the City's Reversionary Clause in Section 6, the $8 million payment, as adjusted, by Asante to ACH as provided in Section 6.1.2 shall be deemed to be in full satisfaction of any liability or claim for damages, injunctive relief or otherwise owing to ACH, the City of Ashland and/or ACH Foundation arising out of this Agreement except for (1) the City's interest as an additional insured under Asante's or ACH's general liability policy from the signing of this Agreement until the earlier of three years after the Closing Date or any reversion of Asante's sole membership interest in ACH to the City under this Section 6 and its subsections, (2) the agreement to pay the amounts described in subsection 5.2.1 or Section 7 and its subsections, whichever may be applicable, up to the date of any default, prorated for the month or partial month of the year in which Asante defaults, if at all, and (3) the agreement in subsection 5.2.4 that ACH's cash balance on the date of reversion will be equal to or greater than ACH's cash balance on the Closing Date. In the event of a reversion pursuant to Section 6 and its subsections, the Plan liability of ACH shall be with ACH and the City after the reversion of Asante's sole membership interest in ACH, and Asante shall have no further liability with respect to those liabilities. Without limitation of the foregoing provisions of this Section 6.2, any and all costs, Page 7 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 including without limitation personnel costs incurred by Asante associated with maintaining ACH medical, information, or telecommunication system licenses, licensure and operating agreements shall be the responsibility of Asante prior to the payment of the $8 million in subsection 6.1.3, and shall by the responsibility of the City and ACH commencing with the date of the payment by Asante of the $8 million, as adjusted, as provided in subsection 6.1.3. 6.3 Real Property. The real and personal property conveyed by the City and ACH Foundation to ACH at the Closing shall remain with ACH during the first three years after the Closing. The property conveyed by the City to ACH shall remain with ACH upon the reversion in this Section 6 and its subsections. 7. Event of Default Regarding Subsection 5.2.1. Subject to Section 7.1, in the event Asante defaults in payment of at least $2.5 million in ACH capital investments within the first year after the Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the difference between $2.5 million and the lesser amount Asante actually paid during the first year after the Closing Date. Subject to Section 7. 1, in the event Asante defaults in payment of at least a cumulative total of $5.5 million in ACH capital investments within the first two years after the Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the difference between $5.5 million and the lesser amount Asante actually paid during the first two years after the Closing Date. Subject to Section 7.1, in the event Asante defaults in payment of at least a cumulative total of $10 million in ACH capital investments within the first three years after the Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the difference between $10 million and the lesser amount Asante actually paid during the first three years after the Closing Date, which amount will be verified as per Section 5.3. 7.1 Default under Section 7; Verification; Audit. In the event the written statement provided by Asante to the City and ACH Foundation pursuant to Section 5.3 shows that Asante did not make the minimum investments in ACH capital improvements during any of the first three years as provided in Section 7, or in the event any audit requested pursuant to Section 5.3 shows that Asante did not make the minimum investments in ACH capital improvements during any of the first three years as provided in Section 7, Asante will be in default in payment of the applicable amount for the applicable year in Section 7, in which case Asante will pay ACH Foundation the difference between the amount Asante was obligated to pay under Section 7 and the lesser amount Asante actually paid during the applicable year. In the event of a default in payment by Asante as defined in the immediately preceding sentence in this Section 7.1, Asante will pay any amount due to ACH Foundation under Section 7, as further provided in Section 7. 1, within 90 days after the written verification and/or audit is completed. 7.2 Effect of the Payments by Asante to ACH Foundation. The payments by Asante pursuant to this Section 7 and its subsections with respect to default in payment of the $10 million or the portion thereof as provided in Section 7 shall be in full satisfaction of any liability or claim for damages, injunctive relieve or otherwise owing to the City, ACH, or ACH Foundation arising out of this Agreement, except for (1) Asante's agreement to operate ACH as a General Hospital during the first three years after the Closing Date as provided in Section 5. 1, or, in the event Section 9.8 is applicable, Asante's agreement to operate ACH as a General Hospital Page 8 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 in Section 9.8 in years four through fifteen after the Closing Date, (2) the City's interest as an additional insured under Asante's or ACH's general liability policy from the signing of this Agreement until the earlier of three years after the Closing Date or any reversion of Asante's sole membership interest in ACH to the City under Section 6 and its subsections, (3) the agreement to pay the amounts described in subsection 5.2.1 or to pay to ACH Foundation the amount required to be paid in Section 7 and its subsections in the event of a default in payment by Asante under Section 7.1 up to the date of any default, whichever may be applicable, prorated for the month or partial month of the year in which Asante defaults, if at all, in the payment of the applicable amounts required, and (4) any obligation of Asante with respect to a staffed ACH Foundation office as provided in Section 3. 8. Asante's Reversionary Clause. Subject to the terms and conditions of this Section 8 and elsewhere in this Agreement, Asante shall have the right, at its sole discretion, to cause a reversion of its sole membership interest in ACH to the City pursuant to this Section 8 and its subsections if any one or more of the following events in Section 8.1, 8.2, or 8.3 occur at any time within the first three years after the Closing Date ("Asante's Reversionary Clause"): 8.1 Unfunded Defined Benefit Pension Liability of ACH. The unfunded Plan liability, based on GAAP standards plus any cash payments made into the Plan at any time during the first three years exceeds $16 million at any time during the first three years ending after the Closing Date. Prior to the Closing Date of this Agreement, the Plan is a governmental plan under Section 414(d) of the Code. The Plan received a favorable determination letter from the Internal Revenue Service in 1997. The Plan was frozen effective December 31, 2006, which eliminated future benefit accruals and closed the Plan to new entrants. After the Closing Date, the Plan will become a nongovernmental plan. Milliman, Inc., actuaries shall make a written determination within 180 days after the end of each of the first three full Plan years after the Closing Date as to whether the Plan has an unfunded defined benefit pension plan liability which exceeds $16 million. Asante or ACH shall be responsible for paying for the cost of each such determination by Milliman, Inc. The determination of Milliman, Inc. shall be final and binding on the Parties. Asante shall provide the City and ACH Foundation with a copy of the determination of Milliman, Inc. within 30 days of receipt by Asante of the determination from Milliman, Inc.; or 8.2 It is determined at any time during the first three years that there are liabilities that have a negative impact of $4 million or more on the ACH Income Statement or Balance Sheet, as defined in and prepared in accordance with GAAP, as a result of any unknown liabilities or known liabilities arising from acts or omissions that occurred prior to the Closing Date and which are not quantifiable at the time of the Closing Date of this Agreement, excluding: (1) the unfunded Plan liability described in Section 8.1, (2) the existing Umpqua Bank loan to ACH, and (3) all liabilities in the amount stated on the ACH Balance Sheet immediately prior to the Closing; provided, however, that any liabilities arising from Asante's negligent acts or omissions after the Closing shall not be counted in determining a negative impact of $4 million or more; or 8.3 Acts or omissions that occurred prior to the Closing Date cause (1) the federal tax exempt status of ACH under Code Section 501(c)(3) or nonprivate foundation status under Code Page 9 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 Sections 509(a)(1) and 170(b)(1)(A)(iii) to be terminated or revoked, or (2) the Medicare and/or Medicaid provider status of ACH to be terminated or revoked. 8.4 Activation of Asante's Reversionary Clause. If any one or more of the events described in Sections 8.1, 8.2, and/or 8.3 occurs within the first three years after the Closing Date, Asante shall have the right to activate Asante's Reversionary Clause by giving written notice to the City and ACH Foundation at any time following the determination in Section 8.1 or 8.2, or within 60 days of the termination or revocation in Section 8.3. 8.5 Effect of Activation of Asante's Reversionary Clause. In the event Asante activates Asante's Reversionary Clause, Asante agrees to do the following: 8.5.1 Asante will orderly transfer its sole membership and operations in ACH to the City, and the City will thereafter have the right to deal with ACH in accordance with the City's rights as the sole member of ACH. Asante will orderly transfer its sole membership and operations in ACH by amending or restating the articles of incorporation and corporate bylaws of ACH, within 45 days of activation of Asante's Reversionary Clause, to provide that the City will be the sole member upon the date the amended or restated articles of incorporation are filed with the Oregon Corporation Division. The City shall have the right to review the amended or restated articles of incorporation of ACH in advance of Asante filing them, and the City shall have the right to comment to Asante on the amended or restated articles of incorporation for the purpose of assuring that the amended or restated articles will achieve their intended purpose of making the City the sole member of ACH. In addition, Asante will give the City access to and the right to copy or obtain electronic access to the books and records of Asante with respect to ACH and its operations, with the intent being that the City will be able to own and operate ACH in the event Asante activates Asante's Reversionary Clause. 8.5.2 In the event Asante activates Asante's Reversionary Clause and effective upon the filing of the amended or restated articles of incorporation of ACH with the Oregon Corporation Division as provided in Section 8.5.1, Asante shall have no further liability to ACH, the City, ACH Foundation and/or to any persons or entities who are sponsors of, participants in, or beneficiaries of the Plan with respect to the Plan which was frozen effective December 31, 2006, or defined contribution plan funded quarterly, and all such liability shall be with and for the account of ACH and the City. This exoneration of Asante from liability after the filing of the amended or restated articles of incorporation of ACH shall be in addition to the satisfaction of liability provisions of Section 8.6. In the event the City's Reversionary Clause is activated or Asante's Reversionary Clause is activated, the City shall indemnify and hold harmless Asante and its officers, directors, employees and agents from and against any claims, liabilities, losses, damages and expenses arising from or with respect to the Plan. 8.6 Effect of Transfer of Sole Membership by Asante to the City. In the event Asante activates Asante's Reversionary Clause in Section 8 and its subsections, any such transfer of sole membership in ACH by Asante to the City described in Section 8.5 is in full satisfaction of any liability or claim for damages, injunctive relief or otherwise owing to ACH or the City arising out of the Agreement, except for (1) the agreement to pay the amounts described in subsection Page 10 -AFFILIATION AGREEMENT PDXDOCS:1998401.9 5.2.1 or Section 7, whichever may be applicable, up to the date Asante triggers or activates Asante's Reversionary Clause, prorated for the month or partial month of the year in which Asante triggers or activates Asante's Reversionary Clause, if at all, and (2) the agreement in subsection 5.2.4 that ACH's cash balance on the date of reversion will be equal to or greater than ACH's cash balance on the Closing Date. In the event of a reversion pursuant to Section 8 and its subsections, the defined benefit pension liability of ACH and the Umpqua Bank liability of ACH will remain with ACH and the City after the reversion of Asante's sole membership interest in ACH to the City, and Asante shall have no liability with respect to those liabilities. Without limitation of the foregoing provisions of this Section 8.6, any and all costs, including without limitation personnel costs incurred by Asante associated with maintaining ACH medical, information, or telecommunication systems licenses, licensure, and operating agreements prior to a reversion pursuant to Section 8 and its subsections shall be the responsibility of Asante, and such costs incurred thereafter shall be the responsibility of the City and ACH commencing with the effective date of the filing of the amended or restated articles of incorporation of ACH as referred to in Section 8.5.2. 9. Real Estate Arrangements Among the Parties. The Parties agree to each of the following: 9.1 Conveyances By the City to ACH. Prior to the Closing, the City and ACH are parties to an unrecorded Facilities Lease entered into June 18, 1996 pursuant to which the City leases to ACH the two parcels of real property described in Exhibit 9.1, together with all facilities and other improvements located thereon including but not limited to land improvements, buildings and fixed equipment. Effective upon the Closing Date, the City shall convey to ACH all of the City's assets leased by the City to ACH including without limitation the two parcels of real property described in Exhibit 9.1 and the improvements, buildings and fixed equipment located thereon. The two parcels of real property described in Exhibit 9.1 are (1) Parcel I on which the main hospital buildings of ACH are located, with a situs address of 278 and 280 Maple St., Ashland, OR 97520, and (2) Parcel V on which ACH Internal Medicine and Information Technology operations are located, with a situs address of 560 Catalina Dr., Ashland, OR 97520. The City shall convey to ACH at the Closing fee simple title to the two parcels of real property described in Exhibit 9.1 and all improvements, buildings and fixed equipment located thereon by statutory warranty deeds and bills of sale, free and clear of all liens and encumbrances except for the line of credit deed of trust of Umpqua Bank dated January 5, 2004, recorded January 9, 2004 in the Jackson County Official Records as No. 2004-001245. The City and ACH agree to obtain the written consent of Umpqua Bank to the conveyance of Parcel I to ACH. The form of the statutory warranty deeds are attached as Exhibit 9.1A and 9.113. 9.2 Conveyances by ACH Foundation to ACH. Effective upon the Closing Date, ACH Foundation shall convey to ACH fee simple title to the following five specific parcels of real property owned by ACH Foundation, including without limitation the land, buildings, improvements, and fixed equipment: 9.2.1 317 Maple Street, Ashland, Oregon (house used for storage), as legally described in Exhibit 9.2.1 as Parcel III. Page 11 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 9.2.2 530 Catalina Street, Ashland, Oregon (parking lot), as legally described in Exhibit 9.2.2 as Parcel VI. 9.2.3 628 North Main Street, Ashland, Oregon (medical office building), as legally described in Exhibit 9.2.3 as Parcel VIII. 9.2.4 49 Talent Avenue, Talent, Oregon (medical office building), as legally described in Exhibit 9.2.4 as Parcel XI, Tract A. 9.2.5 209 North Pacific Highway, Talent, Oregon (commercial building to be used for storage and possibly offices), as legally described in Exhibit 9.2.5 as Parcel X. 9.3 Terms of Conveyances by ACH Foundation. The conveyances by ACH Foundation to ACH of each of the five aforedescribed parcels of real property and all buildings, improvements and fixed equipment located thereon at the Closing shall be by statutory warranty deeds (except for Parcel XI, Tract A described in Section 9.2.4 which may be by bargain and sale deed) and bills of sale, free and clear of all liens and encumbrances except for the existing lien in the amount of approximately $82,000 encumbering the property at 209 North Pacific Highway in Talent, Oregon (the "Talent Property" described in Section 9.2.5 above) which Asante agrees to assume or pay off as of the Closing Date, and to pay the promissory note in connection with such existing lien according to its terms. ACH will grant to ACH Foundation (or ACH Foundation may reserve) an easement across the Talent Property for access to other property owned by ACH Foundation, and ACH Foundation will grant to ACH an easement across other property owned by ACH Foundation for access to the Talent Property. 9.4 License For and Guarantee of Parking Spaces at 588 North Main Street in Ashland. ACH Foundation also owns a parcel of real property located at 588 North Main Street, Ashland, Oregon, which is legally described on Exhibit 9.4 as Parcel IX, Tract F. This parcel of real property will not be conveyed by ACH Foundation to ACH, but commencing on the Closing Date, ACH Foundation hereby licenses and guarantees to ACH and Asante the unrestricted use of 10 parking spaces on this parcel for visitors (i.e., patients and invitees) to ACH Family Medicine, which is located at 628 North Main Street, Ashland, Oregon, which is described in Section 9.2.3 above. This license and guarantee by ACH Foundation shall be perpetual, subject to revocation by ACH Foundation only in the event of a reversion of Asante's sole membership interest in ACH under Sections 6 or 8. 9.5 ACH Foundation Reversionary Clause. Commencing on the Closing Date, ACH Foundation shall have a reversionary clause ("ACH Foundation Reversionary Clause"), as provided in this Section 9.5, and which will be contained in each of the five deeds from ACH Foundation to ACH as described in Section 9.3, which will provide that in the event Asante does not operate ACH as a General Hospital during the first three years after the Closing Date as described in Section 5.1, or in the event Asante activates Asante's Reversionary Clause with respect to Asante's sole membership interest in ACH as provided in Section 8 and its subsections, ACH Foundation will have the right, in its sole discretion, to activate the Page 12 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 reversionary clause(s) in any one or more or all of the five deeds by providing written notice to Asante and the City within 90 days after the occurrence of either such event. 9.6 Obligation of Asante and ACH if ACH Foundation Reversionary Clause is Activated. In the event ACH Foundation activates the ACH Foundation Reversionary Clause with respect to any one or more of the deeds described in Section 9.5, Asante shall cause ACH to reconvey to ACH Foundation the real property and all buildings, improvements and fixed equipment located on the parcels of property described in the written notice of activation of the ACH Foundation Reversionary Clause. Such reconveyance(s) by ACH to ACH Foundation shall be by statutory warranty deed for properties conveyed by ACH Foundation to ACH by statutory warranty deed and by a special warranty deed for any property conveyed by ACH Foundation to ACH by a bargain and sale deed, as applicable to the parcel being reconveyed, as provided in Section 9.3, and each such deed will be subject to any liens and encumbrances which existed against such real property as of the Closing Date (provided the indebtedness secured by any such lien or encumbrance shall not exceed the amount of such indebtedness at the time of conveyance of the property by ACH Foundation to ACH), but will not be subject to any liens and encumbrances created or suffered by ACH or Asante after the Closing. Any such reconveyance(s) by ACH to ACH Foundation described in this Section 9.6 shall be delivered by ACH to ACH Foundation within 60 days of receipt by ACH and Asante of the written notice from ACH Foundation of activation of the ACH Foundation Reversionary Clause. 9.7 Effect of Reconveyance from ACH to ACH Foundation. In the event the reversionary clause in Section 9.5 is activated, the reconveyance of the assets by ACH to ACH Foundation shall be in full satisfaction of any liability or claim for damages, injunctive relief or otherwise owing to ACH Foundation arising from any obligation of Asante to meet or perform the agreement to operate ACH as a General Hospital in Section 5.1, except for (1) the agreement of Asante to fund capital improvements as provided in subsection 5.2.1, or (2) the agreement of Asante to pay to ACH Foundation amounts required to be paid in Section 7 (as further provided in Section 7. 1), whichever may be applicable, up to the date Asante triggers the reversionary clause, prorated for the month or partial month of the year in which Asante triggers the reversionary clause, if at all. 9.8 Years Four through Fifteen after Closing. For the first three years after the Closing Date, and in the event (1) Asante has not activated Asante's Reversionary Clause in Section 8 and (2) Asante does not cease operating ACH as a General Hospital during the first three years after the Closing Date as provided in Section 5.1, Asante further agrees that it will operate ACH as a General Hospital for an additional twelve (12) years. In the event the twelve (12) year period of ACH operating as a General Hospital is not satisfied, Asante will pay to the City $4 million in full satisfaction of any liability or claim for damages, injunctive relief or otherwise arising out of this Agreement, including without limitation any liability or claim that Asante is obligated to operate ACH as a General Hospital for an additional twelve (12) years, except for any required payments from Asante to ACH Foundation in Section 7 (as further provided in Section 7.1). In the event the condition with respect to the $4 million payment by Asante is applicable, Asante will make the payment within 60 days of the date Asante ceases operating ACH as a General Hospital. Page 13 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 9.9 Additional Agreements of the Parties Relating to the Conveyance of Real Pro ert . Attached as Exhibit 9.9 are additional agreements of the Parties relating to (1) the conveyance by the City to ACH of the two parcels of real property described in Section 9.1, and (2) the conveyance by ACH Foundation to ACH of the five parcels of real property described in Section 9.2 and its subsections. The agreements of the Parties in Exhibit 9.9 are incorporated into this Agreement by this reference and shall have the same force and effect as if such agreements were set forth as a section or part of this Agreement. 10. Finances; PERS. The City agrees to assume any liability of ACH related to the Public Employees Retirement System ("PERS") retirement plan of the City, including without limitation any such liability and/or unfunded liability or surplus with respect to the participation of the employees of ACH who were employees of ACH prior to and/or after July 1, 1996, irrespective of whether any one or more of such employees remain as employees of ACH as of the Closing Date or thereafter. In the event ORS 236.610(7) is applicable, which the Parties deny, this Section 10 constitutes the written agreement described in ORS 236.610(7). 11. Hospital Name. The name/branding of ACH will be Asante Ashland Community Hospital (or similar), in a manner substantially consistent with Asante's existing hospital facilities, Asante Rogue Regional Medical Center and Asante Three Rivers Medical Center. 12. Governance. 12.1 On Closing, Asante will elect a new Board of Directors for ACH, which will consist of the Asante Board. Each of the persons on the board of directors of ACH prior to the Closing Date shall resign as a board member of ACH effective concurrent with Closing. Immediately after the Closing, ACH will form an "Advisory Board" of community members which will consist of the persons on the ACH Board of Directors immediately prior to Closing, and shall include the current chief of the ACH Medical Staff up to two additional medical staff members and the Asante Chief Quality and Medical Officer. 12.2 The Chair of the ACH Advisory Board shall become an ex-officio, voting member of the Asante Board. 12.3 The current Chief of the ACH Medical Staff shall become an ex-officio, non- voting member of the Asante Board. 12.4 The ACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at ACH, and for confirming credentialing and other decisions of the ACH Medical Staff. The ACH Advisory Board actions and minutes will be submitted to the Asante Board, which will have the final approval authority. 12.5 It is the intent of all Parties that the ACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee. The agreements in Section 12.1 through 12.4 will be in effect until the date the ACH Advisory Board becomes the Asante Ashland Page 14 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 Community Hospital Quality Committee. Thereafter, the level of representation of the Ashland community on the Asante Board will be in accordance with the Asante corporate bylaws. 12.6 It is Asante's desire to merge ACH into Asante. The timing of this desire will be at Asante's sole discretion but in any event not before three years after Closing. 13. Covenant Not to Compete. The City and ACH Foundation each agree that they shall not either together or individually or with any other person or entity directly or indirectly own or operate or be affiliated with a hospital or other healthcare facility or service in competition with Asante Ashland Community Hospital in Jackson County, Oregon for the lesser of 15 years from the Closing Date or the date of a reversion in Sections 6, 8, or 9.5 and any applicable subsections of those Sections unless Asante withdraws all healthcare services from Ashland, Oregon. ACH Foundation's land lease arrangement for a retirement facility at 548 N. Main Street in Ashland, Oregon shall not be considered to violate the foregoing agreement so long as the suite of services provided as of the Closing do not substantively change after Closing The Parties acknowledge that the geographic and practice restrictions in this Section and the time period(s) of such restrictions are reasonable and necessary for the adequate protection of Asante's interests and agreements in this Agreement. A violation of any of the terms of this Section will cause irreparable harm and injury to Asante and ACH, the extent of which is extremely difficult or impossible to ascertain, and any remedy at law for breach of those terms and conditions will be inadequate. Accordingly, Asante and ACH shall be entitled as a matter of course, in addition to any other rights and remedies, to an injunction issued out of any court of competent jurisdiction or, at Asante's option, from the arbitral tribunal in Section 31.3 enjoining or restraining the City and/or ACH Foundation, as applicable, from continuing to do any act or commit any violation or threatened violation of this Section, and the City and/or ACH Foundation, as applicable, hereby consent to the issuance of such injunction or restraining order and agree that there shall be no bond or other security required in connection therewith. This covenant not to compete shall be construed as an agreement or covenant independent of any other provision of this Agreement. No claim or cause of action asserted by the City and/or ACH Foundation against Asante or ACH or any of their agents, officers, employees, or directors, whether or not predicated on or arising from this Agreement shall constitute a defense to the enforcement of this covenant not to compete. 14. ACH Employees. 14.1 Effective upon the Closing Date, Asante or ACH will extend every effort to offer at-will employment for as many ACH employees as possible at ACH or Asante, but Asante does not guarantee that all or substantially all ACH employees will be employed after the Closing Date. 14.2 Employees of ACH prior to the Closing Date who are at risk for not being employed by ACH or Asante after the Closing Date in the same or substantially similar positions which such employees had with ACH prior to the Closing Date, will be eligible to apply for other positions within Asante as though they were internal applicants of Asante, with the Page 15 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 exception of Asante employees who are members of the Oregon Nurses Association (ONA), who will have priority for such positions over such ACH employees. 14.3 Employees losing their jobs as a result of the Affiliation will be offered a severance payment consistent with ACH's severance guidelines immediately prior to the Closing Date. 14.4 Any employee of ACH prior to the Closing who is terminated, discharged, or laid off from employment by ACH prior to the Closing, and who is not rehired or employed by ACH, Asante or Asante Physician Partners after the Closing, shall be paid all wages and/or salary and unused Earned Time Off ("ETO") and other leave benefits payable at the time of such termination of employment not later than the end of the first business day after the termination of employment or discharge by ACH, as provided in ORS 652.140(1). 14.5 Employees of ACH prior to the Closing Date (the "Employees") shall continue to be employed following the Closing Date in the same or substantially similar positions. The Employees will maintain their seniority ("years of service") for the purposes of compensation and benefits programs. Employees will maintain their ACH health and welfare benefits from Closing through December 31, 2013. Employees will maintain accrued ETO and Extended Sick Time (EST) balances. Except as otherwise specifically noted, Employees will become subject to all Asante Human Resources and Administrative policies as of the Closing Date. 14.5.1 From the Closing Date, Employees will be paid their current base compensation rate and applicable differential rates but Employees will move from the ACH step pay system to Asante's merit pay system. 14.5.2 It is the intention of the Parties that as of January 1, 2014, Employees will move from ACH Health and Welfare Benefits and Retirement plans to the Asante plans. 14.5.3 From the Closing Date, Employees will move to the Asante ETO and EST plans including the Asante accrual rates. 14.6 Employees hired to ACH subsequent to the Closing Date will follow all Asante policies and be provided the same compensation and benefits plans as Asante employees. 14.7 Notwithstanding anything to the contrary in this Section 14 and its subsections or elsewhere in this Agreement, no provision of this Agreement is intended to or shall (i) be treated as an amendment to any particular employee benefit plan of Asante, ACH or any of their respective affiliates, (ii) obligate Asante or any of its respective affiliates to (A) maintain any particular benefit plan or arrangement or (B) retain the employment of any particular employee, (iii) prevent Asante or any of its respective affiliates from amending or terminating any benefit plan or arrangement, or (iv) give any third party the right to enforce any of the provisions of this Agreement, or create a continued right of employment for any Employee or employees. Except as limited in this Section, Asante retains the right to change, modify or terminate any wages, benefits, policies and procedures in its sole discretion as it deems appropriate. Page 16 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 15. Medical Staff. 15.1 Upon the Closing Date, the Asante ACH Medical Staff will continue with separate medical staff bylaws (the "Asante ACH Medical Staff Bylaws"), subject to the approval of the ACH Advisory Board and the ACH board of directors, which will be the Asante Board. 15.2 The Asante ACH Medical Staff will be responsible for credentialing and scope of services at ACH, subject to the overall quality requirements of Asante and the requirements of Asante's or ACH's liability coverage. The credential and peer review recommendations of the Asante ACH Medical Staff will be subject to the approval of the ACH Advisory Board and the Asante Board. 15.3 The Closing in and of itself will not impact or change (a) the medical staff privileges for members of the medical staff of ACH on the Closing Date, or (b) any agreements with members of the medical staff, whether the physicians are employed or contracted provided, however, that the foregoing statement shall not be deemed to preclude Asante and ACH from amending any contracts with physicians in accordance with the terms of such contracts or from establishing new procedures consistent with customary practices of other Asante hospitals and industry standards for medical staff approval and maintenance of medical staff privileges after the Closing Date. Further, the Closing will not impact or change the medical staff officers of ACH; such impact or change, if any, would only occur with action taken in accordance with the Asante ACH Medical Staff Bylaws. The consummation of the transactions contemplated in this Agreement shall not result in a need for any reapplications of current members of ACH Medical Staff, except as otherwise required by the Asante ACH Medical Staff Bylaws with respect to expiration of medical staff appointments or credentials. Prior to and after the Closing, Asante and ACH shall work with the medical staff to evaluate and, where feasible, pursue opportunities for medical staff/clinical integration where doing so offers opportunities for advancement in quality of care. 15.4 Upon the Closing, the Asante ACH Medical Staff shall amend its Bylaws as required in this Agreement. 16. Confidentiality. The Parties agree that the exhibits, schedules and appendices to this Agreement are exempt from the Public Records Law (see ORS 192.410) under ORS 192.502(4) ("Confidential Information"), some or all of which may also be exempt under ORS 192.501(2) (as "Trade Secrets"). The Parties mutually agree to treat all such information as confidential, in accordance with the Public Records Law and Sections 36.9, 36.10, 37.5, 38.8, and 38.9, and their respective subsections. In the event of conflict between this Section 16 and any other provision of this Agreement, this Section 16 shall prevail. 17. Public Statements. Subject to Section 2.5 of the Confidentiality and Non-Disclosure Agreement made on or about December 19, 2012 (the "CNDA"): Page 17 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 17.1 All Parties will work together to expeditiously develop mutually agreed upon talking points to be shared with the media and general public. 17.2 No Party shall disclose the terms of or negotiations with respect to the Definitive Agreements until such time as public notice is published for public consideration of the Definitive Agreement by the Ashland City Council. 17.3 No public statements about the proposed affiliation between Asante and ACH will be provided by any spokesperson for any of the Parties without prior approval of the other Parties, provided however, such approval will no longer be required with respect to the Definitive Agreement after notice of Ashland City Council's public consideration of the Definitive Agreement has been published. 17.4 Notwithstanding Sections 17.2 and 17.3, individual Ashland City Councilors may respond to questions from the news media or their constituents as to their views with respect to the proposed Affiliation between Asante and ACH. 18. Due Diligence. The Parties have been conducting due diligence since prior to the execution of the CNDA. The Parties will continue to conduct reasonable due diligence permitting the other Party or Parties and its or their employees, lenders, financial advisors, attorneys, accountants and other authorized representatives reasonable access to the Party's premises, employees, accountants, and books and records, including without limitation corporate compliance, to complete such due diligence investigations customary for transactions of this nature. Each Party shall cause all requested due diligence documents and information to be delivered to the other promptly. During the due diligence process, the interim ACH CEO will be notified of all identified issues that need immediate attention/resolution and will address these issues in a timely fashion. Any additional information discovered by any of the Parties during the due diligence process that has the potential to extend the timeline for successful completion of this Agreement or cause the integration of ACH into Asante to not occur must disclose this information to the other Parties immediately. All Parties agree to work in good faith to resolve any issue caused by this additional information, if possible, in an expeditious manner. Any and all terms in this Agreement are subject to confirmatory due diligence. Access to data, executives and other resources to complete such diligence is required and delays in such efforts could influence the timing of when the Affiliation is completed. All inspections will only occur at times and in a manner as will not unreasonably disrupt the delivery of care to patients or the other transaction of business by a Party. 19. Definitive Agreement. This Agreement constitutes the Definitive Agreement between the Parties with respect to the Affiliation. Asante will seek and file for regulatory approvals required prior to Closing, and such approvals will be required in order to complete the Affiliation; provided however, that Asante may waive this requirement with respect to obtaining any one or more approvals prior to the Closing Date. 20. Property Insurance. Asante agrees to maintain or cause ACH to maintain insurance coverage on the ACH property, structures and equipment at replacement value (including Page 18 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 properties conveyed to ACH by the City and ACH Foundation), to pay any insurance deductibles in the event of a covered loss, and to name the City of Ashland and ACH Foundation as additional insured parties with regard to their respective contributed properties under such insurance for the lesser of three years from the Closing, or the date of any reconveyance of the properties pursuant to a reversion. 21. No Brokers. Each Party represents and warrants to each other Party that the Party has not worked with, contracted with, or consulted any broker or other person or entity that may be entitled to compensation with respect to this Affiliation or Agreement. 22. Expenses. The Parties shall each pay their respective expenses (including fees and expenses of counsel, investment bankers, brokers, and/or other representatives and consultants) in connection with the CNDA, LOI, Management Agreement, and this Agreement. 23. Post Closing Audit. Subsequent to the Closing, ACH shall cause an audit in accordance with auditing standards generally accepted in the United States of America to be performed by, and secure an audit opinion from, Clifton Larson Allen as of the Closing. Immediately following the Closing, Asante will hire an auditing firm to conduct an audit on the financial position, results of operations, changes in net assets and cash flows of ACH as of the Closing Date ("Closing Date Audit"). The cost of obtaining such Closing Date Audit shall be borne by Asante, and the auditors shall be instructed to apply Asante's policies and procedures insofar as they relate to matters of accounting and financial controls. 24. Certain Liabilities. ACH shall be and remain fully liable for the defense and settlement of any medical malpractice, professional liability, or other liability claims, suits, or proceedings, of any kind or nature, whether known or unknown, contingent or fixed, relating to or arising out of any actual or alleged act or omission occurring prior to and through the Closing Date. With respect to any such liabilities, ACH shall use commercially reasonable efforts to resolve, terminate and/or extinguish such liabilities in a manner reasonably acceptable to Asante. 25. Liability Insurance Coverage. At the Closing, ACH shall remain under its current insurance policy and shall deliver to Asante written proof that ACH has obtained from ACH's current insurance company comprehensive general liability and professional liability insurance coverage with respect to all claims covered thereby attributable to or arising out of the operation of ACH on or before the Closing, regardless of when any such claims shall be made. At the Closing, ACH shall (i) cause said insurers to issue and deliver to Asante a certificate of insurance evidencing each tail insurance policy maintained by ACH hereunder, naming Asante as an additional insured thereunder, and ACH shall cause each such insurance policy to contain a clause requiring the insurer to give not less than 30 days prior written notice to Asante prior to the cancellation or modification of any such policy for any reason whatsoever; (ii) pay all premiums and take all other steps as may be reasonably necessary to maintain such tail insurance policies in full force and effect; and (iii) use its reasonable commercial efforts to avoid invalidating such insurance coverage. Page 19 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 26. ACH Existing Debt. Effective as to the Closing Date, ACH shall retain its obligations with respect to the Umpqua Bank debt described in Section 9.1 in place at the time of Closing. Following three years after Closing, Asante may, in its sole discretion, add ACH as a member of the Asante obligated group or as a designated affiliate with respect to Asante's tax exempt bonds. 27. Execution Date and Closing Date Requirements. 27.1 Execution Date Deliveries. 27.1.1 The execution of this Agreement by the Parties shall be subject to receipt of the items specified in subsections 27.1.2 through 27.1.5 below. No Party shall be deemed to have executed this Agreement until it has received or waived all required deliveries. 27.1.2 On the Execution Date, Asante shall deliver to ACH, the City, and ACH Foundation a copy of resolutions of the Asante Board, certified by the Secretary of Asante as having been duly adopted and still in effect as of the Execution Date, authorizing and approving the execution of this Agreement, the performance of all actions to be taken on behalf of Asante pursuant to this Agreement, and the completion of all transactions contemplated herein. 27.1.3 On the Execution Date, ACH shall deliver to Asante, the City, and ACH Foundation a copy of resolutions of the ACH Board, certified by the Secretary of ACH as having been duly adopted and still in effect as of the Execution Date, authorizing and approving the execution of this Agreement, the performance of all actions to be taken on behalf of ACH pursuant to this Agreement, and the completion of all transactions contemplated herein. 27.1.4 On the Execution Date, ACH Foundation shall deliver to Asante, the City, and ACH a copy of resolutions of the ACH Foundation Board, certified by the Secretary of ACH Foundation as having been duly adopted and still in effect as of the Execution Date, authorizing and approving the execution of this Agreement, the performance of all actions to be taken on behalf of ACH Foundation pursuant to this Agreement, and the completion of all transactions contemplated herein. 27.1.5 On the Execution Date, the City shall deliver to Asante, ACH, and ACH Foundation a copy of resolutions of the City, certified by the City Recorder as having been duly adopted and still in effect as of the Execution Date, authorizing and approving the execution of this Agreement, the performance of all actions to be taken on behalf of the City pursuant to this Agreement, and the completion of all transactions contemplated herein. 27.2 Closing Date: Closing. 27.2.1 Unless the Parties otherwise agree in writing, the arrangement and other transactions contemplated herein to become effective as of the Closing Date, shall become so effective, provided that as of the Closing Date all of the conditions precedent set forth in Sections 40, 41, 42, and 43 and their respective subsections have occurred, including the delivery Page 20 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 by each Party of all documents required to be delivered by such Party as set forth in this Section 27 and its subsections (the "Closing Date Documents"), except for any documents for which delivery has been waived in writing by a Party or Parties as of the Closing Date. 27.2.2 The delivery of the Closing Date Documents shall occur on July 31, 2013, or if all of the conditions precedent set forth in Sections 40, 41, 42, and 43 and their respective subsections have not occurred prior to such date, or such conditions precedent have been waived as provided in Section 27.2.1, such other date as is agreed to by the Parties (the "Closing Date" or the "Closing"), at the offices of Asante, 2650 Siskiyou Blvd., Medford, OR 97504 or. any other location agreed to by the Parties. Upon 7 days prior written notice, ACH or Asante may with mutual written agreement extend the Closing Date for up to 30 days if such Party is actively working towards completing all of the conditions precedent to Closing; all Parties must agree to any further extension. The Closing Date will also be automatically extended if any of the Parties are involved in the process described in Section 27.5 and its subsections but the process has not yet been completed thereunder, until completion of the process thereunder. 27.2.3 At the Closing, all documents to be executed and actions to be taken, pursuant to this Agreement, as of the Closing Date, shall be deemed to have been executed and to have been taken substantially concurrently, and no action shall be deemed to be complete until all are completed and all documents called for in this Agreement have been executed by all Parties. 27.3 Pre-Closing Actions. Prior to the Closing, the Parties shall take and cause to be taken all actions necessary or appropriate on their respective parts to implement the transactions contemplated herein on the Closing Date, including, without limitation, the following: 27.3.1 Actions by Asante. Prior to the Closing Date, the Asante Board shall approve the execution on behalf of Asante of this Agreement and of any and all other agreements and other documents and the taking of any and all other actions contemplated or required by this Agreement to be executed or taken by Asante on or before the Closing Date. 27.3.2 Actions by ACH and the City. Prior to the Closing Date, the ACH Board, and the City acting through the City Council, as appropriate, shall approve the execution by or on behalf of ACH and the City of this Agreement and of any and all other agreements and other documents, and the taking of any and all other actions contemplated or required by this Agreement to be executed or taken by ACH and the City on or before the Closing Date, including, without limitation, the following: 27.3.2.1 approve the ACH Amended Articles in substantially the form attached hereto as Exhibit 27.3.2.1; and 27.3.2.2 approve the ACH Amended Bylaws in substantially the form attached hereto as Exhibit 27.3.2.2. Page 21 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 27.3.3 Actions by ACH Foundation. Prior to the Closing Date, the ACH Foundation Board shall approve the execution on behalf of ACH Foundation of this Agreement and of any and all other agreements and other documents, and the taking of any and all other actions contemplated or required by this Agreement to be executed or taken by ACH Foundation on or before the Closing Date, including all such other actions as are necessary or appropriate to consummate the transactions contemplated or required by this Agreement. 27.4 Closing Document Deliveries. At the Closing, the Parties shall deliver the documents listed below. 27.4.1 Asante. At the Closing, Asante shall deliver the following documents (the "Asante Closing Documents"): 27.4.1.1 A certificate of the Asante President/Chief Executive Officer, dated as of the Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and completeness of Asante's representations and warranties, and its performance of the covenants and conditions precedent, set forth in this Agreement; 27.4.1.2 A certificate of the Chief Financial Officer of Asante, dated as of the Closing Date, certifying as of the date thereof, as to the accuracy of the financial representations and warranties relating to Asante and set forth at Section 33.4 and its subsections, and the performance of the covenants and conditions precedent relating to Asante set forth at Sections 37 and 41 hereof and their respective subsections; 27.4.1.3 A certificate of the Secretary of Asante, dated as of the Closing Date, certifying as to the due adoption and continued effectiveness of and attaching a copy of the resolutions of the Asante Board approving, with respect to Asante, the actions and transactions and actions required or contemplated by this Agreement; 27.4.1.4 Evidence of the insurance called for in Section 20 and ACH insurance policies; 27.4.1.5 Such other instruments and documents as may be reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof. 27.4.2 ACH. At the Closing, ACH shall deliver the following documents (the "ACH Closing Documents"): 27.4.2.1 A certificate of the Board Chair of ACH, dated as of the Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and completeness of representations and warranties of ACH and its respective performance of the covenants and conditions precedent, set forth in this Agreement; Page 22 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 27.4.2.2 A certificate of the Board 'Treasurer of ACH, dated as of the Closing Date, certifying as of the date thereof, as to the accuracy of the financial representations and warranties relating to ACH and set forth at Section 32.4 and its subsections, and the performance of the covenants and conditions precedent relating to ACH set forth at Sections 36 and 40 hereof and their respective subsections; 27.4.2.3 A certificate of the Secretary of ACH, dated as of the Closing Date, certifying as to the due adoption and continued effectiveness of, and attaching a copy of. (1) the resolutions of the ACH Board approving, with respect to ACH, the actions and transactions required or contemplated by this Agreement, including the Amended ACH Bylaws; 27.4.2.4 A copy of the ACH Amended Articles, in a form suitable and ready to be filed with the Secretary of State of the State of Oregon; 27.4.2.5 Evidence of the insurance called for in Section 25; 27.4.2.6 Legal Opinion of Oregon counsel to ACH, opining as to: (1) the due organization and good standing of ACH; (2) ACH's corporate power and authority to enter into this Agreement and such other agreements as are specified hereunder to be entered into by ACH, and to take such other actions as are contemplated to be taken by ACH hereunder; and (3) the due authorization, on behalf of ACH, of the execution and delivery of this Agreement and such other agreements as are specified hereunder to be entered into by ACH as of the Closing Date, and the performance of all other actions contemplated to be taken by ACH hereunder; and 27.4.2.7 Such other instruments and documents as may be reasonably necessary to carry out the transactions contemplated or required by this Agreement and to comply with the terms hereof. 27.4.3 ACH Foundation. At the Closing, ACH Foundation shall deliver the following documents (the "ACH Foundation Closing Documents"): 27.4.3.1 A certificate of the Executive Director of ACH Foundation, dated as of the Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and completeness of the Foundation's representations and warranties, and its performance of the covenants and conditions precedent, set forth in this Agreement; 27.4.3.2 A certificate of the Secretary of ACH Foundation, dated as of the Closing Date, certifying as to and including a copy of the resolutions of the ACH Foundation Board approving, with respect to ACH Foundation, the actions and transactions contemplated or required by this Agreement including without limitation the conveyance of the five parcels of real property to ACH at the Closing and the granting of the license in Section 9.4; 27.4.3.3 A copy of the statutory warranty deeds and bargain and sale deed in a form suitable and ready to be recorded by Jackson County, Oregon by the Title Company at the Closing; Page 23 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 27.4.3.4 Legal Opinion of Oregon Counsel, opining as to: (1) the due organization and good standing of ACH Foundation; (2) ACH Foundation's corporate power and authority to enter into this Agreement and such other agreements as are specified hereunder to be entered into by ACH Foundation, and to take such other actions as are contemplated to be taken by ACH Foundation hereunder; and (3) the due authorization, on behalf of ACH Foundation, of the execution and delivery of this Agreement and such other agreements as are specified hereunder to be entered into by ACH Foundation as of the Closing Date, and the performance of all other actions contemplated to be taken by ACH Foundation hereunder; and 27.4.3.5 Such other instruments and documents as may be reasonably necessary to carry out the transactions contemplated or required by this Agreement and to comply with the terms hereof. 27.4.4 The City. At the Closing, the City shall deliver the following documents (the "City Closing Documents"): 27.4.4.1 A certificate of the City .Administrator, dated as of the Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and completeness of the City's representations and warranties, and its performance of the covenants and conditions precedent, set forth in this Agreement; 27.4.4.2 A certificate of the City Recorder, dated as of the Closing Date, certifying as to and including a copy of the resolutions of the City Council approving, with respect to the City, the actions and transactions contemplated or required by this Agreement including without limitation the conveyance of the two parcels of real property to ACH at the Closing and the granting of the license in Section 9.4; 27.4.4.3 A copy of the two statutory deeds in a form suitable and ready to be recorded in Jackson County, Oregon by the Title Company at the Closing; 27.4.4.4 Legal Opinion of the Ashland City Attorney opining as to: (1) the due organization and good standing of the City; (2) the City's corporate power and authority to enter into this Agreement and such other agreements as are specified hereunder to be entered into by the City, and to take such other actions as are contemplated to be taken by the City hereunder; and (3) the due authorization, on behalf of the City, of the execution and delivery of this Agreement and such other agreements as are specified hereunder to be entered into by the City as of the Closing Date, and the performance of all other actions contemplated to be taken by the City hereunder; and 27.4.4.5 Such other instruments and documents as may be reasonably necessary to carry out the transactions contemplated or required by this Agreement and to comply with the terms hereof. Page 24 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 27.5 Schedules; Modification of Schedules. All the Parties (each an "Amending Party"), shall provide any amendments to their respective schedules attached hereto (each, a "Schedule") to each other, by delivering one or more amended schedules (each, an "Amended Schedule," and collectively, the "Amended Schedules") to the other Parties (a "Receiving Party"), not later than July 16, 2013, at which time all schedules shall be finalized, except for changes in circumstances arising after that date and before Closing. Schedules delivered by a Party prior to the Execution Date shall be deemed received by the other Parties as of the Execution Date. 27.5.1 Upon receipt of a Schedule or an Amended Schedule, the Receiving Party shall have fifteen (15) business days either to approve information contained in the Schedule or Amended Schedule or to notify the Amending Party that it disapproves of information in such Schedule or Amended Schedule (a "Disapproved Item"). 27.5.2 The Amending Party shall have the right, but not the obligation, within fifteen (15) business days following its receipt of notice of a Disapproved Item, to elect to cure such Disapproved Item by the delivery of an appropriate written notice to the Receiving Party. The Amending Party's notice shall set forth its proposed manner of cure of the Disapproved Item and the anticipated period of time necessary to complete the cure. 27.5.3 The Receiving Party shall have ten (10) business days after receipt of the Amending Party's notice of cure to approve or disapprove such cure. If the Receiving Party fails to disapprove the Amending Party's cure notice within this ten-day period, the Receiving Party shall be deemed to have approved the manner of cure specified in the cure notice. Upon approval of a cure notice, the Amending Party shall use Reasonable Commercial Efforts to effectuate the cure specified in the cure notice. If the Amending Party completes the agreed upon cure by Closing, the Disapproved Item shall not be placed on the Amending Party's schedules to the Agreement, and the Receiving Party shall have no right to terminate this Agreement as a result of the Disapproved Item. If the Amending Party refuses to cure the Disapproved Item, the Parties are unable to agree upon an appropriate cure, or if the agreed-upon cure has not been completed by Closing, the Receiving Party may: (i) elect to close despite the Disapproved Items; or (ii) may elect to terminate this Agreement by providing written notice to the Amending Party. If the Receiving Party elects to Close over the Disapproved Item, the Disapproved Items shall be deemed a modification to the schedules delivered by the Amending Party prior to the Closing Date. If any Party is notified in writing by its respective legal counsel that a representation or warranty of the other Party given hereunder is not materially accurate or correct, then the Party so notified shall inform the other Party that its representation and/or warranty is not accurate. 28. Term. The term of this Agreement shall commence on the Execution Date and shall continue for fifteen (15) years after the Closing Date unless sooner terminated by the Parties at any time by their mutual written consent, prior to the Closing Date, except that: 28.1 This Agreement shall terminate in its entirety prior to the Closing Date in the event that there is a failure of any condition precedent as set forth in Sections 40, 41, 42 or 43 Page 25 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 and their respective subsections, unless such failure is waived in writing by ACH (in the case of conditions precedent set forth in Section 40 and its subsections); or Asante (in the case of conditions precedent set forth in Section 41 and its subsections); or ACH Foundation (in the case of conditions precedent set forth in Section 42 and its subsections); or the City (in the case of conditions precedent set forth in Section 43 and its subsections). 28.2 Should Closing be delayed beyond the later of (a) periods provided for in other Sections of this Agreement, or (b) September 30, 2013, any Party may thereafter terminate this Agreement by written notice to all other Parties if the Closing has not occurred by December 31, 2013; 28.3 If this Agreement is terminated, any agreement entered into pursuant to this Agreement shall terminate in accordance with the terms thereof, 28.4 Any Party may terminate this Agreement before the Closing if, pursuant to Sections 27.5 and its subsections and 30 of this Agreement;, there is a material breach or misrepresentation of any material representation or warranty made by any Party which breach or misrepresentation cannot be cured without detriment to the non-defaulting Parties in accordance with Section 27.5 and its subsections or within 30 days of receipt of written notice of the material breach or misrepresentation from the non-defaulting Party or non-defaulting Parties, if later; and 28.5 No Party or Parties may terminate this Agreement after the Closing Date, unless all four Parties agree in writing to terminate this Agreement after the Closing Date. 29. Termination Consequences. If this Agreement is terminated pursuant to Section 28, (a) all further obligations of the Parties under this Agreement shall terminate, except that the obligations in Sections 36.9, 36.10, 37.5, 38.8, 38.9 39.8 and 39.9 (Confidentiality), 44.5 (Applicable Law; Forum), and 44.3 (Expenses), and their respective subsections, shall survive, (b) each Party shall pay the costs and expenses incurred by it in connection with this Agreement, and (c) nothing shall prevent any Party hereto from pursuing any of its legal rights or remedies that may be granted to any such Party by law against any other Party to this Agreement, except that no Party shall be entitled to obtain consequential damages. 30. Survival of Representations, Warranties, Covenants and Agreements. Except as otherwise expressly provided in this Agreement, the representations and warranties contained in this Agreement or in any document delivered at the Closing pursuant hereto shall be deemed to have been relied upon by the Parties, and shall survive the Closing and thereafter shall be in force and effect in accordance with their terms for a period of three years. Unless otherwise stated herein, all covenants and agreements contained in this Agreement or in any document delivered at Closing pursuant hereto shall be fully effective and enforceable pursuant to this Agreement for the term of this Agreement and shall survive the termination of this Agreement and thereafter shall be in force and effect in accordance with their terms. If discovered prior to the Closing, except to the extent not inconsistent with the process described in Section 27.5, the sole and exclusive remedy for any breach or misrepresentation, or alleged breach or Page 26 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 misrepresentation, of any representation or warranty made by a Party shall be termination of the Agreement as set forth in Section 28.4. 31. Dispute Resolution. 31.1 Resolution of Potential Disputes. The Parties acknowledge that notwithstanding their reasonable commercial efforts, disagreements or disputes may arise among or between them regarding their respective rights, responsibilities, covenants, obligations and liabilities under this Agreement and in any document delivered in anticipation of the Closing. Prior to the Closing, and thereafter, the Parties shall attempt to resolve the dispute in good faith in a manner consistent with the procedures set forth in this Section 31 and its subsections. 31.2 Dispute Resolution Procedures. 31.2.1 Prior to the Closing, and thereafter, in the event of a dispute between or among the Parties, any Party may give written notice to the other Party or Parties to the dispute setting forth the nature of such dispute and requesting that the Parties to the dispute meet and confer to discuss the dispute (the "Meet and Confer Request"). Not later than thirty (30) days after a Meet and Confer Request, the principal executive officers of each of the Parties to the dispute or their designees, shall meet and confer to discuss the dispute in good faith in an attempt to resolve the dispute. Such representatives shall meet at such dates and times as are mutually convenient to the representatives of each applicable Party within such thirty (30) day period. 31.2.2 In the event any dispute is not or cannot be resolved by the Parties to the dispute during the meet and confer process described in Section 31.2.1, any Party to the dispute may give written notice of such Party's intention to submit the issue in dispute to non-binding mediation pursuant to this Section 31.2.2 (the "Dispute Notice"). Not later than ten (10) days after a Party's receipt of a Dispute Notice, the Parties to the dispute shall jointly appoint a mediator. 31.2.2.1 If the Parties to the dispute cannot agree upon a mediator within the ten (10) day period, or within such other period as they may mutually agree upon, then the Parties to the dispute shall each appoint a mediator acceptable to the Party within the following ten (10) days, and the two (2) or more, if applicable mediators shall jointly appoint, within ten (10) days after the date on which the last mediator is appointed, a third mediator who shall serve as the sole mediator of the issues in dispute; 31.2.2.2 The Parties to the dispute shall engage in a good faith effort to resolve the issue in dispute following the appointment of one or more mediators. The Parties to the dispute each shall share equally the fees and expenses of the mediator(s) and such other costs and expenses as they shall mutually agree upon; and 31.2.2.3 If the Parties to the dispute are unable to resolve the dispute within sixty (60) days following the appointment of one or more mediators as provided in this Section 31.2.2, any Party to the dispute may submit the matter to binding arbitration by giving to Page 27 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 the other Party or Parties to the dispute a written demand for arbitration (the "Arbitration Demand"). 31.3 Binding Arbitration 31.3.1 Not later than thirty (30) days after a Party gives to any other Party or Parties an Arbitration Demand, the Parties to the dispute shall jointly select an arbitrator. If the Parties to the dispute cannot agree upon an arbitrator within such thirty (30) day period, they shall jointly submit, or any one of them may submit, to Arbitration Service of Portland, Inc. or its successor organization (the "ASP") a request to select a panel of seven (7) potential arbitrators, each of whom shall be licensed to practice law in the State of Oregon, from which panel the Parties to the dispute will select a single arbitrator to hear their dispute. In the event any Party to the dispute is dissatisfied with the panel of potential arbitrators, such Party may request one alternate panel of potential arbitrators. The request shall state that it is the intention of the Parties to the dispute to submit to the jurisdiction and procedures of the ASP for a hearing in the Medford, Oregon area, and to be bound by the ASP's rules, to resolve their dispute. 31.3.2 Not later than sixty (60) days after the date on which the arbitrator is selected, the arbitrator shall conduct a formal hearing into the issue in dispute in accordance with the applicable rules for arbitration of the ASP then in effect and/or such rules as the Parties to the dispute may mutually agree upon. 31.3.3 The arbitrator's decision shall be final and binding upon the Parties to the dispute, and shall be enforceable in accordance with its terms under Oregon law. 31.3.4 The Parties to the dispute shall share equally the cost of arbitration, including the arbitrator's fees, but the Parties to the dispute each shall bear its own legal and other expenses incurred by it in connection with the arbitration. 31.3.5 Nothing in this Agreement shall be interpreted to limit any Party's right to pursue preliminary or provisional equitable relief pending the arbitration award, including, without limitation, specific performance or a temporary restraining order or preliminary injunctive relief, from a court of competent jurisdiction at any time. By way of example, the foregoing provisions of this Section 31.3 shall not be interpreted to require either Party to submit to meet-and-confer, mediation or arbitration prior to exercising such Party's right to pursue preliminary equitable relief to protect trade secrets or prevent irreparable harm. Recognizing the substantial resources and costs incurred in integrating the governance and operations of the Parties following the Closing, and the difficulty of segregating, integrated operations, no Party shall bring suit against any other Party seeking the equitable remedy of contract rescission or attempting to challenge the validity or enforceability of this Agreement following the Closing Date. 32. Representations and Warranties of ACH. ACH hereby gives, as of the Representation Date, the following representations and warranties to Asante: Page 28 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.1 Due Organization; Good Standing; Power. 31.1.1 ACH is an Oregon nonprofit corporation, exempt from federal income taxation under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. 31.1.2 ACH is duly formed, validly existing and in good standing under the laws of the State of Oregon, and has the corporate power and authority to own, operate or hold under lease its properties and assets and to carry on its business and operations as presently conducted. 32.2 Corporate Authorization. 32.2.1 ACH has the full corporate power and authority to enter into and to perform its obligations under this Agreement. 32.2.2 The execution, delivery and performance of this Agreement by ACH have been duly and properly authorized by all necessary corporate: action in accordance with its articles of incorporation, as amended to the Representation Date, and its corporate Bylaws, as amended to the Representation Date; provided, however, that for purposes of this Section 32.2.2, "Representation Date" shall refer only to the Closing Date. 32.2.3 This Agreement constitutes the valid and legally binding obligation of ACH, enforceable against ACH in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general application now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and, except as provided under Section 31.3 of this Agreement, that the remedies of specific performance, contract rescission and injunctive and other forms of equitable relief may not be available. 32.3 No Violation; Approvals. 32.3.1 Except to the extent specified in Schedule 32.3 hereto, the execution, delivery and performance of this Agreement shall not result in the creation of any lien, charge, or encumbrance of any kind or the termination or acceleration of any indebtedness or other obligation of ACH, and is not prohibited by, does not violate or conflict with any provision of, and does not constitute a default under or breach of any Material Contract (as defined in Section 32.18), indenture, mortgage, permit, license, approval or other commitment to which ACH is a party or is subject or by which any such corporation is bound, any judgment, decree, order, writ or injunction of any court or regulatory authority, or any law, statute, rule or regulation, applicable to ACH.. 32.3.2 Except to the extent specified in Schedule 32.3.2 hereto, no approval, authorization, registration, consent, order or other action of or filing that has not occurred or been obtained with or from any person, including any court, administrative agency or other Page 29 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 governmental authority, is required for the execution and delivery by ACH of this Agreement or the consummation by ACH of the transactions contemplated or required hereby. 32.4 Financial Statements. 32.4.1 Attached hereto as Exhibit 32.4.1 are true and correct copies of (i) audited financial statements of ACH for the two (2) years ended June 30, 2012 and June 30, 2011, and unaudited financial statements of ACH for the interim period from July 1, 2012, through the most recent month-end date for which financial statements were available prior to the Execution Date (the "ACH Financial Statements"). For each month following the Execution Date until the Closing Date, by the twentieth (20th) day of such month, A.CH shall provide Asante with monthly unaudited financial statements for the immediately preceding month. 32.4.2 The ACH Financial Statements are complete and present fairly in all material respects the financial position of ACH, and the results of its operations at the dates and for the periods indicated, in conformity with generally accepted accounting principles (except as otherwise disclosed on Schedule 32.4.2), applied consistently for the periods specified, including the consistent use of assumptions, practices, procedures and terminology, except that the interim financial statements need not contain any of the footnotes and other items required to comply with generally accepted accounting principles. 32.4.3 From and after July 1, 2012 (except as set forth in Schedule 32.4.3), ACH has not made any material change to its accounting methods or practices, including methods or practices used to: (i) establish reserves on any patient and notes receivables; (ii) establish estimates of any third-party settlements; (iii) establish valuation estimates related to the investment plan and any defined benefit plan; and/or (iv) determine the value of any other accounts which require subjective determinations. 32.4.4 To the knowledge of ACH, and except as disclosed on Schedule 32.4.4, ACH does not have any liabilities or obligations, whether contingent or absolute, direct or indirect, or matured or unmatured, which are not shown or provided for in the ACH Financial Statements and the ACH Financial Statements provided to Asante prior to the Representation Date, other than any individual liability or obligation of less than One Hundred Thousand Dollars ($100,000) and claims covered by insurance. 32.4.5 Except as disclosed on Schedule 32.4.5, none of the assets of ACH are subject to restrictions imposed by the donors of specific funds. Page 30 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.4.6 Set forth on Schedule 32.4.6 is an accurate and complete list of all of the accounts in which funds of or attributable to the Plan are invested or otherwise held. ACH has not taken, or caused or permitted to be taken any action which would change the legal or beneficial ownership status of such funds prior to the Closing Date. 32.5 Interim Chances. Except for matters expressly :permitted or authorized by this Agreement and except as set forth on Schedule 32.5, to the knowledge of ACH, there has not been, after the date of the most recent interim financial statements provided for ACH attached under Exhibit 32.4.1: 32.5.1 any change in the financial condition, assets, liabilities, properties or results of operation of ACH or any other business of ACH which has had or could have, in the aggregate, a materially adverse effect on ACH, provided that this representation is limited to events, transactions or facts which specifically affect the operation of ACH's businesses and does not apply to general changes in the laws or economy of the United States or matters affecting the health care industry in general; 32.5.2 any damage, destruction or loss, whether or not covered by insurance, which has had or could have, in the aggregate, a materially adverse effect on ACH or any other business of ACH; 32.5.3 any disposition by ACH of any property, rights or other assets owned by or employed in ACH or any other business of ACH, except for dispositions in the usual and ordinary course of the business; 32.5.4 any change to the make-up or composition of the Management Personnel (defined for these purposes to mean the chief executive, directors or other officers or any vice president) of ACH (see Management Agreement); and 32.5.5 any amendment or termination of any Material Contract which has had or could have, in the aggregate, a materially adverse effect on ACH or any other business of ACH. 32.6 Legal Proceedings. Except as disclosed on Schedule 32.6, ACH is not a defendant in or, to the knowledge of ACH, threatened with any action, suit, proceeding, state or federal investigation, complaint, claim, charge, hearing or arbitration which may materially and adversely affect its businesses or financial conditions or the ability of ACH to perform hereunder. Except as disclosed on Schedule 32.6, to the knowledge of ACH, ACH has not received written notice of any investigation or threatened investigation by any federal, state or local governmental or regulatory agency, including those involving its business practices and policies, which could have, in the aggregate, a materially adverse effect on ACH, or its respective business. Page 31- AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.7 Licenses and Permits. 32.7.1 ACH holds all governmental licenses, permits, certificates, consents and approvals which are material to its respective business and operations (the "Licenses and Permits"). The Licenses and Permits, each of which is listed at Schedule 32.7.1, are current and valid. 32.7.2 Except as set forth on Schedule 32.7.2, no notice from any governmental authority in respect to the revocation, termination, suspension or limitation of any License or Permit has been issued or given, nor does ACH have any knowledge of any basis for any such action. 32.8 No Material Omissions. 32.8.1 To its knowledge (as provided in Section 32.23), ACH has responded in all material respects to all written requests for information and documentation made by Asante in connection with Asante's due diligence review of the business, operations, assets and liabilities of ACH. ACH has not knowingly omitted any material information relating to the businesses, operations, assets or liabilities of ACH in its responses to Asante's requests. Since the delivery of such responses to Asante, ACH has not received and not disclosed any material information which would render untrue or misleading any information previously disclosed to Asante in response to its requests for information. 32.8.2 To its knowledge, the representations and warranties of ACH contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement delivered at Closing by ACH pursuant to this Agreement, are accurate, correct and complete, do not contain any untrue statement of a material fact or omit to state a material[ fact necessary in order to make the statements and information contained therein not misleading. 32.9 Compliance with Law. Except as set forth on Schedule 32.9, to the knowledge of ACH, ACH is in material compliance with all laws, regulations, ordinances, decrees and orders applicable to it, which are material to its business and operations. Without limiting the generality of the foregoing, ACH is in material compliance with all Environmental Laws and all employment laws, including, without limitation, provisions thereof relating to wages, hours and the payment of Social Security and similar taxes. "Environmental Laws," as used herein, shall mean any and all federal, state and local statutes and ordinances, and all rules and regulations promulgated thereunder, pertaining or relating to the identification, reporting, generation, manufacture, processing, distribution, use, treatment, storage, disposal, emission, discharge, release, transport or other handling of any pollutants, .contaminants, chemicals, wastes, including medical wastes, radioactive material, or other noxious or harmful[ substances or materials. Page 32 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.10 Title to Real Property and Other Assets. 32.10.1 Schedule 32.10.1 sets forth an accurate and complete list of all real property owned by ACH (the "Real Property"). 32.10.2 Except as disclosed on Schedule 32.10.2, ACH has good and defensible title to all of its assets (other than the Real Property) of every kind, character and description, whether real, personal, tangible or intangible, used in connection with the operation of ACH or of any other business or activity owned, operated or maintained by ACH as of the Representation Date (the "Other Property"), free and clear of all liens, mortgages, security interests, options, pledges, charges, covenants, conditions, restrictions and other encumbrances and claims of any kind or character whatsoever, other than covenants, restrictions and easements of record. 32.10.3 Schedule 32.10.3 sets forth an accurate and complete list of real property leases in which ACH is a tenant, lessee, subtenant, or otherwise in possession. 32.10.4 Schedule 32.10.4 sets forth an accurate and complete list of real property leases in which ACH is the landlord. 32.10.5 Schedule 32.10.5 sets forth an accurate and complete list of all locations in which or at which ACH owns and/or operates health or other services. 32.11 Affiliates and Subsidiaries. Exhibit 32.11 sets forth an accurate and complete list of all corporations, partnerships, limited liability companies and any other entities of which ACH is a shareholder, partner, or member, and has the right to appoint or approve one or more of the directors, officers or managers, or persons holding equivalent positions. 32.12 Tax Exempt Status. ACH is an exempt organization under Section 501(c)(3) of the Code and not a "private foundation" within the meaning of Section 509(a) of the Code. The Internal Revenue Service (the "Service") has not taken, or, to the knowledge of ACH, proposed to take, any action to revoke the tax exempt status of ACH, and has not determined in writing or, to the knowledge of ACH, proposed to announce, that ACH is a "private foundation" within the meaning of Section 509(c) of the Code. ACH has no knowledge of any change in the organization or operation of ACH, which, to the knowledge of ACH, would result in a loss of ACH's status as an organization described in Section 501(c)(3) of the Code or which could cause ACH to be treated as a "private foundation" within the meaning of Section 509(a) of the Code. 32.13 Insurance. 32.13.1 Schedule 32.13.1 sets forth an accurate, correct and complete list (including the name of the insurer, coverage, premium and expiration date) of all binders and policies of insurance (collectively, the "Insurance Policies") maintained by ACH in which ACH is a named insured; or which otherwise insure assets used primarily in connection with the operation of ACH. Page 33 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.13.2 Except as set forth on Schedule 32.13.2, the Insurance Policies are in full force and effect and shall remain in full force and effect through the Closing Date. 32.14 Taxes. ACH has filed, or shall file, all returns, declarations, and reports and all information returns and statements required to be filed or sent with respect to all federal, state, county, local and other taxes of every kind and however measured (collectively, the "Taxes") for all periods ending on or within the five (5) year period preceding the Representation Date (collectively, the "Returns"). Except as set forth on Schedule 32. 14, as of the time of filing, the Returns correctly reflected, and Returns prepared or being prepared, but not yet filed as of the Representation Date shall correctly reflect, the income, business, assets, operations, activities and status of ACH and any other information required to be shown therein. ACH has timely paid or made provision for all Taxes shown as due and payable on its Returns required to be filed or sent prior to the Representation Date and has made provision for timely payment of all Taxes that shall be shown as due and payable on its Returns required to be filed or sent by it after the Representation Date and relating to any period prior to the Closing Date. 32.15 Employee Benefit Plans. 32.15.1 Schedule 32.15 sets forth an accurate, correct and complete list of all "employee welfare benefit plans" (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), "employee pension benefit plans" (as defined in Section 3(2) of ERISA), governmental pension plans including defined benefit pension plans, and all other employee benefit plan agreements and arrangements and employee benefit policies, whether funded or unfunded, qualified or nonqualified, whether or not subject to ERISA, maintained or contributed to (or required to be contributed to) by ACH for the benefit of any of its officers, employees or other persons (all the foregoing being herein called `Benefit Plans"). ACH has delivered to Asante accurate, correct and complete copies of: 32.15.1.1 each Benefit Plan and any ,unendment thereto; 32.15.1.2 the most recent annual report on Form 5500, if required, filed with the Service or the Department of Labor with respect to any Benefit Plan, including all schedules and attachments; 32.15.1.3 each trust agreement, group annuity contract or other funding vehicle relating to any Benefit Plan and any amendments thereto; 32.15.1.4 certified financial statements relating to any Benefit Plan; 32.15.1.5 the summary plan description and any summaries of material modifications for each Benefit Plan; 32.15.1.6 collective bargaining agreements or other such contracts, including any riders or amendments thereto; Page 34 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.15.1.7 each determination letter, letter ruling or any outstanding ruling request on the tax exempt status of any qualified Benefit Plan or any voluntary employees' beneficiary association ("VEBA") implementing a Benefit Plan; and 32.15.1.8 each sample correspondence to employees giving notice of their rights under Section 4980B of the Code and any other documents indicating compliance with said Section 4980B. 32.15.2 Except as disclosed on Schedule 32.15.2: 32.15.2.1 all contributions to, and payments from, the Benefit Plans required to be made in accordance with the Benefit Plans have been timely made; and 32.15.2.2 no Benefit Plan is subject to the funding rules of Section 302 of ERISA or Section 412 of the Code. 32.15.3 All Benefit Plans (and all related trust agreements or annuity contracts or any funding instruments) currently are and at all times in the past have been, both as to form and operation, in material compliance with and administered in accordance with their terms and the provisions of tax laws and the Code, where required for the Benefit Plan to be a governmental plan or tax-qualified under Sections 401(a) and 501(a) of the Code, and all other applicable laws, rules and regulations. Except as disclosed on Schedule 32.15.3, the Benefit Plans that are pension benefit plans have received determination letters or private letter rulings from the Service to the effect that such Benefit Plans are governmental plans or qualified and exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, or are governmental plans as defined in Code Section 414(d), and no such determination letter or private letter ruling has been revoked or, to the knowledge of ACH, has revocation been threatened, nor has any such Benefit Plan been amended or experienced any change in facts or circumstances since the date of its most recent determination ]letter or private letter ruling or application therefore in any respect which would adversely affect its qualification or materially increase its cost. 32.15.4 All reports, returns and similar documents with respect to the Benefit Plans required to be filed with any government agency or distributed to any Benefit Plan participant have been duly and timely filed or distributed. To the knowledge of ACH, there are no investigations by any governmental agency, termination proceedings or other claims (except claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings against or involving any Benefit Plan or asserting any rights or claims to benefits under any Benefit Plan that could give rise to any material liability, nor, to the knowledge of ACH, are there any facts that could give rise to any material liability in the event of any such investigation, claim, suit or proceeding. 32.15.5 No "prohibited transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA) has occurred which involves the assets of any Benefit Plan and Page 35 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 which could subject ACH, or any of its respective employees, or a trustee, administrator or other fiduciary of any trust created under any Benefit Plan to the tax or penalty on prohibited transactions imposed by Section 4975 of the Code or the sanctions imposed under Title I of ERISA. No Benefit Plan which has been terminated has or may cause liability to ACH. 32.15.6 Except as disclosed in Schedule: 32.15.6, ACH does not (i) maintain or contribute to any Benefit Plan which provides, or has any liability to provide, life insurance, medical, severance or other employee welfare benefits to any employee upon his/her retirement or termination of employment, except as may be required by Section 4980B of the Code or other applicable Law; or (ii) has ever represented, promised or contracted (whether in oral or written form) to any employee (either individually or to employees as a group) that such employee(s) would be provided with life insurance, medical, severance or other employee welfare benefits upon their retirement or termination of employment, except to the extent required by Section 4980B of the Code or other applicable law. 32.15.7 Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (whether alone or in connection with any other event) will, with respect to any employee under any of Benefit Plan or otherwise: 32.15.7.1 result in any material payment from ACH (including severance, unemployment compensation, bonus or otherwise) becoming due; 32.15.7.2 increase any benefits otherwise payable; or 32.15.7.3 result in (i) any acceleration of the time of payment or vesting of any such benefits, (ii) any forgiveness of any indebtedness, (iii) any obligation to fund benefits, or (iv) the imposition of any restrictions with respect to the amendment or termination of any of the Benefit Plans (or any adverse consequence for so doing). 32.15.8 With respect to each Benefit Plan that is an "employee welfare benefit plan" within the meaning of Section 3(2) of ERISA, all claims incurred (including claims incurred but not reported) by employees, former employees and their dependents thereunder for which ACH is, or will become, liable are reflected as a liability or accrued for on ACH's consolidated financial statements for the most recently completed fiscal year end. 32.15.9 ACH does not have any liability under any Benefit Plan that is a "multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA and the transactions contemplated by this Agreement will not give rise to any such liability. 32.15.10 No individual classified as a non-employee for purposes of receiving employee benefits (such as an independent contractor, leased employee, consultant or special consultant), regardless of actual legal status, is eligible to participate in or receive benefits under any Benefit Plan that does not specifically provide; for their participation. Page 36 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.16 Medicare and Medicaid. 32.16.1 Except as set forth on Schedule 32.16.1, ACH is not engaged in termination proceedings as to its respective participation in Medicare or Medicaid, nor has ACH received written notice that its current participation in Medicare or Medicaid is subject to any contest, termination or suspension as a result of alleged violations or any noncompliance with participation requirements. ACH and the Hospital meet the conditions for participation in the Medicare and Medicaid programs, and there is not now pending or, to the knowledge of ACH, any threatened proceeding or investigation under such programs involving any of the foregoing. 32.16.2 Except as set forth on Schedule 32.].6.2, for the past ten (10) years, each of the contracts, financial relationships or arrangements entered into between ACH and a physician or physician group is, or was during its duration, in compliance with the laws, rules and regulations regulating the delivery of health care services by providers, including, those relating to the prohibition of fraudulent and abusive practices by ]health care providers, including (i) the anti-kickback statute set forth at 42 U.S.C. 1320a-7(a) and 7(b) and its related regulations ("Anti-Kickback Statute") and (ii) the anti-referral statutes set forth at 42 U.S.C. § 1395nn and its related regulations ("Stark II"). 32.17 Accreditation. ACH is accredited by DNV Healthcare, Inc. ("DNVHC"), and by such other organizations as are listed on Schedule 32.17. Except as set forth on Schedule 32.17, no written notice has been received by ACH from DNVHC or any other accreditation organization material to its operation regarding the suspension, revocation or termination of ACH's (or any ACH programs or divisions) with respect to accreditation, and ACH has no knowledge of the proposed issuance of any such written notice. 32.18 No Defaults. 32.18.1 Except as set forth on Schedule 32.18.1, ACH is not in breach or default in any material respect under any term or provision of any Material Contract (as defined in the next sentence). For purposes of this Agreement, "Material Contracts" shall mean the following: all contracts, leases (capital and operating), and other agreements entered into by or on behalf of ACH which are in effect as of the Representation Date, have a term of more than one year, and involve a significant aspect of the operations of ACH, including but not limited to the following: 32.18.1.1 all management or consulting agreements and involving payment of more than $100,000 in the aggregate; 32.18.1.2 all service contracts, shared service agreements, joint purchasing agreements, provider agreements or similar agreements and involving payment of more than $100,000 in the aggregate; 32.18.1.3 all leases of space and/or equipment and involving payment of more than $50,000 in the aggregate; Page 37 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.18.1.4 all agreements for the sale or acquisition of capital assets and involving payment of more than $100,000 in the aggregate; 32.18.1.5 all service agreements and warranties with respect to assets of the Hospital and involving payment of more than $100,000 in the aggregate; 32.18.1.6 all installment payment agreements involving payment of more than $100,000 in the aggregate; 32.18.1.7 all membership or other agreements with groups or entities which engage in quality review or rate review procedures, involving payment of more than $100,000 in the aggregate; 32.18.1.8 all agreements with third-party administrators, involving payment of more than $100,000 in the aggregate; 32.18.1.9 all membership or other agreements with groups formed to coordinate facilities or services planning, involving payment of more than $100,000 in the aggregate; 32.18.1.10 all affiliation and transfer agreements or contracts with educational institutions, other health care facilities, and government agencies, involving payment of more than $100,000 in the aggregate; 32.18.1.11 all supply agreements involving payment of more than $100,000 in the aggregate; 32.18.1.12 all brokers' or finders' agreements involving payment of more than $100,000 in the aggregate; 32.18.1.13 all agreements pursuant to which any department of ACH is operated under a lease arrangement and involving payment of more than $100,000 in the aggregate; 32.18.1.14 all joint venture agreements or shareholder agreements to which ACH is a party or involving any ACH program or operations and involving payment of more than $100,000 in the aggregate; 32.18.1.15 all agreements or commitments related to physician hospital organizations (PHOs), medical services organizations (MSOs), physician networks, community care networks, integrated delivery networks, or other health care delivery systems or networks and all agreements or arrangements with physicians or physician groups; Page 38 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.18.1.16 all indemnity arrangements for officers, directors, members, shareholders, or advisory board members of ACH; 32.18.1.17 license and sublicense agreements with respect to any computer software and involving payment of more than $50,000 in the aggregate; and 32.18.1.18 easement and real property operating agreements, loan agreements, promissory notes, trust deeds, mortgages, leases and all other agreements related to a real property interest of ACH. 32.18.2 Attached hereto at Schedule 32.18 is a true and correct list of all Material Contracts. 32.19 Exclusion from Health Care Programs. Except as listed on Schedule 32.19, (a) no current employee or independent contractor (whether an individual or entity) of ACH has been excluded from participating in any state or federal health care! program, and (b) none of the officers, directors, agents or managing employees (as such term is defined in 42 U.S.C. §1320a- 5(b)) of ACH has been excluded from any state or federal healthcare program. 32.20 Environmental Matters. Without limiting the generality of Sections 32.6, 32.7 and 32.9: 32.20.1 except as disclosed in Schedule 32.20.1, ACH is in material compliance with all Environmental Laws and any Permits and Licenses required under applicable Environmental Laws. 32.20.2 except as disclosed in Schedule 32„20.2, ACH has not received any written notification from a Governmental Authority with respect to pending or ongoing investigations or enforcement actions related to alleged or potential violations of any applicable Environmental Law with respect to any of the Real Property (defined in Section 32.10.1) and/or with respect to any real property owned, leased or occupied by ACH, nor is ACH aware of any facts or conditions which could reasonably give rise to any such investigation or enforcement actions. 32.20.3 except as disclosed in Schedule 32.20.3, none of the following exists at any real property currently owned, leased, or occupied by ACH: (i) underground storage tanks, (ii) asbestos-containing material in any friable or damaged form or condition, (iii) materials or equipment containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface impoundments. 32.20.4 ACH has provided to Asante all Environmental Reports and assessments relating to potential or actual environmental conditions on the Real Property and any real property currently owned, leased, or occupied by ACH that ACH has in its possession, control or knowledge. A complete list of those Environmental Reports is included in Schedule 32.20.4. Page 39 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 32.20.5 "Environmental Report," as used herein, shall mean any and all environmental site assessments, analyses, investigations or audits prepared by an independent environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II investigations of current, past and potential environmental conditions on or under real property. ACH shall allow Asante to cause to be performed a Phase I Environmental Investigation and corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante. 32.21 Fair Market Value. ACH has not (1) paid more than fair market value for any property or services received by it, including any property or services received from any member of its Board of Directors, officer, physician or physician group, or any legal entity in which such person has an ownership interest or (2) received consideration from any third party that is less than fair market value for goods or services rendered by ACH. ACH has only acquired goods or services necessary to advance or further its legitimate business and charitable purposes. The total compensation, including bonuses and benefits, paid to each contractor or employee of ACH as of the date of this Certificate, and for the five (5) years prior thereto, was negotiated at arms' length and is fair, reasonable, and consistent with industry standards. 32.22 Employment Matters. Except as set forth on Schedule 32.22: 32.22.1 Labor Matters. 32.22.1.1 ACH is not a party or otherwise subject to any collective bargaining or other agreement governing the wages, hours, or terms of employment of its employees. 32.22.1.2 There is no (i) unfair labor practice complaint against ACH pending before the National Labor Relations Board or any other governmental authority, (ii) labor strike, slowdown, or work stoppage actually occurring or, to the best knowledge of ACH threatened against ACH, (iii) representation petition regarding ACH's employees pending before the National Labor Relations Board, or (iv) grievance or any arbitration proceeding pending arising out of or under collective bargaining agreements applicable to ACH. 32.22.1.3 ACH has not experienced any primary work stoppage or other organized work stoppage involving its employees in the past two years. 32.22.1.4 Employment Claims. There are no pending claims and, to ACH's knowledge, no threatened claims by or on behalf of any of its employees under any federal, state, or local labor or employment laws or regulations. 32.22.1.5 Employment Agreements. Each of ACH's employees is an "at-will" employee and there are no written employment, commission, or compensation agreements of any kind between ACH and any of its employees. Schedule 32.22 lists all ACH employment or supervisory manuals, employment or supervisory policies, and written Page 40 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 information generally provided to employees (such as applications or notices), and true and complete copies of those manuals, policies, and written information have been provided to Asante. ACH does not have any agreements or undertakings with its employees except as reflected in the items listed on Schedule 32.22. 32.22.1.6 Compensation. Schedule 32.22 contains a complete and accurate list of all officers, employees, and consultants of ACH, specifying their names and job designations, the total amount paid or payable as compensation to each of them, and the basis of such compensation, whether fixed or commission or a combination thereof, and accrued benefits for them as of the date of this Agreement. 32.22.1.7 Severance. Except as set forth on Schedule 32.22, ACH has no severance pay plan, policy, practice, or agreement with any of its employees. 32.23 Knowledi?e, after Reasonable Inquiry and Diligence Standard. As used in this Section 32 and its subsections, the words "to the knowledge" of ACH means the actual knowledge of the ACH Board, after the performance, by or under the direction of the designated ACH Board, of a reasonable investigation of the underlying, and reasonably available, facts relating to the referenced subject matter. 33. Representations and Warranties of Asante. Asante gives, as of the Representation Date, the following representations and warranties to ACH, the City, and ACH Foundation: 33.1 Due Organization; Good Standing; Power. Asante is an Oregon nonprofit corporation, exempt from federal income taxation under Section 501(c)(3) of the Code. Asante is duly formed, validly existing and in good standing under the laws of the State of Oregon, and has the corporate power and authority to own, operate or hold under lease its properties and assets and to carry on its business and operations as presently conducted. 33.2 Corporate Authorization. 33.2.1 Asante has the full corporate power and. authority to enter into and to perform its obligations under this Agreement. 33.2.2 The execution, delivery and performance; of this Agreement by Asante have been duly and properly authorized by all necessary corporate action in accordance with its articles of incorporation and corporate Bylaws. 33.2.3 This Agreement constitutes the valid and legally binding obligation of Asante, enforceable against Asante in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general application now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and, except as provided under Section 31.3 of this Agreement and its subsections, that the remedies of specific performance, contract rescission and injunctive and other forms of equitable relief may not be available. Page 41 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 33.3 No Violation; Approvals. 33.3.1 Except to the extent specified in Schedule 33.3.1 hereto, the execution, delivery and performance of this Agreement shall not result in the creation of any lien, charge, or encumbrance of any kind or the termination or acceleration of any indebtedness or other obligation of Asante, and is not prohibited by, does not violate or conflict with any provision of, and does not constitute a default under or breach of any Asante material contract, indenture, mortgage, permit, license, approval or other commitment to which Asante is a party or is subject or by which Asante is bound, any judgment, decree, order, writ or injunction of any court or regulatory authority, or any law, statute, rule or regulation, applicable to Asante. 33.3.2 Except to the extent specified in Schedule 33.3.2 hereto, no approval, authorization, registration, consent, order or other action of or filing that has not occurred or been obtained with or from any person, including any court, administrative agency or other governmental authority, is required for the execution and delivery by Asante of this Agreement or the consummation by Asante of the transactions contemplated or required hereby. 33.4 Financial Statements. 33.4.1 Attached hereto as Exhibit 33.4.1 are true and correct copies of audited financial statements of Asante for the two (2) years ended September 30, 2012 and September 30, 2011 and unaudited financial statements of Asante for the interim period from October 1, 2012 through the most recent month-end date for which financial statements were available prior to the Execution Date (the "Asante Financial Statements"). For each month following the Execution Date until the Closing Date, by the twentieth (20th) clay of such month, Asante shall provide ACH with monthly unaudited financial statements for the immediately preceding month. 33.4.2 The Asante Financial Statements are complete and present fairly in all material respects the financial position of Asante, and the results of the respective operations of Asante at the dates and for the periods indicated, in conformity with generally accepted accounting principles (except as otherwise disclosed on Schedule 33.4.2), applied consistently for the periods specified, including the consistent use of assumptions, practices, procedures and terminology, except that the interim financial statements need not contain any of the footnotes and other items required to comply with generally accepted accounting principles. 33.4.3 From and after October 1, 2012 (except as set forth in Schedule 33.4.3), Asante has not made any material changes to its accounting methods or practices, including methods or practices used to: 33.4.3.1 establish reserves on any patient and notes receivables; 33.4.3.2 establish estimates of any third-party settlements; and 33.4.3.3 determine the value of any other accounts which require subjective determinations. Page 42 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 33.5 Legal Proceedings. Except as disclosed on Schedule 33.5, Asante is not a defendant in, nor to Asante's knowledge been threatened with, any action, suit, proceeding, complaint, charge, hearing or arbitration which may materially and adversely affect its business or financial conditions or Asante's ability to perform hereunder. Except as disclosed on Schedule 33.5, to the knowledge of Asante, Asante has not received written notice of any investigation or threatened investigation by any federal, state or local governmental or regulatory agency, including those involving its business practices and policies, which could have, in the aggregate, a materially adverse effect on its business. 33.6 No Material Omissions. 33.6.1 To Asante's knowledge, Asante has responded in all material respects to all written requests for information and documentation made by ACH in connection with ACH's due diligence review of the business, operations, assets and liabilities of Asante. Asante has not knowingly omitted any material information relating to the businesses, operations, assets or liabilities of Asante in its responses to ACH's written requests. Since the delivery of such responses to ACH, Asante has not received and not disclosed any material information which would render untrue or misleading any information previously disclosed to ACH in response to its written requests for information. 33.6.2 To Asante's knowledge, the representations and warranties of Asante contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement delivered at Closing by Asante pursuant to this Agreement, are accurate, correct and complete, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements and information contained therein not misleading. 33.7 Compliance with Law. Except as set forth on Schedule 33.7, to Asante's knowledge, Asante is in material compliance with all laws, regulations, ordinances, decrees and orders applicable to it, which are material to its business and operations. Without limiting the generality of the foregoing, Asante is in material compliance with all Environmental Laws and all employment laws, including, without limitation, provisions thereof relating to wages, hours and the payment of Social Security and similar taxes. 33.8 Tax Exempt Status. Asante is an exempt organization under Section 501(c)(3) of the Code and not a "private foundation" within the meaning of Section 509(a) of the Code. The Service has not taken, or, to the knowledge of Asante, proposed to take, any action to revoke the tax-exempt status of Asante, and has not determined in writing or, to the knowledge of Asante, proposed to announce, that Asante is a "private foundation" within the meaning of Section 509(c) of the Code. Asante has no knowledge of any change in its organization or operation which, to the knowledge of Asante, would result in a loss of A sante's status as an organization described in Section 501(c)(3) of the Code or which could cause Asante to be treated as a "private foundation" within the meaning of Section 509(a) of the Code. 33.9 Taxes. Asante has filed, or shall file, all returns, declarations, and reports and all information returns and statements required to be filed or sent with respect to all Taxes for all Page 43 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 periods ending on or within the five (5) year period preceding the Representation Date (collectively, the "Asante Returns"). Except as set forth on Schedule 33.9, as of the time of filing, the Asante Returns correctly reflected, and Asante Returns prepared or being prepared, but not yet filed as of the Representation Date shall correctly reflect, the income, business, assets, operations, activities and status of Asante, and any other information required to be shown therein. Asante has timely paid or made provision for all Taxes shown as due and payable on Asante Returns required to be filed or sent prior to the Representation Date and has made provision for timely payment of all Taxes that shall be shown as due and payable on Asante Returns required to be filed or sent by it after the Representation Date and relating to any period prior to the Closing Date. 33.10 Medicare and Medicaid. Except as set forth on Schedule 33.10, Asante is not engaged in termination proceedings as to its participation in Medicare or Medicaid, nor has Asante received notice that its current participation in Medicare or Medicaid is subject to any contest, termination or suspension as a result of alleged violations or any noncompliance with participation requirements. To the knowledge of Asante, Asante meets the conditions for participation in the Medicare and Medicaid programs, and there is not now pending or, to the knowledge of Asante any threatened proceeding or investigation under such programs involving any of the foregoing. 33.11 Exclusion from Health Care Programs. Except as listed on Schedule 33.11, to the knowledge of Asante, (1) no current employee or independent contractor (whether an individual or entity) of Asante has been excluded from participating in any state or federal health care program, and (2) none of the officers, directors, agents or managing employees (as such term is defined in 42 U.S.C. §1320a-5(b)) of Asante have been excluded from any state or federal health care program. 33.12 Knowledge, after Reasonable Inquiry and Diligence Standard. As used in this Section 33 and its subsections, the words "to the knowledge" of Asante mean the actual knowledge of such corporation, after the performance, by or under the direction of a designated executive officer thereof, of a reasonable investigation of the underlying, and reasonably available, facts relating to the referenced subject matter. 34. Representations and Warranties of the City. The City hereby gives, as of the Representation Date, the following representations and warranties to Asante: 34.1 Due Organization; Good Standing; Power. 34.1.1 City is an Oregon municipal corporation, exempt from federal income taxation under Section 115 of the Code. 34.1.2 City is duly formed and validly existing under the laws of the State of Oregon, and has the power and authority to own, operate or hold under lease its properties and assets and to carry on its business and operations as presently conducted. Page 44 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 34.2 Authorization. 34.2.1 City has the full power and authority to enter into and to perform its obligations under this Agreement. 34.2.2 The execution, delivery and performance of this Agreement by City have been duly and properly authorized by all necessary action in accordance with Oregon law, the City's charter, ordinances, and all other applicable laws, as amended to the Representation Date, provided, however, that for purposes of this Section 34.2.2, "Representation Date" shall refer only to the Closing Date. 34.2.3 This Agreement constitutes the valid and legally binding obligation of City, enforceable against City in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general application now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and, except as provided under Section 31.3 of this Agreement, that the remedies of specific performance, contract rescission and injunctive and other forms of equitable relief may not be available. 34.3 No Violation; Approvals. 34.3.1 Except to the extent specified in Schedule 34.3 hereto and its subsections, the execution, delivery and performance of this Agreement shall not result in the creation of any lien, charge, or encumbrance of any kind or the termination or acceleration of any indebtedness or other obligation of City, and is not prohibited by, does not violate or conflict with any provision of, and does not constitute a default under or breach of any Material Contract (defined as all contracts, leases (capital and operating), and other agreements entered into by or on behalf of City which are in effect as of the Representation Date, have a term of more than one year, and involve a significant aspect of the operations of City), indenture, mortgage, permit, license, approval or other commitment to which City is a party or is subject or by which City is bound, any judgment, decree, order, writ or injunction of any court or regulatory authority, or any law, statute, rule or regulation, applicable to City. 34.3.2 Except to the extent specified in Schedule 34.3.2 hereto, no approval, authorization, registration, consent, order or other action of or filing that has not occurred or been obtained with or from any person, including any court, administrative agency or other governmental authority, is required for the execution and delivery by City of this Agreement or the consummation by City of the transactions contemplated or required hereby. 34.4 Financial Statements. 34.4.1 The City website contains true and correct copies of audited financial statements of City for the two (2) years ended June 30, 2012 and June 30, 2011, and unaudited financial statements of City for the interim period from July 1, 2012, through the most recent month-end date for which financial statements were available prior to the Execution Date (the Page 45 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 "City Financial Statements). For each month following the Execution Date until the Closing Date, by the twentieth (20th) day of such month, City shall provide Asante with monthly unaudited financial statements for the immediately preceding month. 34.4.2 The City Financial Statements are complete and present fairly in all material respects the financial position of City, and the results of its operations at the dates and for the periods indicated, in conformity with generally accepted accounting principles (except as otherwise disclosed on Schedule 34.4.2), applied consistently for the periods specified, including the consistent use of assumptions, practices, procedures and terminology, except that the interim financial statements need not contain any of the footnotes and other items required to comply with generally accepted accounting principles. 34.5 Legal Proceedings. Except as disclosed on Schedule 34.5, City is not a defendant in or, to the knowledge of City, threatened with any action, suit, proceeding, complaint, claim, charge, hearing or arbitration which may materially and adversely affect the ability of City to perform hereunder. Except as disclosed on Schedule 34.5, to the knowledge of City, City has not received written notice of any investigation or threatened investigation by any federal, state or local governmental or regulatory agency, including those involving its business practices and policies, which could have, in the aggregate, a materially adverse effect on the ability of City to perform hereunder. 34.6 Compliance with Law. Except as set forth on Schedule 34.6, to the knowledge of City, City is in material compliance with all laws, regulations, ordinances, decrees and orders applicable to it, which are material to the ability of City to perform hereunder. 34.7 Title to Real Property and Other Assets. 34.7.1 Schedule 34.7.1 sets forth an accurate and complete list of the two parcels of real property owned by City (the "City Real Property") which are currently leased by City to ACH, and which will be conveyed to ACH at the Closing. The lease or leases (collectively for purposes of this subsection 34.7.1, "leases") of the City Real Property are in full force and effect, ACH is not in default of the leases, and the City has no existing; claims against ACH under the leases. 34.7.2 Except as disclosed on Schedule 34.7.2, City has good and defensible title to the City Real Property together with all facilities and other improvements located thereon including without limitation land improvements, buildings, fixed equipment and personal property of every kind, character and description, whether real, personal, tangible or intangible, used in connection with the operation of ACH or of any other business or activity owned, operated or maintained by ACH as of the Representation Date (the "Other Property"), free and clear of all liens, mortgages, security interests, options, pledges, charges, covenants, conditions, restrictions and other encumbrances and claims of any kind or character whatsoever, other than covenants, restrictions and easements of record, and other than the lien of Umpqua Bank described in Section 9.1. Page 46 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 34.7.3 Schedule 34.7.3 sets forth an accurate and complete list of real property leases by the City in which ACH is a tenant, lessee, subtenant, or otherwise, other than the City Real Property. The leases of the real property listed in Schedule 34.7.3 are in full force and effect, ACH is not in default of the leases, and the City has no existing claims against ACH under the leases. 34.8 Insurance. 34.8.1 Schedule 34.8.1 sets forth an accurate, correct and complete list (including the name of the insurer, coverage, premium and expiration date) of all binders and policies of insurance (collectively, the "Insurance Policies") maintained by City in which ACH is a named insured; or which otherwise insure assets used primarily in connection with the operation of ACH. 34.8.2 Except as set forth on Schedule 34.8.2, the Insurance Policies are in full force and effect and shall remain in full force and effect through the Closing Date. 34.9 No Defaults. 34.9.1 City is not in breach or default in any material respect under any term or provision of any Material Contract (as defined in the next sentence). For purposes of this Section 34.9.1, "Material Contracts" shall mean the following: all contracts, leases (capital and operating), and other agreements entered into by or on behalf of City which are in effect as of the Representation Date, have a term of more than one year, and involve a significant aspect of the operations of ACH. 34.10 Environmental Matters. Without limiting the generality of Sections 34.5 and 34.6: 34.10.1 Except as disclosed in Schedule 34.10.1, City is in material compliance with all Environmental Laws and any Permits and Licenses required under applicable Environmental Laws with respect to the City Real Property (defined in Section 34.7.1). 34.10.2 Except as disclosed in Schedule 34.10.2, City has not received any written notification from a Governmental Authority with respect to pending or ongoing investigations or enforcement actions related to alleged or potential violations of any applicable Environmental Law with respect to any of the City Real Property and/or with respect to any real property owned by the City and leased to or occupied by ACH, nor is City aware of any facts or conditions which could reasonably give rise to any such investigation or enforcement actions. 34.10.3 Except as disclosed in Schedule 34.10.3, none of the following exists at any real property owned by the City and leased to or occupied by ACH: (i) underground storage tanks, (ii) asbestos-containing material in any friable or damaged form or condition, (iii) Page 47 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 materials or equipment containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface impoundments. 34.10.4 City has provided to Asante all Environmental Reports and assessments relating to potential or actual environmental conditions on the City Real Property and any real property owned by the City and leased to or occupied by ACH that City has in its possession, control or knowledge. A complete list of those Environmental Reports is included in Schedule 34.10.4. 34.10.5 "Environmental Report," as used ]herein, shall mean any and all environmental site assessments, analyses, investigations or audits prepared by an independent environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II investigations of current, past and potential environmental conditions on or under real property. City shall allow Asante to cause to be performed a Phase I Environmental Investigation and corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante, with respect to the City Real Property and any real property owned by the City and leased to or occupied by ACH. 34.11 No Material Omissions. 34.11.1 To City's knowledge, City has responded in all material respects to all written requests for information and documentation made by Asante in connection with Asante's due diligence review of the business, operations, assets and liabilities of City. City has not knowingly omitted any material information relating to the businesses, operations, assets or liabilities of Asante in its responses to Asante's written requests. Since the delivery of such responses to Asante, City has not received and not disclosed any material information which would render untrue or misleading any information previously disclosed to Asante in response to its written requests for information. 34.11.2 To its knowledge, the representations and warranties of City contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement delivered at Closing by City pursuant to this Agreement, are accurate, correct and complete, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements and information contained therein not misleading. 34.12 Knowledge, after Reasonable Inquiry and Dilig=e Standard. As used in this Section 34 and its subsections, the words "to the knowledge" of City mean the actual knowledge of the City after the performance, by or under the direction of -the designated executive officer thereof, of a reasonable investigation of the underlying, and reasonably available, facts relating to the referenced subject matter. 35. Representations and Warranties of the ACH Foundation. ACH Foundation hereby gives, as of the Representation Date, the following representations and warranties to Asante: Page 48 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 35.1 Due Organization; Good Standing Power. 35.1.1 ACH Foundation is an Oregon nonprofit corporation, exempt from federal income taxation under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. 35.1.2 ACH Foundation is duly formed and validly existing under the laws of the State of Oregon, and has the corporate power and authority to own, operate or hold under lease its properties and assets and to carry on its business and operations as presently conducted. 35.2 Corporate Authorization. 35.2.1 ACH Foundation has the full corporate power and authority to enter into and to perform its obligations under this Agreement. 35.2.2 The execution, delivery and performance of this Agreement by ACH Foundation have been duly and properly authorized by all necessary action in accordance with its articles of incorporation, as amended to the Representation Date, and its corporate bylaws, as amended to the Representation Date; provided, however, that for purposes of this Section 35.2.2, "Representation Date" shall refer only to the Closing Date. 35.2.3 This Agreement constitutes the valid and legally binding obligation of ACH Foundation, enforceable against ACH Foundation in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general application now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and, except as provided under Section 31.3 of this Agreement, that the remedies of specific performance, contract rescission and injunctive and other forms of equitable relief may not be available. 35.3 No Violation, Approvals. 35.3.1 Except to the extent specified in Schedule 35.3 hereto, the execution, delivery and performance of this Agreement shall not result in the creation of any lien, charge, or encumbrance of any kind or the termination or acceleration of any indebtedness or other obligation of ACH Foundation, and is not prohibited by, does not violate or conflict with any provision of, and does not constitute a default under or breach of any Material Contract (defined as all contracts, leases (capital and operating), and other agreements entered into by or on behalf of ACH Foundation which are in effect as of the Representation Date and have a term of more than one year), indenture, mortgage, permit, license, approval or other commitment to which ACH Foundation is a party or is subject or by which ACH Foundation is bound, any judgment, decree, order, writ or injunction of any court or regulatory authority, or any law, statute, rule or regulation, applicable to ACH Foundation. 35.3.2 Except to the extent specified in Schedule 35.3.1 hereto, no approval, authorization, registration, consent, order or other action of or filling that has not occurred or been Page 49 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 obtained with or from any person, including any court, administrative agency or other governmental authority, is required for the execution and delivery by ACH Foundation of this Agreement or the consummation by ACH Foundation of the transactions contemplated or required hereby. 35.4 Financial Statements. 35.4.1 Attached hereto as Exhibit 35.4.1 are true and correct copies of (i) audited financial statements of ACH Foundation for the two (2) years ended December 31, 2012 and December 31, 2011, and unaudited financial statements of ACH Foundation for the interim period from January 1, 2013, through the most recent month-end date for which financial statements were available prior to the Execution Date (the; "ACH Foundation Financial Statements). For each month following the Execution Date until the Closing Date, by the twentieth (20th) day of such month, ACH Foundation shall provide Asante with monthly unaudited financial statements for the immediately preceding month. 35.4.2 The ACH Foundation Financial Statements are complete and present fairly in all material respects the financial position of ACH Foundation, and the results of its operations at the dates and for the periods indicated, in conformity with. generally accepted accounting principles (except as otherwise disclosed on Schedule 35.4.2), applied consistently for the periods specified, including the consistent use of assumptions, practices, procedures and terminology, except that the interim financial statements need not contain any of the footnotes and other items required to comply with generally accepted accounting principles. 35.5 Legal Proceedings. Except as disclosed on Schedule 35.5, ACH Foundation is not a defendant in or, to the knowledge of ACH Foundation, threatened with any action, suit, proceeding, complaint, claim, charge, hearing or arbitration which may materially and adversely affect its businesses or financial conditions or the ability of ACH Foundation to perform hereunder. Except as disclosed on Schedule 35.5, to the knowledge of ACH Foundation, ACH Foundation has not received written notice of any investigation or threatened investigation by any federal, state or local governmental or regulatory agency, including those involving its business practices and policies, which could have, in the aggregate, a materially adverse effect on ACH Foundation, or its respective business. 35.6 No Material Omissions. 35.6.1 To its knowledge, ACH Foundation has responded in all material respects to all written requests for information and documentation made by Asante in connection with Asante's due diligence review of the business, operations, assets and liabilities of ACH Foundation. ACH Foundation has not knowingly omitted any material information relating to the businesses, operations, assets or liabilities of ACH Foundation in its responses to Asante's requests. Since the delivery of such responses to Asante, ACH Foundation has not received and not disclosed any material information which would render untrue or misleading any information previously disclosed to Asante in response to its requests for information. Page 50 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 35.6.2 To its knowledge, the representations and warranties of ACH Foundation contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement delivered at Closing by ACH Foundation pursuant to this Agreement, are accurate, correct and complete, do not contain any untrue statement of a material fact: or omit to state a material fact necessary in order to make the statements and information contained therein not misleading. 35.7 Compliance with Law. Except as set forth on Schedule 35.7, to the knowledge of ACH Foundation, ACH Foundation is in material compliance with all laws, regulations, ordinances, decrees and orders applicable to it, which are material to its business and operations. Without limiting the generality of the foregoing, to the knowledge of ACH Foundation, ACH Foundation is in material compliance with all Environmental Laws. "Environmental Laws," as used herein, shall mean any and all federal, state and local statutes and ordinances, and all rules and regulations promulgated thereunder, pertaining or relating to the identification, reporting, generation, manufacture, processing, distribution, use, treatment, storage, disposal, emission, discharge, release, transport or other handling of any pollutants, contaminants, chemicals, wastes, including medical wastes, radioactive material, or other noxious or harmful substances or materials. 35.8 Title to Real Propegy and Other Assets. 35.8.1 Schedule 35.8.1 sets forth an accurate and complete list of all real property owned by ACH Foundation (the "ACH Foundation Real Property") which will be conveyed to ACH at the Closing. 35.8.2 Except as disclosed on Schedule 35.8.2, ACH Foundation has good and defensible title to the ACH Foundation Real Property together with all facilities and other improvements located thereon including without limitation land improvements, buildings, fixed equipment and personal property of every kind, character and description, whether real, personal, tangible or intangible, (other than personal property or equipment owned by ACH) used in connection with the operation of ACH or of any other business, or activity owned, operated or maintained by ACH as of the Representation Date (the "Other Property"), free and clear of all liens, mortgages, security interests, options, pledges, charges, covenants, conditions, restrictions and other encumbrances and claims of any kind or character whatsoever, other than covenants, restrictions and easements of record, except for the $82,000 lien described in Section 9.3. 35.8.3 Schedule 35.8.3 sets forth an accurate and complete list of real property in which ACH is a tenant, lessee, subtenant, or otherwise in possession of ACH Foundation Real Property or any other real property owned by ACH Foundation. The leases of the real property in Schedule 35.8.3 are in full force and effect, ACH is not in default of the leases, and ACH Foundation has no existing claims against ACH under the leases. 35.9 Insurance. 35.9.1 Schedule 35.9.1 sets forth an accurate, correct and complete list (including the name of the insurer, coverage, premium and expiration date) of all binders and policies of Page 51 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 insurance (collectively, the "Insurance Policies") maintained by ACH Foundation in which ACH is a named insured; or which otherwise insure assets used in connection with the operation of ACH. 35.9.2 Except as set forth on Schedule 35.9.2, the Insurance Policies are in full force and effect and shall remain in full force and effect through the Closing Date. 35.10 No Defaults. 35.10.1 To the knowledge of ACH Foundation, ACH Foundation is not in breach or default in any material respect under any term or provision of any Material Contract (as defined in the next sentence). For purposes of this Section 34.9.1, "Material Contracts" shall mean the following: all contracts, leases (capital and operating), and other agreements. entered into by or on behalf of ACH Foundation which are in effect as of the Representation Date, have a term of more than one year, and involve a significant aspect of the operations of ACH. 35.11 Environmental Matters. Without limiting the generality of Section 35.5 and 35.7: 35.11.1 except as disclosed in Schedule 35.11.1, to the knowledge of ACH Foundation, ACH Foundation is in material compliance with all Environmental Laws and any Permits and Licenses required under applicable Environmental Laws with respect to the ACH Foundation Real Property (defined in Section 35.8.1). 35.11.2 except as disclosed in Schedule 35.11.2, ACH Foundation has not received any written notification from a Governmental Authority with respect to pending or ongoing investigations or enforcement actions related to alleged or potential violations of any applicable Environmental Law with respect to any of the ACH Foundation Real Property and/or with respect to any real property owned by ACH Foundation and leased to or occupied by ACH, nor is ACH Foundation aware of any facts or conditions which could reasonably give rise to any such investigation or enforcement actions. 35.11.3 except as disclosed in Schedule 35.11.3, to the knowledge of ACH Foundation none of the following exists at any real property owned by ACH Foundation and leased to or occupied by ACH Foundation: (i) underground storage tanks, (ii) asbestos- containing material in any friable or damaged form or condition, (iii) materials or equipment containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface impoundments. 35.11.4 ACH Foundation has provided to Asante all Environmental Reports and assessments relating to potential or actual environmental conditions on the ACH Foundation Real Property and any real property owned by ACH Foundation and leased to or occupied by ACH that ACH Foundation has in its possession, control or knowledge. A complete list of those Environmental Reports is included in Schedule 35.111.4. 35.11.5 "Environmental Report," as used herein, shall mean any and all environmental site assessments, analyses, investigations or audits prepared by an independent Page 52 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II investigations of current, past and potential environmental conditions on or under real property. City shall allow Asante to cause to be performed a Phase I Environmental Investigation and corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante, with respect to the ACH Foundation Real Property and any real property owned by ACH Foundation and leased to or occupied by ACH. 35.12 Knowledge, after Reasonable Inquiry and Diligf;nce Standard. As used in this Section 35 and its subsections, the words "to the knowledge" of ACH Foundation mean the actual knowledge of the governing body of the ACH Foundation after the performance, by or under the direction of the designated executive officer thereof, of a reasonable investigation of the underlying, and reasonably available, facts relating to the referenced subject matter. 36. Covenants of ACH. ACH hereby agrees to keep, perform and fully discharge the following covenants and agreements, as applicable: 36.1 Interim Conduct of Business. From the Execution Date to the Closing Date, ACH shall: 36.1.1 preserve, protect and maintain the business, properties and assets of ACH; 36.1.2 operate the businesses of ACH as a going concern, consistent with prior practices and not other than in the ordinary course of business; 36.1.3 preserve the good will of all individuals and entities having business or other relations with ACH including physicians, employees, patients, customers and suppliers; 36.1.4 obtain all documents called for by this Agreement and required to facilitate the consummation of the transactions contemplated by this Agreement; 36.1.5 provide Asante promptly with interim financial statements, as referenced in Section 32.4.1, as soon as such are available; 36.1.6 Without providing to Asante prior written notification, not (1) make any changes, or permit any changes to be made, in the Articles of Incorporation, corporate bylaws, or Asante ACH Medical Staff Bylaws and other organizational documents of ACH, except for changes expressly authorized by this Agreement; or (2) enter into any transaction which could have a Material Adverse Effect (as defined in Section 45) on the businesses of ACH, except for transactions expressly authorized by this Agreement. 36.2 Preserve Accuracy of Representations and Warranties. From the Execution Date to the Closing Date: Page 53 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 36.2.1 ACH shall not take any action which would render any representation or warranty contained in Section 32 or any of its subsections inaccurate or untrue as of the Closing Date. 36.2.2 ACH shall promptly notify Asante of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against ACH or its respective officers, directors or members involving in any material way the businesses, properties or assets of ACH or of the Real Property. 36.2.3 ACH shall promptly notify Asante in writing of any facts or circumstances which come to its attention and which cause, or through the passage of time may cause, any of the representations and warranties made by such corporation and contained in Section 32 or any of its subsections to be untrue or misleading at any time from the Execution Date to the Closing Date. 36.3 Access to Information and Real Property. 36.3.1 From the Execution Date to the Closing Date, ACH shall give to Asante and to its representatives full and free access, during normal business hours, to all properties (including without limitation the Real Property (defined in Section 32.10.1) and the City Real Property and the ACH Foundation Real Property, collectively for purposes of this Section 36.3.1 "ACH Real Property"), books, records and contracts pertaining to the businesses, properties and assets of ACH, as may be reasonably requested, subject to reasonable advance notice and provided that Asante shall not exercise such rights of access in such manner as would unduly interfere with the operations of ACH's personnel or the activities of ACH's patients or guests. Asante's due diligence rights hereunder with respect to the ACH Real Property shall include, but not be limited to, the right to inspect the ACH Real Property and all improvements and structures on the ACH Real Property, and to conduct environmental, geotechnical, engineering, and other inspections and studies thereof, as Asante desires in its sole discretion, as long as any such inspections and studies comply with the prior sentence of this Section 36.3.1. 36.3.2 ACH shall cooperate in keeping Asante fully informed and shall promptly notify Asante of any change having a Material Adverse Effect or other adverse change in the normal course of business or prospects of ACH or any other business of ACH. 36.4 Maintain Books and Accounting Practices. From the Execution Date to the Closing Date, ACH shall maintain the books of account of ACH in the usual, regular and ordinary manner in accordance with generally accepted accounting principles consistently applied and on a basis consistent with prior years, including the consistent use of assumptions, practices, procedures and terminology, and ACH shall not make or cause to be made any material changes in the accounting methods or practices of ACH, or relating to the ACH Real Property or the Other Property (defined in Section 32.10.2), including, as applicable, methods or practices: 36.4.1 establishing reserves on any patient and note receivables; Page 54 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 36.4.2 establishing reserves for all third-party settlements; and 36.4.3 determining the value of any other accounts which are subjectively determined. 36.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date, ACH shall: 36.5.1 comply in all material respects with all applicable statutes, laws, ordinances and regulations pertaining to ACH or the operation of ACH; 36.5.2 subject to Section 36.8 hereof, keep, hold and maintain all certificates, certificates of need, certificates of exemption, accreditation, licenses and other permits necessary for the conduct and operation of ACH and any other business of ACH; and 36.5.3 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate fully with Asante in Asante's efforts to obtain, all consents, approvals, exemptions and authorizations of third parties, whether governmental or private, make all filings, and give all notices which may be necessary or appropriate under all applicable laws and under all contracts, agreements and commitments in order to consummate the transactions contemplated or required by this Agreement. 36.6 Resolution of Outstanding Medicare Issues. 36.6.1 From the Execution Date to the Closing Date, ACH shall make all reasonable efforts to resolve all outstanding Medicare billing disputes, as identified on Schedule 32.16.1, prior to the Closing Date. 36.6.2 As of the Closing Date, ACH shall have filed all applicable appeals for Medicare and Medicaid cost reporting periods prior to December 31, 2012, for which ACH has received final notice. 36.7 No Merger or Consolidation. ACH shall not solicit or negotiate alternative bids, proposals, or opportunities from any other party with regard to a merger, affiliation, change or sale of membership interests, or sale of a material amount of assets relating to ACH, or merge or consolidate with, or acquire (except in the ordinary course) any of the assets of any other corporation, business or person. 36.8 Third-Party Authorizations; Estoppel Certificates. From the Execution Date to the Closing Date ACH shall obtain expeditiously all consents, approvals and authorizations of third parties, necessary for the valid execution, delivery and performance of this Agreement by ACH. From the Execution Date to the Closing Date, ACH shall solicit and obtain estoppel certificates (using a form provided by Asante) from each and every third party to a lease of Real Property in which ACH is a party other than the City or ACH Foundation. Page 55 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 36.9 Confidentiality of Asante Information. 36.9.1 Except as otherwise set forth in Section 36.9.2, ACH shall hold in confidence all information regarding Asante obtained in connection with the negotiation and performance of this Agreement or any due diligence investigation with respect to Asante. 36.9.2 The confidentiality obligation set forth in this Section 36.9 shall not apply to information that: 36.9.2.1 was known by ACH prior to receipt; 36.9.2.2 is or hereafter becomes lawfully obtainable by ACH from other sources; 36.9.2.3 ACH is required by law to disclose, including in any filings required to be made with any governmental agency and pleadings required to be filed with any court or tribunal; and 36.9.2.4 ACH is required to disclose to confirm the representations and warranties contained in Section 32 and its subsections. 36.9.3 If the transactions contemplated by this Agreement are not consummated, ACH shall continue to hold all confidential Asante information in confidence and shall immediately return to Asante all documents (and all copies thereof) containing such information. 36.9.4 ACH acknowledges that there is not an adequate remedy at law for the breach of this Section 36.9 and that, in addition to any other remedies available, injunctive relief may be granted for any such breach. The provisions of this Section 36.9 shall survive any termination of this Agreement. 36.10 Confidentiality of ACH Information. 36.10.1, If the change of the membership of ACH occurs pursuant to this Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as otherwise set forth in Section 36.10.2, ACH shall hold in confidence all information regarding ACH prior to the Closing Date, and shall not divulge such information to third parties or use in a manner detrimental to Asante, ACH, the ACH Foundation, or the City. 35.10.2 The confidentiality obligation set firth in Section 36.10.1 shall not apply to information that: 36.10.2.1 was known by ACH prior to receipt; 36.10.2.2 is or hereafter becomes lawfully obtainable by ACH from other sources; Page 56 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 36.10.2.3 ACH is required by law to disclose; or 36.10.2.4 ACH is required to disclose to confirm the representations and warranties contained in Section 32 and its subsections. 36.11 Performance of Undertakings. ACH shall use Reasonable Commercial Efforts to perform faithfully at all times any and all covenants, undertakings, stipulations and provisions applicable to it contained in this Agreement and in any and every document executed, authenticated and delivered hereunder. 36.12 Consummation of Transactions. ACH shall use Reasonable Commercial Efforts to consummate the transactions contemplated by this Agreement and shall not take any other action inconsistent with its obligations hereunder or which could hinder or materially delay the consummation of the transactions contemplated or required hereby. 36.13 Exclusivity. Between the Execution Date and the Closing Date, ACH will abide by the exclusive negotiations provision in Section 6 of the CNDA. 37. Covenants of Asante. Asante hereby agrees to keep, perform and fully discharge the following covenants and agreements: 37.1 Preserve Accuracy off Representations and Warranties. From the Execution Date until the Closing Date: 37.1.1 Asante shall not take any action which would render any representation or warranty contained in Section 33 or any of its subsections inaccurate or untrue as of the Closing Date. 37.1.2 Asante shall promptly notify ACH, the City, and ACH Foundation of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against Asante, or its officers or directors involving in any material way the ability of Asante to consummate the transactions contemplated or required by this Agreement, or materially affecting Asante's business properties or its assets. 37.1.3 Asante shall promptly notify ACH, the City, and ACH Foundation in writing of any facts or circumstances which come to Asante's attention and which cause, or through the passage of time may cause, any of the representations and warranties contained in Section 33 or any of its subsections to be untrue or misleading. 37.2 Access to Information. 37.2.1 From the Execution Date to the Closing Date, Asante shall give to ACH and the City and to their representatives full and free access, during normal business hours, to all properties, books, records and contracts pertaining to the businesses, properties and assets of Asante as may be reasonably requested, subject to reasonable advance notice and provided that Page 57 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ACH shall not exercise such rights of access in such manner as would unduly interfere with the operations of Asante or the activities of Asante's patients or invitees. 37.2.2 Asante shall cooperate in keeping ACH and the City fully informed and shall promptly notify ACH of any change having a Material Adverse Effect or other adverse change in the normal course of business or prospects of Asante. 37.3 Compliance with Laws; Consents. From the Execution Date to the Closing Date, Asante shall: 37.3.1 comply in all material respects with all applicable statutes, laws, ordinances and regulations pertaining to Asante; 37.3.2 subject to Section 37.4 hereof and its subsections, keep, hold and maintain all certificates, certificates of need, certificates of exemption, accreditation, licenses and other permits necessary for the conduct and operation of Asante and any other business of Asante; and 37.3.3 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate fully with ACH in ACH's efforts to obtain, all consents, approvals, exemptions and authorizations of third parties, whether governmental or private, make all filings, and give all notices which may be necessary or appropriate under all applicable laws and under all contracts, agreements and commitments in order to consummate the transactions contemplated or required by this Agreement. 37.4 Third Party Authorizations. From the Execution Date to the Closing Date: 37.4.1 Asante shall use Reasonable Commercial Efforts to obtain expeditiously all consents, approvals and authorizations of third parties and to give all notices under all applicable laws and under all contracts, agreements and commitments to which Asante is a party or is bound, to the extent necessary for the valid execution, delivery and performance of this Agreement by Asante. 37.4.2 Asante shall cooperate fully with ACH in its efforts to obtain all, consents, approvals, exemptions and authorizations of third parties, whether governmental or private, and to make all filings, necessary in order to consummate the transactions contemplated by this Agreement. 37.5 Confidentiality. 37.5.1 Except as otherwise set forth in Section 37.5.2, from the Execution Date and at all times thereafter, Asante shall hold in confidence all information regarding ACH obtained in connection with the negotiation and performance of this Agreement, or its due diligence investigation with respect to ACH and shall not divulge to third parties or use such information in a manner detrimental to ACH. Page 58 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 37.5.2 The confidentiality obligation set forth in Section 37.5.1 shall not apply to information that: 37.5.2.1 was known by Asante when received; 37.5.2.2 is or hereafter becomes lawfully obtainable by Asante from other sources; 37.5.2.3 Asante is required by law to disclose; or 37.4.2.4 Asante is required to disclose to confirm the representations and warranties contained in Section 33 and its subsections. 37.5.3 If the transactions contemplated by this Agreement are not consummated, Asante shall continue to hold all such information in confidence and shall immediately return to ACH all documents (and all copies thereof) containing such information. 37.5.4 Asante acknowledges that there is not an adequate remedy at law for the breach of this Section 37.5 and its subsections and that, in addition to any other remedies available, injunctive relief may be granted for any such breach. The provisions of this Section 37.5 shall survive any termination of this Agreement. 37.6 Damage to Property. In the event that, at any time from the Execution Date to the Closing Date, Asante engages an environmental or similar consultant to take samples of or otherwise physically disturb any portion of the ACH Real Property, City Real Property, or ACH Foundation Real Property, Asante shall pay the costs of repairing any damage done to the damaged real property as a result of such consultant activity and Asante will provide the owner of such property with the results of any such study or sample. All such samplings shall be conducted in accordance with Section 36.3 above. 37.7 Performance of Undertakings. Asante shall use Reasonable Commercial Efforts to perform faithfully at all times any and all covenants, undertaki'.ngs, stipulations and provisions applicable to it contained in this Agreement and in any and every document executed, authenticated and delivered hereunder. 37.8 Consummation of Transactions. Asante shall use Reasonable Commercial Efforts to consummate the transactions contemplated in this Agreement and shall not take any other action inconsistent with its obligations hereunder or which could hinder or materially delay the consummation of the transactions contemplated hereby. 38. Covenants of City. City hereby agrees to keep, perform and fully discharge the following covenants and agreements, as applicable: Page 59 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 38.1 Interim Conduct of Business. From the Execution Date to the Closing Date, City shall: 38.1.1 preserve, protect and maintain the City Real Property, as defined in Section 3 8.3.1; 3 8.1.2 obtain all documents called for by this Agreement and required to facilitate the consummation of the transactions contemplated by ibis Agreement; 38.1.3 without providing to Asante prior written notification, not (1) make any changes, or permit any changes to be made, in the Articles of Incorporation, corporate bylaws, or ACH Medical Staff Bylaws and other organizational documents of ACH, except for changes expressly authorized by this Agreement; or (2) enter into any transaction which could have a Material Adverse Effect (as defined in Section 45) on the businesses of ACH, except for transactions expressly authorized by this Agreement. 38.2 Preserve Accuracy of Representations and Warranties. From the Execution Date to the Closing Date: 38.2.1 City shall not take any action which would render any representation or warranty contained in Section 34 or any of its subsections inaccurate or untrue as of the Closing Date. 38.2.2 City shall promptly notify Asante of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against City or ACH or their respective officers, directors or members or City Councilors involving in any material way the businesses, properties or assets of ACH or of the City Real Property. 38.2.3 City shall promptly notify Asante in writing of any facts or circumstances which come to its attention and which cause, or through the passage of time may cause, any of the representations and warranties made by the City and contained in Section 34 or any of its subsections to be untrue or misleading at any time from the Execution Date to the Closing Date. 38.3 Access to Information and Real Property. 38.3.1 From the Execution Date to the Closing Date, City shall give to Asante and to its representatives full and free access, during normal business hours, to all properties (including without limitation the Real Property (defined in Section 32.10.1) and the City Real Property, collectively for purposes of this Section 38.3.1 ("City Real Property"), books, records and contracts pertaining to the businesses, properties and assets of ACH, as may be reasonably requested, subject to reasonable advance notice and provided that Asante shall not exercise such rights of access in such manner as would unduly interfere with the operations of ACH's personnel or the activities of ACH's patients or guests. Asante's due diligence rights hereunder with respect to the City Real Property shall include, but not be limited to, the right to inspect the City Real Property and all improvements and structures on the City Real Property, and to conduct environmental, geotechnical, engineering, and other inspections and studies thereof, as Page 60 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 Asante desires in its sole discretion, as long as any such inspections and studies comply with the prior sentence of this Section 38.3.1. 38.3.2 City shall cooperate in keeping Asante fully informed and shall promptly notify Asante of any change having a Material Adverse Effect or other adverse change in the City Real Property. 38.4 Maintain Books and Accounting Practices. From the Execution Date to the Closing Date, City shall not make or cause to be made any material changes in the accounting methods or practices of ACH or relating to the ACH Real Property defined in Section 36.3.1 or the Other Property (defined in Section 32.10.2), including, as applicable, methods or practices: 38.4.1 establishing reserves on any patient and note receivables; 38.4.2 establishing reserves for all third-party settlements; and 38.4.3 determining the value of any other accounts which are subjectively determined. 38.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date, City shall: 38.5.1 comply in all material respects with all applicable statutes, laws, ordinances and regulations pertaining to ACH or the operation of ACH; 38.5.2 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate fully with Asante in its efforts to obtain, all consents, approvals, exemptions and authorizations of third parties, whether governmental or private, make all filings, and give all notices which may be necessary or appropriate under all applicable laws and under all contracts, agreements and commitments to which City is a party or is bound in order to consummate the transactions contemplated or required by this Agreement. 38.6 No Merger or Consolidation. City shall not solicit or negotiate alternative bids, proposals, or opportunities from any other party with regard to a merger, affiliation, change or sale of membership interests, or sale of a material amount of assets relating to ACH. 38.7 Third-Party Authorizations; Estoppel Certificates. From the Execution Date to the Closing Date City shall obtain expeditiously all consents, approvals and authorizations of third parties, necessary for the valid execution, delivery and performance of this Agreement by City. 38.8 Confidentiality of Asante Information. 38.8.1 Except as otherwise set forth in Section 38.8.2, City shall hold in confidence all information regarding Asante obtained in connection with the negotiation and performance of this Agreement or any due diligence investigation with respect to Asante. Page 61- AFFILIATION AGREEMENT PDXDOCS:1998401.9 38.8.2 The confidentiality obligation set forth in this Section 38.8 shall not apply to information that: 38.8.2.1 was known by City prior to receipt; 38.8.2.2 is or hereafter becomes lawfully obtainable by City from other sources; 38.8.2.3 City is required by law to disclose, including in any filings required to be made with any governmental agency and pleadings required to be filed with any court or tribunal; and 38.8.2.4 City is required to disclose: to confirm the representations and warranties contained in Section 34 and its subsections. 38.8.3 If the transactions contemplated by this Agreement are not consummated, City shall continue to hold in confidence all Asante trade secrets or information submitted by Asante in confidence (that is, information submitted pursuant to a confidentiality agreement in advance) and shall immediately return to Asante all documents (and all copies thereof) containing such information. 38.8.4 City acknowledges that there is not an adequate remedy at law for the breach of this Section 38.8 and that, in addition to any other remedies available, injunctive relief may be granted for any such breach. The provisions of this Section 38.8 shall survive any termination of this Agreement. 38.9 Confidentiality of City Information. 38.9.1 If the change of the membership of ACH occurs pursuant to this Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as otherwise set forth in Section 38.9.2, City shall hold in confidence all information regarding ACH prior to and after the Closing Date to the extent such information is or has been submitted in confidence (that is, submitted pursuant to a confidentiality agreement in advance), and shall not divulge such information to third parties or use in a manner detrimental to Asante, ACH, the ACH Foundation, or the City. 38.9.2 The confidentiality obligation set forth in Section 38.9.1 shall not apply to information that: 38.9.2.1 was known by City prior to receipt; 38.9.2.2 is or hereafter becomes lawfully obtainable by City from other sources; 38.9.2.3 City is required by law to disclose; or Page 62 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 38.9.2.4 City is required to disclose to confirm the representations and warranties contained in Section 34 and its subsections. 38.10 Performance of Undertakings. City shall use Reasonable Commercial Efforts to perform faithfully at all times any and all covenants, undertakings, stipulations and provisions applicable to it contained in this Agreement and in any and every document executed, authenticated and delivered hereunder. 38.11 Consummation of Transactions. City shall use Reasonable Commercial Efforts to consummate the transactions contemplated by this Agreement and shall not take any other action inconsistent with its obligations hereunder or which could hinder or materially delay the consummation of the transactions contemplated or required hereby. 38.12 Exclusivity. Between the Execution Date and the Closing Date, City will abide by the exclusive negotiations provision in Section 6 of the CNDA.. 39. Covenants of ACH Foundation. ACH Foundation hereby agrees to keep, perform and fully discharge the following covenants and agreements, as applicable: 39.1 Interim Conduct of Business. From the Execution Date to the Closing Date, ACH Foundation shall: 39.1.1 preserve, protect and maintain the ACH Foundation Real Property; 36.1.2 obtain all documents called for by this Agreement and required to facilitate the consummation of the transactions contemplated by this Agreement; 39.2 Preserve Accuracy of Representations and Warranties. From the Execution Date to the Closing Date: 39.2.1 ACH Foundation shall not take any action which would render any representation or warranty contained in Section 35 or any of its subsections inaccurate or untrue as of the Closing Date. 39.2.2 ACH Foundation shall promptly notify Asante of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against ACH Foundation or its respective officers, directors or members involving in any material way the ACH Foundation Real Property. 39.2.3 ACH Foundation shall promptly notify A.sante in writing of any facts or circumstances which come to its attention and which cause, or through the passage of time may cause, any of the representations and warranties made by ACH Foundation and contained in Section 35 or any of its subsections to be untrue or misleading at any time from the Execution Date to the Closing Date. Page 63 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 39.3 Access to Information and ACH Foundation Real Pro e . 39.3.1 From the Execution Date to the Closing Date, ACH Foundation shall give to Asante and to its representatives full and free access, during; normal business hours, to the ACH Foundation Real Property, and books, records and contracts pertaining to the ACH Foundation Real Property, as may be reasonably requested, subject to reasonable advance notice and provided that Asante shall not exercise such rights of access in such manner as would unduly interfere with the operations of ACH Foundation. Asante's due diligence rights hereunder with respect to the ACH Foundation Real Property shall include, but not be limited to, the right to inspect the ACH Foundation Real Property and all improvements and structures on the ACH Foundation Real Property, and to conduct environmental, geotechnical, engineering, and other inspections and studies thereof, as Asante desires in its sole discretion, as long as any such inspections and studies comply with the prior sentence of this Section 39.3.1. 39.3.2 ACH Foundation shall cooperate in keeping Asante fully informed and shall promptly notify Asante of any change having a Material Adverse Effect or other adverse change in the ACH Foundation Real Property. 39.4 Maintain Books and Accounting Practices. From the Execution Date to the Closing Date, ACH Foundation shall maintain the books of account of ACH Foundation in the usual, regular and ordinary manner in accordance with generally accepted accounting principles consistently applied and on a basis consistent with prior years, including the consistent use of assumptions, practices, procedures and terminology, and ACH: Foundation shall not make or cause to be made any material changes in the accounting methods or practices of ACH Foundation or relating to the ACH Foundation Real Property. 39.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date, ACH Foundation shall: 39.5.1 comply in all material respects with all applicable statutes, laws, ordinances and regulations pertaining to ACH Foundation or the operation of ACH Foundation; 39.5.2 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate fully with Asante in its efforts to obtain, all consents, approvals, exemptions and authorizations of third parties, whether governmental or private, make all filings, and give all notices which may be necessary or appropriate under all applicable laws and under all contracts, agreements and commitments to which ACH Foundation is a party or is bound in order to consummate the transactions contemplated or required by this Agreement. 39.6 No Merger or Consolidation. ACH Foundation shall not solicit or negotiate alternative bids, proposals, or opportunities from any other party with regard to a merger, affiliation, change or sale of membership interests, or sale of a material amount of assets relating to ACH Foundation, or merge or consolidate with, or acquire (except in the ordinary course) any of the assets of any other corporation, business or person. Page 64 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 39.7 Third-Party Authorizations; Estoppel Certificates. From the Execution Date to the Closing Date ACH Foundation shall obtain expeditiously all consents, approvals and authorizations of third parties, necessary for the valid execution, delivery and performance of this Agreement by ACH Foundation. 39.8 Confidentiality of Asante Information. 39.8.1 Except as otherwise set forth in Section 39.8.2, ACH Foundation shall hold in confidence all information regarding Asante obtained in connection with the negotiation and performance of this Agreement or any due diligence investigation with respect to Asante. 39.8.2 The confidentiality obligation set forth in this Section 39.8 shall not apply to information that: 39.8.2.1 was known by ACH Foundation prior to receipt; 39.8.2.2 is or hereafter becomes lawfully obtainable by ACH Foundation from other sources; 39.8.2.3 ACH Foundation is required by law to disclose, including in any filings required to be made with any governmental agency and pleadings required to be filed with any court or tribunal; and 39.8.2.4 ACH Foundation is required to disclose to confirm the representations and warranties contained in Section 35 and its subsections. 39.8.3 If the transactions contemplated by this Agreement are not consummated, ACH Foundation shall continue to hold all confidential Asante; information in confidence and shall immediately return to Asante all documents (and all copies thereof) containing such information. 39.8.4 ACH Foundation acknowledges that there is not an adequate remedy at law for the breach of this Section 39.8 and that, in addition to any other remedies available, injunctive relief may be granted for any such breach. The provisions of this Section 39.8 shall survive any termination of this Agreement. 39.9 Confidentiality of ACH Foundation Information. 39.9.1 If the change of the membership of ACH occurs pursuant to this Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as otherwise set forth in Section 39.9.2, ACH Foundation shall hold in confidence all information regarding ACH Foundation prior to the Closing Date, and shall not divulge such information to third parties or use in a manner detrimental to Asante, ACH, ACH Foundation, or the City. 39.9.2 The confidentiality obligation set forth in Section 39.9.1 shall not apply to information that: Page 65 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 39.9.2.1 was known by ACH Foundation prior to receipt; 39.9.2.2 is or hereafter becomes lawfully obtainable by ACH Foundation from other sources; 39.9.2.3 ACH Foundation is required by law to disclose; or 39.9.2.4 ACH Foundation is required to disclose to confirm the representations and warranties contained in Section 35 and its subsections. 39.10 Performance of Undertakings. ACH Foundation shall use Reasonable Commercial Efforts to perform faithfully at all times any and all covenants, undertakings, stipulations and provisions applicable to it contained in this Agreement and in any and every document executed, authenticated and delivered hereunder. 39.11 Consummation of Transactions. ACH Foundation shall use Reasonable Commercial Efforts to consummate the transactions contemplated by this Agreement and shall not take any other action inconsistent with its obligations hereunder or which could hinder or materially delay the consummation of the transactions contemplated or required hereby. 39.12 Exclusivity. Between the Execution Date and the Closing Date, ACH Foundation will abide by the exclusive negotiations provision in Section 6 of' the CNDA. 40. Conditions Precedent to Obligations of ACH. The obligations of ACH to consummate the transactions contemplated by this Agreement are, at the option of ACH subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 40.1 Accuracy of Warranties; Performance of Covenants. The representations and warranties of Asante contained in Section 33 and its subsections shall be accurate in all material respects as if made on and as of the Closing Date. Asante shall have performed all of the obligations and complied with each and all of the covenants, agreements and conditions required to be performed or complied with by it on or prior to the Closing Date. 40.2 No Pending Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 40.3 Regulatory Approvals. All regulatory consents and approvals required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. 40.4 Consents. All consents, approvals and authorizations of third parties required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. Page 66 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 40.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be binding upon the Parties that all required Exhibits and Schedulers be attached in a final form on the Execution Date. Notwithstanding the foregoing; all Exhibits and Schedules to this Agreement shall be complete and otherwise in final form acceptable to the Parties and shall be attached to the Agreement at Closing. Asante shall have cured any Disapproved Items set forth in its Schedules and Amended Schedules, in accordance with the process described in Section 27.5 and its subsections. 40.6 Delivery of Asante Closing Documents. Asante shall have executed and delivered the Asante Closing Documents. 40.7 Delivery of Other Agreements. Asante, the City, and ACH Foundation shall have executed and delivered all other agreements determined by the Parties to be necessary or appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by this Agreement. 40.8 Material Adverse Change. There has not been a change having a Material Adverse Effect on the business, financial condition, results of operation or assets of the Asante as of, and for the annualized results of operation for the period commencing with the date of this Agreement and ending with the most recent month ending prior to the Closing Date, when compared to the same as of, and for the 12-month period ending, with the month ending immediately preceding the date of this Agreement. 40.9 EIB; Seniority. Asante and ACH shall have agreed to an approach to credit, transition and/or redeem certain seniority, paid time off (PTO) and extended illness benefits (EIB) of those ACH employees who will transition to Asante benefit programs following the Closing Date. Such agreement will be documented and attached. to this Agreement at Closing as Schedule 40.9. 40.10 Satisfaction of Condition. If ACH is not satisfied, in its sole discretion, that each of the conditions set out in this Section 40 and its subsections has been satisfied, then, at any time prior to the Closing Date, ACH shall have the right to terminate this Agreement upon written notice to Asante, in which event, each Parties' obligation to complete the Closing shall automatically terminate. 41. Conditions Precedent to Obligations of Asante. The obligations of Asante to consummate the transactions contemplated by this Agreement are at the option of Asante, subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 41.1 Accuracy of Warranties; Performance of Covenants. Except for changes or developments expressly permitted or contemplated by the express terms of this Agreement or anticipated changes or developments disclosed on a Schedule hereto, or negative performance trends encountered as a direct or indirect impact of transaction(s) like those that are part of this Agreement, the representations and warranties of the following entities and municipality shall be accurate in all material respects as if made on and as of the Closing Date: ACH as provided in Section 32 and its subsections, the City as provided in Section 34 and its subsections, and ACH Page 67 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 Foundation as provided in Section 35 and its subsections. ACH., the City, and ACH Foundation shall have performed all of their respective obligations and complied with each and all of the covenants, agreements and conditions applicable to them required to be performed or complied with by them on or prior to the Closing Date. 41.2 No Pending; Action. No action or proceeding before any court. or governmental body shall be pending wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 41.3 Regulatory Approvals. All regulatory consents and approvals required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date, without imposition of terms or conditions unacceptable to Asante in its sole discretion. 41.4 Consents. All consents, approvals and authorizations of third parties, required for the consummation of the transactions contemplated by this Agreement shall have been obtained on or before the Closing Date. 41.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be binding upon the Parties that all required Exhibits and Schedulers be attached in a final form on the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this Agreement shall be complete and otherwise in final form acceptable to the Parties and shall be attached to the Agreement at Closing. ACH, the City, and the ACH Foundation shall have cured any Disapproved Items set forth in their respective Schedules and Amended Schedules, in accordance with the process described in Section 27.5 and its subsections. 41.6 Closing, Documents. ACH, the City, and ACH Foundation shall have delivered, respectively, on or before the Closing Date, the ACH Closing Documents, the City Closing Documents, and the ACH Foundation Closing Documents. 41.7 Delivery of Other Agreements. ACH, the City, and ACH Foundation shall have executed and delivered all other agreements determined by the Parties to be necessary or appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by this Agreement. 41.8 Change of Auditor. Subject to Section 23, ACH[ shall have approved KPMG as its auditor as of the Closing Date. 41.9 No Catastrophic Losses or Liabilities. Following; the Execution Date, ACH shall have suffered or incurred no liabilities outside of the ordinary course of its businesses or casualty losses exceeding Three Million Dollars ($3,000,000) in the aggregate. 41.10 Due Diligence. Asante shall have completed its due diligence investigation of ACH and the resulting information from such investigation shall have been acceptable to Asante in its sole discretion. Page 68 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 41.11 Material Adverse Change. There has not been a change having a Material Adverse Effect on the business, financial condition, results of operation or assets of ACH or Asante as of, and for the annualized results of operation for the period commencing with the date of this Agreement and ending with the most recent month ending prior to the Closing Date, when compared to the same as of, and for the 12-month period ending, with the month ending immediately preceding the date of this Agreement. 41.12 Execution of the Agreement by ACH Foundation, ACH, and the City. The City, ACH, and ACH Foundation shall have executed this Agreement and agreed to its terms. 41.13 Environmental, Engineering and Asbestos Surveys. Asante has satisfied itself in its sole discretion with the condition of all ACH Real Property as defined in Section 36.3.1 and all buildings, structures, and improvements located thereon, and the condition thereof, and with the environmental condition of the ACH Real Property as defined in Section 36.3.1 and its compliance with all Environmental Laws. 41.14 Title Report. Asante shall have satisfied itself in its sole discretion and at its sole expense with the condition of title to the ACH Real Property as defined in Section 36.3.1, and the City, ACH, and ACH Foundation shall have performed each and every obligation required of them under this Agreement regarding the conveyance of the City Real Property and the ACH Foundation Real Property to ACH. 41.15 Medical Staff Bylaws, Policies and Procedures. ACH shall have amended the Asante ACH Medical Staff Bylaws, Policies and Procedures as provided in Section 15.4 hereof. 41.16 EIB; Seniority. Subject to Section 14, Asante and ACH shall have agreed to an approach to credit, transition and/or redeem certain seniority and extended illness benefits (EIB) of those ACH employees who will transition to Asante benefit programs following the Closing Date. Such agreement will be documented and attached to this Agreement at Closing as Schedule 40.9. 41.17 Evidence of Tail Insurance. ACH shall have delivered to Asante the evidence of the insurance coverage called for under Section 25 hereof. 41.18 Satisfaction of Condition. If Asante is not satisfied, in its sole discretion, that each of the conditions set out in this Section 41 has been satisfied, then, at any time prior to the Closing Date, Asante shall have the right to terminate this Agreement upon written notice to ACH, the City, and ACH Foundation, in which event, each Parties' obligation to complete the Closing shall automatically terminate. 42. Conditions Precedent to Obligations of City. The obligations of City to consummate the transactions contemplated by this Agreement are, at the option of City subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 42.1 Accuracy of Warranties; Performance of Covenants. The representations and warranties of Asante contained in Section 33 and its subsections, shall be accurate in all material Page 69 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 respects as if made on and as of the Closing Date. Asante shall have performed all of the obligations and complied with each and all of the covenants, agreements and conditions required to be performed or complied with by it on or prior to the Closing Date. 42.2 No Pendinjz Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 42.3 Re u~ l~y Approvals. All regulatory consents and approvals required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. 42.4 Consents. All consents, approvals and authorizations of third parties required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. 42.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be binding upon the Parties that all required Exhibits and Schedules be attached in a final form on the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this Agreement shall be complete and otherwise in final form acceptable to the Parties and shall be attached to the Agreement at Closing. Asante shall have cured any Disapproved Items set forth in its Schedules and Amended Schedules, in accordance with the process described in Section 27.5 and its subsections. 42.6 Delivery of Asante Closing Documents. Asante shall have executed and delivered the Asante Closing Documents. 42.7 Delivery of Other Agreements. Asante, ACH, and ACH Foundation shall have executed and delivered all other agreements determined by the Parties to be necessary or appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by this Agreement. 42.8 Material Adverse Change. There has not been a change having a Material Adverse Effect on the business, financial condition, results of operation or assets of the Asante as of, and for the annualized results of operation for the period commencing with the date of this Agreement and ending with the most recent month ending prior to the Closing Date, when compared to the same as of, and for the 12-month period ending, with the month ending immediately preceding the date of this Agreement. 42.9 EIB; Seniority. Subject to Section 14, Asante and ACH shall have agreed to an approach to credit, transition and/or redeem certain seniority, paid time off (PTO) and extended illness benefits (EIB) of those ACH employees who will transition to Asante benefit programs following the Closing Date. Such agreement will be documented and attached to this Agreement at Closing as Schedule 40.9. Page 70 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 42.10 Satisfaction of Condition. If City is not satisfied, in its sole discretion, that each of the conditions set out in this Section 42 has been satisfied, then, at any time prior to the Closing Date, City shall have the right to terminate this Agreement upon written notice to Asante, in which event, each Parties' obligation to complete the Closing shall automatically terminate. 43. Conditions Precedent to Obliizations of ACH Foundation. The obligations of ACH Foundation to consummate the transactions contemplated by this Agreement are, at the option of ACH Foundation subject to the satisfaction, on or prior to the Closing Date, of the following conditions: 43.1 Accuracy of Warranties, Performance of Covenants. The representations and warranties of Asante contained in Section 33 and its subsections shall be accurate in all material respects as if made on and as of the Closing Date. Asante shall have performed all of the obligations and complied with each and all of the covenants, agreements and conditions required to be performed or complied with by it on or prior to the Closing Date. 43.2 No Pendiny- Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 43.3 Regulatory Approvals. All regulatory consents and approvals required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. 43.4 Consents. All consents, approvals and authorizations of third parties required for the consummation of the transactions contemplated or required by this Agreement shall have been obtained on or before the Closing Date. 43.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be binding upon the Parties that all required Exhibits and Schedules be attached in a final form on the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this Agreement shall be complete and otherwise in final form acceptable to the Parties and shall be attached to the Agreement at Closing. Asante shall have cured any Disapproved Items set forth in its Schedules and Amended Schedules, in accordance with the process described in Section 27.5 and its subsections. 43.6 Delivery of Asante Closing Documents. Asante shall have executed and delivered the Asante Closing Documents. 43.7 Delivery of Other Agreements. Asante, the City, and ACH shall have executed and delivered all other agreements determined by the Parties to be necessary or appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by this Agreement. Page 71- AFFILIATION AGREEMENT PDXDOCS:1998401.9 43.8 Material Adverse Change. There has not been a change having a Material Adverse Effect on the business, financial condition, results of operation or assets of the Asante as of, and for the annualized results of operation for the period commencing with the date of this Agreement and ending with the most recent month ending prior to the Closing Date, when compared to the same as of, and for the 12-month period ending, with the month ending immediately preceding the date of this Agreement. 43.9 Satisfaction of Condition. If ACH Foundation is not satisfied, in its sole discretion, that each of the conditions set out in this Section 43 and its subsections has been satisfied, then, at any time prior to the Closing Date, ACH Foundation shall have the right to terminate this Agreement upon written notice to Asante, in which event, each Parties' obligation to complete the Closing shall automatically terminate. 44. General Provisions. 44.1 Amendment. Except as otherwise provided in this Agreement, no amendment of any provision of this Agreement shall be effective, unless the same shall be in writing and signed by the Parties, and then such amendment shall be effective only in the specific instance and for the specific purpose for which given. 44.2 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by overnight courier or registered or certified mail, postage prepaid, as follows: If to Asante: Asante 2650 Siskiyou Blvd. Medford, OR 97504 Attention: Chief Executive Officer Peter F. Stoloff, P.C. 5285 Meadows Road, Suite 235 Lake Oswego, Oregon 97035, Attorney for Asante If to ACH (prior to the Closing Date): Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Attention: Chief Executive Officer Page 72 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 With a copy to: William S. Manne Miller Nash LLP 111 S.W. Fifth Avenue, Suite 3400 Portland, Oregon 97204, Attorney for ACH If to ACH Foundation: Ashland Community Hospital Foundation 280 Maple Street Ashland, OR 97520 Attention: Board Chair Allen Drescher, Attorney for ACH Foundation If to the City: City of Ashland 20 East Main Street Ashland, OR 97520 Attention: Administrator David Lohman, Ashland City Attorney 20 East Main Street Ashland, OR 97520 A Party may change its address for receiving notice by written notice given to the others named above. All notices shall be effective when received, if by personal delivery or overnight courier, or two (2) business days after being deposited in the mail addressed as set forth above, if mailed. 44.3 Expenses. Except as otherwise provided in this Agreement, each Party shall each pay its own fees and expenses and those of its respective agents, advisors, consultants, attorneys and accountants with respect to the transactions described in this Agreement, its respective due diligence investigations, and the negotiation of the Agreement and the Closing. 44.4 Entire Transaction. This Agreement contains the entire understanding of the Parties with respect to the transactions contemplated hereby and supersedes all other agreements and understandings of the Parties on the subject matter hereof, except that, to the extent that any agreement (including any agreement the form of which is attached hereto as an Exhibit or a Schedule) is referred to herein in such manner as to clearly indicate that such agreement is designed to detail the agreement of the Parties with respect to the specified subject matter, the terms of such agreements shall govern with respect to such subject matter, except that the dispute Page 73 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 resolution procedures set forth in Section 31 and its subsections shall apply to disputes under any agreement delivered on or prior to the Closing. 44.5 Applicable Law, Forum. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Oregon. Subject to Section 31 hereof, any proceeding which arises out of or relates in any way to the subject matter of this Agreement shall be brought in Medford, Oregon in the Jackson County Circuit Court. The Parties hereby consent to the jurisdiction of such courts and waive their right to challenge any proceeding involving or relating to this Agreement on the basis of lack of jurisdiction over the Party or forum non conveniens. 44.6 Headings. Headings of Sections in this Agreement and the table of contents hereof are solely for convenience or reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. 44.7 Gender. Unless the context otherwise indicates, words importing the singular shall be deemed to include the plural, and vice versa, and the use of the neuter, masculine or feminine gender is for convenience only and shall be deemed to mean and include any other gender, as appropriate. 44.8 Further Assurances. After the Closing, each Party shall take such further actions and execute and deliver such additional documents and instruments as may be reasonably requested by another Party in order to perfect and complete the transactions specifically contemplated herein. 44.9 Waiver of Terms. Any of the terms or conditions of this Agreement may be waived at any time by the Party which is entitled to the benefit thereof but only by a written notice signed by the Party waiving such terms or conditions. The waiver of any term or condition shall not be construed as a waiver of any other term or condition of this Agreement. 44.10 Partial Invalidity. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein. 44.11 Exhibits and Schedules. The attached Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. 44.12 Non-Assumption of Liabilities. 44.12.1 Asante, by entering into and performing this Agreement, shall not become liable for any of the existing or future obligations, liabilities or debts of ACH, the City, or ACH Foundation unless Asante expressly assumes such obligations, liabilities, or debts. Page 74 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 44.12.2 No member, director, officer, agent or employee of any of the Parties shall be individually or personally liable for the obligations of any such Party hereunder or subject to personal liability or accountability by reason or approval, execution or delivery of this Agreement. 44.13 Binding Effect; Non-Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, assigns and legal representatives, but no Party may assign its rights in this Agreement or delegate its duties under this Agreement to a third party by any means without first obtaining the prior written consent of all other Parties. 44.14 Counterparts. This Agreement may be executed. in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties agree that facsimile or PDF copies of signatures shall be deemed originals for all purposes hereof and that a Party may produce such copies, without the need to produce original signatures, to prove the existence of this Agreement in any proceeding brought hereunder. 44.15 Access to Records and Information. If and to the extent applicable to this Agreement and to any agreement contemplated hereunder or entered into pursuant hereto between or among the Parties, the Parties agree to comply with the requirements of Public Law 96-499, Section 952 (Section 1861(v)(1)(I) of the Social Security Act) and regulations promulgated thereunder. 44.16 No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person or other third party other than the Parties and their respective successors and permitted assigns. 44.17 Time is of the Essence. Time is of the essence in the performance of this Agreement. 44.18 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by all Parties hereto. 44.19 Recitals. The recitals set forth above constitute a substantive part of this Agreement. 45. Glossary. For convenience, set forth below are summary descriptions of the defined terms used in this Agreement. Parentheses at the end of each definition show the place in the Agreement where the term is initially defined. To the extent of any inconsistency between the meaning of a term as initially defined earlier in this Agreement, and any summary definition below, the initial definition shall govern. ACH Board has the definition set forth in Section 2.2. Page 75 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ACH Closing Documents means the documents to be delivered by ACH at the Closing, as set forth in Section 27.4.2. ACH Financial Statements shall have the meaning set forth in Section 32.4.1. Agreement means this Affiliation Agreement among As-ante, ACH, the City, and ACH Foundation. (Introductory Paragraph). Amended Schedule shall have the meaning set forth in Section 27.5. Amending Party shall have the meaning set forth in Section 27.5. Anti-Kickback Statute shall have the meaning set forth in Section 32.16.2. Arbitration Demand shall have the meaning set forth in Section 31.2.2.3. Asante Board means the Board of Directors of Asante set forth in Section 2.2. Asante Closing Documents means the documents to be delivered by Asante at the Closing, as set forth in Section 27.4.1. Asante Financial Statements shall have the meaning set forth in Section 33.4.1. ASP shall mean Arbitration Service of Portland, Inc.., or its successor organization. (Section 31.3.1). Benefit Plans shall have the meaning set forth in Section 32.15.1. Closing shall have the meaning set forth in Section 27.2. Closing Date shall have the meaning set forth in Section 27.2. Closing Date Documents shall have the meaning set forth in Section 27.2.1. Code means the Internal Revenue Code of 1986, and all Treasury Regulations relating thereto, as may be amended from time to time. Dispute Notice shall have the meaning set forth in Section 31.2.2. DNV Healthcare, Inc. shall have the meaning set forth in Section 32.17. Employee shall have the meaning set forth in Section 14.5. Environmental Law shall have the meaning set forth in Section 32.9. Environmental Report shall have the meaning set forth in Section 32.20.5. Page 76 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ERISA means the Employee Retirement Income Security Act of 1974, as amended. (Section 32.15.1). Execution Date means the day of May, 2013. (Introductory Paragraph). Insurance Policies shall have the meaning set forth in Section 32.13.1. Licenses and Permits shall have the meaning set forth in Section 32.7.1. Material Adverse Effect as to ACH shall mean (A) any event, occurrence or matter having or potentially having a financial impact of $500,000 or more or (B) three consecutive months with operating losses in excess of $200,000 per each month or an aggregate loss for such three month period of $600,000 a loss in value of invested funds of more than $1,000,000 and, as to Asante, shall mean any event, occurrence or matter having or potentially having a financial impact of $10,000,000 or more. (Section 41.11 and 43.8). Material Contracts shall have the meaning set forth in Section 32.18.1. Meet and Confer Request shall have the meaning set forth in Section 31.2.1. Other Property shall have the meaning set forth in Sections 32.10.2, 34.7.2, and 35.8.2, as applicable. Parties means Asante, ACH, the City, and ACH Foundation collectively, except in Section 31, where "Parties to the dispute" excludes Parties not participating in the dispute resolution procedures therein. Party means any of Asante, ACH, the City, and ACH Foundation after each executes the Agreement and becomes a Party hereto. Plan shall have the meaning set forth in Section 5.2.2., The Plan is a single-employer defined benefit pension plan called the Ashland Community Hospital Retirement Plan. The Plan was frozen on December 31, 2006. Representation Date means the Execution Date and the Closing Date. Schedule shall have the meaning set forth in Section 27.5. Stark II shall have the meaning set forth in Section 32.16.2. Taxes mean all federal, state, county, local and other taxes of every kind. (Section 32.14). Title Company means the Company issuing the Title Policy. (Exhibit 9.9, Section 3.1). Title Policy shall have the meaning set forth in Exhibit 9.9, Section 3.1. Page 77 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 Title Report shall have the meaning set forth in Exhibit 9.9, Section 3.1. VEBA shall have the meaning set forth in Section 32.15.1.7. Page 78 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 IN WITNESS WHEREOF, the Parties, acting through their duly authorized representatives, have executed this Affiliation Agreement as of the day and year first above written. Asante 3 Jv►ft S Liu I By: W4- - By: , ~,fMG h, y d t 3 William D. Thorndike e Roy Vinyard Date Board Chair President and Chief Executive Officer Ashland Community Hospital B : 02 013 B Y~~ ~ Y Anne Golden ate Douglas D elil, MD Date Board Chair Board Chair :Elect Ashland ommunity Hospital Foundation andra Slattery ate Tom Grit-land Date Board President Past Board President City of Ashland h 1 \ By: By. 3 joh &Som erg Date Dave Kanner Date Ma Administrator Page 79 - AFFILIATION AGREEMENT PDXDOCS:199a401.9 LIST OF ATTACHMENTS (Exhibits and Schedules) EXHIBITS TO AFFILIATION AGREEMENT EXHIBIT DESCRIPTION Page 80 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ALL SCHEDULES TO AFFILIATION AGREEMENT TO BE PROVIDED BY SCHEDULE DESCRIPTION Page 81 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 ALL SCHEDULES TO AFFILIATION AGREEMENT TO BE PROVIDED BY SCHEDULE DESCRIPTION Page 82 - AFFILIATION AGREEMENT PDXDOCS:1998401.9 RESOLUTION NO. 2013- A RESOLUTION AUTHORIZING MAYOR AND CITY ADMINISTRATOR SIGNATURE OF AN AFFILIATION AGREEMENT BETWEEN ASANTE, ASHLAND COMMUNITY HOSPITAL, THE ASHLAND COMMUNITY HOSPITAL FOUNDATION AND THE CITY OF ASHLAND AND AUTHORIZING THE CITY ADMINISTRATOR TO SIGN DOCUMENTS NECESSARY TO CLOSE THE AFFILIATION TRANSACTION RECITALS: A. The City of Ashland is the sole corporate member in the Ashland Community Hospital (ACH) corporation and the owner of the real property upon which Ashland Community Hospital is located. B. The City and the ACH corporation have determined that it is no longer financially viable for the hospital to operate as an independent community hospital. C. With the City's approval, the ACH Board of Directors conducted a national solicitation for proposals from larger health care organizations with the goal of affiliating with such an organization, thereby accessing the resources necessary to remain in operation as a general hospital. D. Pursuant to that solicitation, the City, the ACH Board of Directors and the Ashland Community Hospital Foundation entered into a period of exclusive negotiation with Asante of Medford, OR, which negotiation has produced an affiliation agreement whereby Asante will become the sole corporate member of the ACH corporation. E. The affiliation agreement requires that the City shall deliver to the other parties to the agreement a resolution of the City Council approving the execution of the agreement. THE CITY OF ASHLAND RESOLVES AS FOLLOWS SECTION 1 The City Council of the City of Ashland, Oregon, approves the Affiliation Agreement between Asante, the City, the ACH Board of Directors and the Ashland Community Hospital Foundation. SECTION 2 The Mayor and the City Administrator are authorized to sign said Affiliation Agreement. SECTION 3 The City Administrator and the City Attorney are directed to provide all exhibits, schedules, documents required by the Affiliation Agreement and to effect all transfers and conveyances required by the Affiliation Agreement. Page 1 of 2 SECTION 4 The City Administrator is authorized to sign any and all documents, other than legal opinions, necessary to close this transaction, including documents necessary for the conveyance of real property, once such documents have been reviewed and approved as to form by the City Attorney. This resolution was read by title only in ccordance with Ashland Municipal Code. PASSED and ADOPTED this day of~ , 2013. Barbara Christensen, City Recorder SIGNED and APPROVED this day of 5 2013 Jo Stromberg, Mayor Reviewe a to form: J tv~ Davi Lo man, 6dy Attorney Page 2 of 2 Ashland Community Healthcare Services Secretary's Certificate The undersigned, Alan DeBoer, Secretary of Ashland Community Healthcare Services, an Oregon corporation (the "Corporation"), delivers this Secretary's Certificate pursuant to Section 27.1.3 of the Affiliation Agreement (the "Agreement"), dated as of June , 2013, between the Corporation, Asante, Ashland Community Hospital Foundation, and the City of Ashland. Capitalized terms used but not defined in this Secretary's Certificate have the meanings provided in the Agreement. The undersigned, in his capacity as Secretary of the Corporation, certifies that: 1. I am the duly elected and acting Secretary of the Corporation, and as such am familiar with the minutes of meetings of the Corporation's board of directors. 2. Attached as Annex A are true and complete copies of the resolutions duly adopted by the Corporation's board of directors on May 22, 2013, authorizing and approving the execution of the Agreement, the performance of all actions to be taken on behalf of the Corporation pursuant to the Agreement, and the completion of all transactions contemplated therein, which resolutions have not subsequently been amended or rescinded, and which remain in full force and effect as of the Execution Date. [remainder of page intentionally left blank.] PDXDOCS:2004320.1 IN WITNESS WHEREOF, the undersigned has executed this Secretary's Certificate effective as of the Execution Date. Alan DeBoer, Secretary -Signature Page to Secretary's Certificate- PDXDOCS:2004320.1 Annex A Resolutions See attached. PDXDOCS:2004320.1 RESOLUTIONS OF THE BOARD OF DIRECTORS OF ASHLAND COMMUNITY HEALTHCARE SERVICES May 22, 2013 AFFILIATION WITH ASANTE WHEREAS the board of directors (the "Board") of Ashland Community Healthcare Services (the "Corporation") has been presented with an Affiliation Agreement, attached as Exhibit A (the "Affiliation Agreement"), describing a proposed affiliation (the "Affiliation") between the Corporation, Asante, an Oregon nonprofit corporation ("Asante"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation would cease to exist, (ii) Asante would become the sole member of the Corporation; and (iii) the Foundation and the City will convey to Asante certain assets owned by the Foundation and the City, respectively, related to the Corporation's operations; and WHEREAS the Board has determined that the Affiliation (i) will promote community health in the City of Ashland and Jackson County and fulfill a community need in furtherance of the Corporation's charitable purposes and missions; and (ii) is in the best interests of the Corporation and the communities served by the Corporation. NOW THEREFORE it is RESOLVED that the Board hereby directs that the Affiliation Agreement be submitted for review and approval by the City, and recommends that the City, as Corporation's sole member, approve the Affiliation Agreement; and RESOLVED FURTHER that, subject to approval of the Affiliation Agreement by the City, in its capacity as Corporation's sole member, the Board hereby approves the Affiliation Agreement and authorizes the Corporation and the Corporation's officers to negotiate, execute, deliver, and. perform the transactions contemplated thereby. EXECUTION AND DELIVERY RESOLVED FURTHER that Anne Golden, as Board Chair of the Corporation, and Doug Diehl, M.D., as Board Chair Elect of the Corporation, are each authorized and directed to execute and deliver the Affiliation Agreement on behalf of the Corporation. PDXDOCS:2004262.1 ADDITIONAL AGREEMENTS RESOLVED FURTHER that the officers of the Corporation are further authorized and directed to negotiate, execute, deliver, and perform on behalf of the Corporation such other agreements, instruments, and documents as necessary or appropriate to effect the transactions contemplated by the Affiliation Agreement. FURTHER ACTIONS RESOLVED FURTHER that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actiions as such officers may deem necessary or advisable to (i) facilitate the transactions contemplated by the Affiliation Agreement, (ii) cause the Corporation to perform its obligations under the Affiliation Agreement and the agreements authorized above, (iii) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the transactions contemplated by such agreements and the resolutions, and (iv) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. The undersigned, in his capacity as Secretary of the Corporation, certifies that the above resolutions were duly adopted by the Corporation's board of directors, at a meeting of the board held on May 22, 2013. Alan DeBoer, Secretary PDXDOCS:2004262.1 Exhibit A Affiliation Agreement See attached. PDXDOCS:2004262.1 N CD O N V O _ N O O C N iB I E U 3 O a) - p m Q p Q x a ,:3 Q L O O iv c O N E W L O L_ C ca O a) ~ CD -a cn Q > ca w y C7) p O c cn Q n m N Q- m N o cv E .y 0 p ca c - % c o E N vi 0O 'E i5 0 > LL cu L rn a a~ L ~ ~ ca m c v m Q (n a) cL cn o o 0 0 C N 75 2 > CU "0 (D a c c cv (a L = C C N ca E m U Y zi N c E a~ In -D a) L 7 w ` E s CO N O '0 U m a~ (D 0 N_ 'O ca cn a > p C M M LO O co) 2 N N O N c- K N Q Q Q N Q 0 iu W ~ O = U aa) N N N > 'd C C E ~ CO m O Q d rL V p (n _0 N O C U ' 0 O C 0 N L _I_- 0 o 0 Q Q ca E N En 0 m p ca CU W aa)i p vii (D 2D E Q ~ U N (n Q~ N 7 X p "O' 7 L w C C C 'p C a) Y 0QE 00E CD a) 3 > w p (D _c-_ cn m > c rn c p v o N ca Q rn c o -a o c Q _0 o E N ~ 4) Im CD -C .3 C a> cn Q ~ Q ca a LL. n - .c U (j w L c z M= a J Cn 'w Q Z g` d 0O O F-- z w ` Q O g J LL O J N D < U- Q Q Ashland Community Hospital Foundation Secretary's Certificate The undersigned, J 14(i t. A, AL4Sf q j , Secretary of Ashland Community Hospital Foundation, an Oregon nonprofit corporation ("ACH Foundation"), delivers this Secretary's Certificate pursuant to Section 27.1.4 of the Affiliation Agreement (the "Agreement"), dated as of June 2013, between ACH Foundation, Asante, Ashland Community Hospital, and the City of Ashland. The term, "Execution Date" shall mean the date of execution of the Agreement as defined therein. The undersigned, as Secretary of ACH Foundation, certifies that: 1. I am the duly elected and acting Secretary of ACH Foundation. 2. Attached hereto is a true and complete copy of a resolution duly adopted by the ACH Foundation board of directors on May 21, 2013, authorizing and approving the execution of the Agreement, the performance of all actions to be taken on behalf of ACH Foundation pursuant to the Agreement, and the completion of all transactions contemplated therein, which resolution has not subsequently been amended or rescinded, and which remains in full force and effect as of the Execution Date. IN WITNESS WHEREOF, the undersigned has executed this Secretary's Certificate effective as of the Execution Date. Julie A. t~sta, ,Secretary Ashland of unity Hospital Foundation -Signature Page to Secretary's Certificate- PDXDOCS:2004320.1 Annex A Resolutions See attached. PDXDOCS2004320.1 ASHLAND COMMUNITY HOSPITAL FOUNDATION MINUTES OF MEETING OF BOARD OF DIRECTORS The following resolution was adopted by the Board of Directors of the Ashland Community Hospital Foundation at a meeting of the Board of Directors held on the 21 day of May, 2013 at which a quorum was present: RESOLUTION AUTHORIZING AFFILIATION AGREEMENT BETWEEN ASANTE, ASHLAND COMMUNITY HOSPITAL, THE ASHLAND COMMUNITY HOSPITAL FOUNDATION AND THE CITY OF ASHLAND AND AUTHORIZING THE PRESIDENT OF THE FOUNDATION TO SIGN DOCUMENTS NECESSARY TO CLOSE THE AFFILIATION TRANSACTION RECITALS: The Ashland Community Hospital Foundation ("ACH Foundation") entered into a Letter of Intent with Asante ("Asante"), Ashland Community Hospital ("ACH") and the City of Ashland ("City") for the purpose of negotiating an agreement that will allow the affiliation of ACH with Asante. Pursuant to the Letter of Intent, an Affiliation Agreement (the "Affiliation Agreement") has been drafted. THE BOARD OF DIRECTORS THEREFORE RESOLVES AS FOLLOWS SECTION 1 The Board of Directors of the Ashland Community Hospital Foundation approves the Affiliation Agreement between Asante, the City, ACH and ACH Foundation. SECTION 2 The President of ACH Foundation is authorized to sign the Affiliation Agreement on behalf of ACH Foundation. SECTION 3 The Executive Director of ACH Foundation is directed to provide to Asante all exhibits, schedules and documents required by the Affiliation Agreement to be provided by ACH Foundation to Asante. SECTION 4 The President of ACH Foundation is authorized to sign, on behalf of ACH Foundation, any and all documents necessary to close the Affiliation Agreement transaction, including documents necessary for the conveyance of real property, once such documents have been reviewed and approved as to form by the attorney for ACH Foundation. The foregoing resolution was adopted by the unanimous vote of the Board of Directors of the Ashland Community Hospital Foundation on the 21 day of May, 2013. Julie A. stad, ecretary RESOLUTION OF THE BOARD OF DIRECTORS OF ASANTE June 3, 2013 AFFILIATION WITH CITY OF ASHLAND, ASHLAND COMMUNITY HEALTHCARE SERVICES, AND THE ASHLAND COMMUNITY HOSPITAL FOUNDATION WHEREAS the board of directors (the "Board") of Asante (the "Corporation") has been presented with an Affiliation Agreement, attached as Exhibit A (the "Affiliation Agreement"), describing a proposed affiliation (the "Affiliation") among the Corporation, Ashland Community Healthcare Services, an Oregon nonprofit corporation ("ACH"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation would cease to exist, (ii) Asante would become the sole member of the Corporation; and (iii) the Foundation and the City will convey to Asante certain assets owned by the Foundation and the City, respectively, related to the ACH's operations; and WHEREAS the Board has determined that the Affiliation (i) will promote community health in the City of Ashland, Jackson County, and surrounding areas, and fulfill a community need in furtherance of the Corporation's Mission; and (ii) is in the best interests of the Corporation and the communities served by the Corporation. NOW THEREFORE it is RESOLVED that the Board hereby directs that the Affiliation Agreement be submitted for review and approval by the City, and recommends that the City, as ACH's sole member, approve the Affiliation Agreement; and RESOLVED FURTHER that, subject to approval of the Affiliation Agreement by the City, in its capacity as ACH's sole member, and the Foundation, the Board hereby approves the Affiliation Agreement and authorizes the Corporation and the Corporation's officers to negotiate, execute, deliver, and perform the transactions contemplated thereby. EXECUTION AND DELIVERY RESOLVED FURTHER that William D. Thorndike, as Board Chair of the Corporation, and Roy Vinyard, as the President/CEO of the Corporation, are each authorized and directed to execute and deliver the Affiliation Agreement on behalf of the Corporation. ADDITIONAL AGREEMENTS RESOLVED FURTHER that the officers of the Corporation are further authorized and directed to negotiate, execute, deliver, and perform on behalf of the Corporation such other agreements, instruments, and documents as necessary or appropriate to effect the transactions contemplated by the Affiliation Agreement. FURTHER ACTIONS RESOLVED FURTHER that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary or advisable to (i) facilitate the transactions contemplated by the Affiliation Agreement, (ii) cause the Corporation to perform its obligations under the Affiliation Agreement and the agreements authorized above, (iii) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the transactions contemplated by such agreements and the resolutions, and (iv) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. The undersigned, in his capacity as Secretary of the Corporation, certifies that the above resolutions were duly adopted by the Corporation's board of directors, at a meeting of the board held on June 3, 2013. Ray Cox, Sec etary Exhibit A Affiliation Agreement See attached. Schedule 2.3 Asante Mission Statement Asante exists to provide quality healthcare services in a compassionate manner, valued by the communities we serve. EXHIBIT 9.1 PARCEL I: Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 31' West along said East side-line, 202.00 feet to the northeast corner of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 0°31' East along the west line of said Lot 70.0 feet to the northeast corner of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 9°31' West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City. ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest corner of said tract; thence North along the west line thereof 115.0 feet to the northwest corner of said tract; thence East 142.00 feet to a point 115.00 feet North of the place of beginning; thence South 115.00 feet to the place of beginning. Being a part of Lot 6 of WIMER'S SUBDIVISION to the City of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Situs Address: 278 & 280 Maple St, Ashland, OR 97520 PARCEL V: Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Situs Address: 560 Catalina Dr, Ashland, OR 97520 WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTOR'S NAME AND ADDRESS: City of Ashland 20 East Main Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: David Lohman, City Attorney City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. DATED: The - day of 2013. CITY OF ASHLAND By Dave Kanner, City Administrator Effective August 1, 2013 STATE OF OREGON ) ) ss County of Jackson } The foregoing Warranty Deed was acknowledged before me on the day of 12013 by Dave Kanner as City Administrator of the City of Ashland, an Oregon municipality, on behalf of the City of Ashland. Notary Public for Oregon My commission expires: EXHIBIT "A" PARCEL I: Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 31' West along said East side-line, 202.00 feet to the northeast comer of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 0°3 P East along the west line of said Lot 70.0 feet to the northeast corner of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 9°31' West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City, ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest corner of said tract: thence North along the west line thereof 115.0 feet to the northwest corner of said tract; thence East 142.00 feet to a point 115.00 feet North of the place of beginning; thence South 115.00 feet to the place of beginning. Being a part of Lot 6 of WIMER'S SUBDIVISION to the City of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Situs Address: 278 & 280 Maple St, Ashland, OR 97520 WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTOR'S NAME AND ADDRESS: City of Ashland 20 East Main Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: David Lohman, City Attorney City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further. made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. DATED: The - day of , 2013. CITY OF ASHLAND By Dave Kanner, City Administrator Effective August 1, 2013 STATE OF OREGON ) ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the day of 12013 by Dave Kanner as City Administrator of the City of Ashland, an Oregon municipality, on behalf of the City of Ashland. Notary Public for Oregon My commission expires: EXHIBIT "A" PARCEL V: Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Situs Address: 560 Catalina Dr, Ashland, OR 97520 Exhibit 9.2.1 Legal Description Parcel III PARCEL III: Commencing at a point 4.72 chains West of the Northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East, Willamette Meridian Jackson County, Oregon; thence South 0930' East 3.70 chains, more or less, to the North line of Maple Street, in the City of Ashland, Jackson County, Oregon; thence North 89°53' West, along the North line of said Maple Street, 462.13 feet, more or less, to the East line of Chestnut Street, in said City, for the true point of beginning; thence North, along the East line of Chestnut Street, 120.0 feet; thence East, parallel with the North line of Maple Street, 60.0 feet; thence South, parallel with the East line of Chestnut Street, 120.0 feet, to the North line of said Maple Street; thence West, along said North line, 60.0 feet, to the true point of beginning. Account: 1-005691-6 391E05DB 1000 Situs Address: 317 Maple St, Ashland, OR 97520 Exhibit 9.2.2 Legal Description Parcel VI PARCEL VI: Parcel No Two (2) of Partition Plat recorded October 2, 1990, as Partition Plat No. P-102-1990 of "Record of Partition Plats" in Jackson County, Oregon, and filed as Survey No. 12201 in the Office of the County Surveyor. Account: 1-079073-6 391E05DB 2601 Situs Address: 530 Catalina Dr, Ashland, OR 97520 Exhibit 9.2.3 Legal Description Parcel VIII PARCEL VIII: Commencing at the intersection of the northeasterly right of way line of North Main Street with the west boundary line of Donation Land Claim No. 40 which bears South 00°02'57" West (deed record South 00°03' West) 951.86 feet distance from the accepted northwest corner of Donation Land Claim No. 40 in Section 5, Township 39 South, Range 1 East, Willamette Base and Meridian, Jackson County, Oregon; thence North 28°10'13" West (deed record North 28°12' West a distance of 326.2 feet) along the northeasterly right of way line of said North Main Street for a distance of 326.20 feet to a 1/2 x 24" galvanized iron pipe situated at the westerly corner of that tract of land as set forth in Volume 411, Page 113, Jackson County, Oregon, Deed Records, being the true point of beginning; thence leaving said right of way line, North 61941'47" East (deed record North 61940 East 200.00 feet) along the northwesterly boundary line of said Volume and Page, for a distance of 200.00 feet to a 1/2 x 24" galvanized iron pipe situated at the northerly corner thereof; thence North 28°10'13" West (deed record North 28°12' West, 45.55 feet) for a distance of 46.03 feet to a 1/2 x 24" galvanized iron pipe situated in the westerly boundary line of Donation Land Claim No. 40; thence North 00°02'57" East along said westerly boundary line (deed record North 00°03' East, 61.90 feet) for a distance of 61.90 feet to a set 1/2 x 24" galvanized iron pipe; thence leaving said Claim line, South 61°41'47" West (deed record South 61940 West, 229.30 feet) for a distance of 229.27 feet to a 1/2 x 24' galvanized iron pipe situated in the northeasterly right of way line of North Main Street; thence South 28°10'13" East along said right of way line (deed record South 28°12' East, 100.00 feet) for a distance of 100.51 feet to the point of beginning. EXCEPTING THEREFROM that portion conveyed to the State of Oregon by and through its Department of Transportation by deeds recorded May 19, 1995 as Document Nos. 95-13393 and 95-13394, Deed Records of Jackson County, Oregon. AND FURTHER EXCEPTING THEREFROM that portion lying and situated within the boundary of the following described parcel: Beginning at a point on the West line of Donation Land Claim No 40, Township 39 South, Range 1 East, Willamette Meridian, Jackson County, Oregon , South 0903" West 270.0 feet from the Northwest corner of said claim (said point being the point of intersection of the Southerly right of way line of the Southern Pacific Company, formerly the Oregon and California Railroad Company, with the West line of said claim); thence along said railroad right of way as follows: South 46919' East 189 feet; thence South 42944' East 217.2 feet; South 39909 East 217.5 feet; thence South 60957' West 276.15 feet to the Easterly line of tract described in Volume 265 Page 471 Jackson County, Oregon, Deed Records; thence North 28°12' West, along said Easterly line, 70.0 feet, to the most Northerly corner of said tract; thence South 61948' West, along the Northerly line thereof, 200.0 feet, to the Easterly side line of North Main Street; thence North 28912' West, along said line, 50.00 feet to the Southwest corner of tract described in Volume 33 Page 481, said Deed Records; thence North 61948' East 200.0 feet to the Southeast corner of said tract; thence North 28912' West, along the Easterly line of said tract and its Northerly extension, 233.0 feet, more or less, to the Northeasterly corner of tract described in Volume 288 Page 86, said Deed Records; thence West, along the North line of said tract, to intersect the West line of said Donation Land Claim No 40; thence North, along said line, to the point of beginning. Account: 1-080638-7 391E05AD 601 Situs Address: 628 N. Main, Ashland, Oregon Exhibit 9.2.4 Legal Description Parcel XI, Tract A PARCEL XI: Tract A: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84°00' West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said line North 52°41' West 206.40 feet; thence South 84°10' West 396.05 feet to the Easterly side line of the Old Pacific Highway No 99, for the true point of beginning; thence along said line North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936' East 50.0 feet; thence South 84°10' West 100.0 feet to the true point of beginning. ALSO: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence South 84910" West 495.9 feet to the Easterly side line of Old Pacific Highway No 99; thence along said line North 25936" West 200.0 feet; for the true point of beginning; thence North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936; East 50.0 feet; thence South 84°10' West 100.0 feet, to the true point of beginning. ALSO: Commencing at a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim No 60; thence 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said highway line North 52°41' West 206.40 feet; thence South 84910" West 246.05 feet to the true point of beginning; thence South 84910' West 50.0 feet to the Southeast corner of tracts described in Volume 434 Page 247, Deed Records of Jackson County, Oregon; thence along the Easterly line of said tract, North 25936' West 100.0 feet to the Northeast corner thereof; thence North 84910' East 50.0 feet; thence South 25936' East 100.0 feet to the true point of beginning. Account: 1-027484-9 381W23CA 1300 Situs Address: 49 Talent Ave, Talent, Oregon 97540 Exhibit 9.2.4 Legal Description Parcel XI, Tract A PARCEL XI: Tract A: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84°00' West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said line North 52°41' West 206.40 feet; thence South 84°10' West 396.05 feet to the Easterly side line of the Old Pacific Highway No 99, for the true point of beginning; thence along said line North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936' East 50.0 feet; thence South 84°10' West 100.0 feet to the true point of beginning. ALSO: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence South 84910" West 495.9 feet to the Easterly side line of Old Pacific Highway No 99; thence along said line North 25936" West 200.0 feet; for the true point of beginning; thence North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936; East 50.0 feet; thence South 84°10' West 100.0 feet, to the true point of beginning. ALSO: Commencing at a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim No 60; thence 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said highway line North 52°41' West 206.40 feet; thence South 84910" West 246.05 feet to the true point of beginning; thence South 84910' West 50.0 feet to the Southeast corner of tracts described in Volume 434 Page 247, Deed Records of Jackson County, Oregon; thence along the Easterly line of said tract, North 25936' West 100.0 feet to the Northeast corner thereof; thence North 84910' East 50.0 feet; thence South 25936' East 100.0 feet to the true point of beginning. Account: 1-027484-9 381W23CA 1300 Situs Address: 49 Talent Ave, Talent, Oregon 97540 Exhibit 9.2.5 Legal Description Parcel X PARCEL K Commencing at a point on the east line of Donation Land Claim No. 60 in Township 38 South, Range 1 West of the Willamette Meridian in Jackson County, Oregon, which point is 330 feet North of the Southeast corner of said Claim, thence South 84°00' West 395.1 feet to an iron pin on the western right of way line of the relocated Pacific Highway No. 99, thence North 52°41' West, along said right of way line, 412.80 feet to the true point of beginning; thence South 84°10' West 39.95 feet; thence North 05°50' West 4.06 feet; thence South 84°10' West 70.33 feet; thence South 05°50' East 4.06 feet; thence South 84°10' West 37.90 feet to the northwest corner of the tract described in deed recorded as No. 94-25870 of the Official Records of Jackson County, Oregon; thence continue South 84°10' West 148.0 feet to the eastern right of way line of the Old Pacific Highway No. 99; thence North 25°36' West, along said right of way line, 98.85 feet to the northwest corner of the tract described in deed recorded as No. 93-21602 of said Official Records; thence North 78°07' East 208.14 feet to a point situated on aforesaid western right of way line, of said relocated Highway No. 99; thence South 52°41' East, along said right of way line, 168.10 feet, more or less, to the true point of beginning. Account: 381W23CA 700 1-027478-2 Situs Address: 209 North Pacific Hwy, Talent, Oregon 97540 EXHIBIT 9.9 Additional Terms Relating To the Conveyance of Real Property Purchase and Sale Agreement RECITALS A. The City of Ashland (the "City") owns certain real, personal, and intangible property located in Jackson County, Oregon, as more particularly described in Section 1 below (collectively, the "City Property"). B. Ashland Community Hospital Foundation ("ACH Foundation") owns certain real, personal, and intangible property located in Jackson County, Oregon, as more particularly described in Section 1 below (collectively, the "ACH Foundation Property"). C. In connection with the affiliation between Asante, an Oregon nonprofit corporation, and Ashland Community Healthcare Services ("ACH"), pursuant to the terms of the Affiliation Agreement to which this Exhibit 9.9 is attached (the "Affiliation Agreement"), ACH desires to acquire all the City Property and the ACH Foundation Property from the City and ACH Foundation, respectively, and the City and ACH Foundation are willing to sell and convey all of their respective Property to ACH, on and subject to the terms set forth in this Exhibit 9.9 (this "Agreement"). D. The City Property and the ACH Foundation Property are collectively referred to in this Agreement as the Property. E. The City and ACH Foundation are referred to collectively as Seller. The term "Purchaser" as used in this Agreement shall mean Asante and ACH, even though title to the Property will be vested solely in ACH, subject to any reversionary rights described in the Affiliation Agreement. AGREEMENT 1. Purchase and Sale of the Property. The City and ACH Foundation, respectively, agree to sell and convey the City Property and the ACH Foundation Property, respectively, to ACH, and ACH agrees to accept the conveyance and to purchase the Property from Seller, on the terms and conditions set forth in this Agreement and the applicable provisions of the Affiliation Agreement. The Property consists of: (a) Exhibit A, which contains legal descriptions of the land described in Exhibits 9.1A, 9.113, 9.2.1, 9.2.2, 9.2.3, 9.2.4 and 9.2.5 of the Affiliation Agreement (the "Land") and all easements, rights, strips, gores, rights-of-way, and any other rights or interests appurtenant thereto; (b) All the improvements currently situated on the Land (the "Improvements"); Page 1- EXHIBIT 9.9 PDXDOCS:2008536.2 (c) All Seller's rights (if any) in all tangible personal property located on the Land or in the Improvements and described in Exhibit B attached hereto (the "Personal Property"); and (d) All Seller's rights (if any) in all the following intangible property now or hereafter existing with respect to the Property (the "Intangible Property"): (1) All leases, licenses, and other agreements to occupy all or any part of the Land or Improvements together with, and subject to the manner in which the same are to be prorated under this Agreement, all rents, charges, deposits, and other sums due, accrued, or to become due thereunder, and all guaranties by third parties of any tenant's obligations under the leases, licenses, and other agreements; (2) All plans and specifications, all building permits and other permits pertaining to the construction of the Improvements, and all warranties, guaranties, and sureties now or hereafter received in connection with the construction of or equipment on the Improvements; (3) All licenses, permits, approvals, certificates of occupancy, and franchises relating to the zoning, land use, ownership, operation, occupancy, construction, or maintenance of the Improvements; (4) All service and maintenance contracts and equipment leases in connection with or used by Seller in the operation of the Improvements; and (5) All Seller's rights, if any, to use the names and " " with respect to the Property. 1.1 Consideration. The consideration for the sale and conveyances of the Property from the City and ACH Foundation to ACH consists of the obligations of Asante and ACH in the Affiliation Agreement, and other good and valuable consideration. 2. Inspection Contingency 2.1 Inspection Rights. Purchaser will have until 11:59 p.m. at the end of May 15, 2013 (the "Review Period") to satisfy itself concerning all aspects of the Property, including, without limitation, the physical condition thereof, the insurance policies, contracts, leases, and all other financial aspects of the Property; the availability of any governmental permits and approvals; and the feasibility of using the Property for Purchaser's intended use. Purchaser will have the right to perform such tests, inspections, and feasibility studies on the Property as Purchaser may deem necessary, including without limitation soils analysis, groundwater testing, or other studies commonly associated with a Phase I or Phase II environmental site assessment. Seller will permit and, to the extent reasonably required by Purchaser, will assist Purchaser in providing access to Seller's architects, engineers, contractors, subcontractors, managers, analysts, and appraisers in connection with Purchaser's review of the Property. For any portion of the Improvements that is occupied by a tenant, Purchaser will make appropriate arrangements Page 2 - EXHIBIT 9.9 PDXDOCS:2008536.2 with Seller regarding the time and duration of Purchaser's inspections, and Purchaser will take all reasonable steps to protect the tenant's property and to avoid disturbing the tenant. Purchaser will schedule and coordinate all inspections, including, without limitation, any environmental tests, with Seller and will give Seller at least two (2) business days' prior written notice thereof. Seller will be entitled to have a representative present at all times during each such inspection and communication with tenants. 2.2 Inspection Expenses. All costs and expenses of all Purchaser's tests, inspections, and studies must be paid by Purchaser when due, regardless of whether this transaction closes. 2.3 Inspection Indemnity; Evidence of Insurance. Purchaser will indemnify, defend, and hold harmless Seller from and against any and all costs, losses, damages, expenses, liabilities, actions, liens, or claims arising from or related to any tests or inspections on or about the Property by Purchaser or any agent, employee, contractor, or invitee of Purchaser. 2.4 Removal of Inspection Contingencies. If, by the end of the Review Period, Purchaser has notified Seller in writing that Purchaser rejects any one or more of the parcels of Property described in Section 1(a) in its then-current condition, this Agreement will terminate with respect to only the parcel or parcels of Property rejected by Purchaser. Unless such notice of rejection is given, the inspection contingency will be deemed waived and this Agreement will be binding on Purchaser. If Purchaser elects, Purchaser may offer Seller the opportunity to correct any items Purchaser determines to be unacceptable by providing Seller with written notice before the end of the Review Period of what must be corrected, by what dates, and in what manner (the "Correction Notice"). Within ten (10) days after Seller is given the Correction Notice, Seller will notify Purchaser in writing whether and to what extent Seller will effect and pay for the corrections (the "Notice of Intent to Correct"), all of which must be completed before the Closing Date (defined in Section 8.1). If Seller fails to give a Notice of Intent to Correct within those ten (10) days, Seller will be deemed to have refused to agree to the corrections. Within ten (10) days after Seller gives a Notice of Intent to Correct (or after the last day of the period within which the notice is to be given if it is not), Purchaser may elect to (a) cancel this Agreement with respect to only the parcel or parcels of Property rejected by Purchaser, or (b) agree to waive its inspection contingencies as provided in this Section, whereupon Seller will promptly commence and proceed with diligence to completion before the Closing Date with the correction of the items that Seller agreed to undertake in its Notice of Intent to Correct. The failure of Purchaser to give notice of its waiver to Seller within the ten (10) day period will be deemed an election to waive its inspection contingencies in this Section. 2.5 Tenant Estoppels. Seller agrees to make a commercially reasonable effort to obtain from each tenant of the Property an estoppel certificate confirming the status of each of the Leases (defined in Section 4.2) in the form attached hereto as Exhibit D. This obligation, however, does not require Seller to make any payment or concessions to or waive any claims or rights against any tenant. The certificates that are so obtained will be delivered to Purchaser within the Review Period. To the extent Seller is unable to obtain an estoppel certificate from any tenants regarding the tenants' Leases, Seller will provide similar assurances to Purchaser to Seller's knowledge by not later than the end of the Review Period. Page 3 - EXHIBIT 9.9 PDXDOCS:2008536.2 2.6 Environmental Assessments. Purchaser is responsible for obtaining its own environmental inspections of the Land and Improvements. Purchaser agrees to provide Seller with a true and complete copy of all environmental studies, tests, and reports that Purchaser obtains in connection with its inspection of the Land or Improvements. Purchaser will pay for all costs of its environmental inspections regardless of whether this transaction closes. If any person is required to make any report to any governmental agency as the result of any environmental inspection, the report will be submitted solely by Seller. 2.7 Confidentiality Requirements. Purchaser will use and disclose information it obtains about the Property solely in connection with its purchase evaluation. Unless and until it acquires the Property, Purchaser will not disclose any such information to any third party except (a) to its members, board of directors, officers, employees, property consultants, and lawyers; (b) to any court of competent jurisdiction in connection with any mediation, arbitration, or litigation in connection with this Agreement; and (c) as to any information that is otherwise a matter of public record. 3. Title to the Property 3.1 Title Report. At least ten (10) days prior to the Closing Date, Purchaser will order a preliminary title report from Ticor Title Company of Oregon (the "Escrow Agent" or "Title Company") with respect to the Land (the "Title Report"). The Title Report will be accompanied by the most legible copies available of all special exceptions listed therein. Purchaser will have until May 1, 2013 to notify Seller in writing of Purchaser's disapproval of any exceptions shown in the Title Report. Any special assessments shown on the Title Report that are objected to by Purchaser will be included in Purchaser's notice. In the event of any disapproval, Seller will notify Purchaser in writing within ten (10) days after Purchaser's notification as to whether Seller agrees to remove any of the exceptions so disapproved, and upon delivering the notice, Seller will have until the Closing Date described in Section 8.1 to cause the exceptions that Seller has agreed to remove to be removed of record and from the Title Report. Purchaser will be deemed to have accepted all title exceptions to which it has not timely objected. 3.2 Rescission ofAgreement Title Defects. If Seller elects not to eliminate any title exception disapproved by Purchaser, Purchaser may elect to cancel this Agreement with respect to any one or more parcels of the Property by written notice to Seller given on or before twenty (20) days after Seller's notification of the election. In this event, this Agreement will terminate with respect to any one or more of the parcels of Property disapproved of by Purchaser. If Purchaser does not elect to cancel this Agreement, Purchaser's objections to the disapproved exceptions that Seller elected not to eliminate are deemed waived and the Property will be conveyed to the Purchaser with such defects. The foregoing notwithstanding, Seller agrees that it will cause all trust deed liens against the Property that are not accepted by Purchaser to be released of record by the Closing Date, except for the lien of Umpqua Bank identified in Section 9.1 of this Agreement and the approximate $82,000 lien identified in Section 9.3 of this Agreement. If Purchaser fails to give timely notice to Seller of termination under this Section, then Purchaser's right of termination will be deemed waived. 4. Property Documentation Page 4 - EXHIBIT 9.9 PDXDOCS:2008536.2 4.1 Copies ofLeases, Contracts, Other Information. As soon as practicable, Seller will deliver to Purchaser or provide Purchaser access to all the documents and reports identified in Exhibit E attached hereto to the extent they exist and are in Seller's possession or control. Except as otherwise specifically provided in this Agreement, Seller is under no obligation to create any additional data or documentation or obtain any reports for Purchaser. 4.2 Rent Roll. Seller will provide Purchaser with a rent roll (the "Rent Roll") within twenty (20) days after the Effective Date, which will identify by tenant name and suite number the leases currently in effect ("Leases"), any guarantors of the Leases, the commencement and expiration dates of the Leases, any options the tenants have under the Leases, any security deposits and the extent to which they have been applied, the amount of current monthly rent under the Leases, the dates through which the rents have been paid, and any material defaults under the Leases of which Seller is aware. All the information contained in the Rent Roll will be updated within five (5) days before the Closing Date and provided to Purchaser not less than one (1) day before the Closing Date. 4.3 Information Provided by Third Parties. Purchaser acknowledges that Seller is not making any representation, warranty, or guaranty with respect to the completeness, accuracy, or reliability of any report, document, or record prepared by any third party regarding the Property, other than that Seller represents it has no actual knowledge of any inaccuracies in such third- party information except as disclosed in writing to Purchaser. 5. Seller's Representations 5.1 Content of Representations. Seller represents, warrants, and covenants to Purchaser as follows: (a) No Notice of Violation of Zoning and Other Laws. Seller has not received any written notice from any governmental authority alleging that the Improvements violate any building codes, building or use restrictions, or zoning ordinances, rules, or regulations. (b) No Litigation. To Seller's knowledge, there is no pending or threatened litigation or administrative action with respect to the Property, except for any actions for possession, damages, or rent against tenants who are in default under their Leases as described in the Rent Roll. (c) To the City's knowledge, there exists no default under the Umpqua Bank loan described in Section 9.1 of this Agreement or any documentation, security, or encumbrances granted in connection therewith. To ACH Foundation's knowledge, there exists no default under the approximate $82,000 note described in Section 9.3 of this Agreement or any documentation, security, or encumbrances granted in connection therewith. (d) No Condemnation. To Seller's knowledge, there is no pending or contemplated eminent domain, condemnation, or other governmental taking of the Property or any portion thereof. Page 5 - EXHIBIT 9.9 PDXDOCS:2008536.2 (e) No Additional Assessments. To Seller's knowledge, there are no extraordinary governmental assessments or impositions levied against, applicable to, or proposed for the Property as distinct from ordinary ad valorem property taxes, which will be disclosed in the Title Report. (f) No Government Obligations. To Seller's knowledge, there are no unperformed obligations that are currently due relative to the Property to any governmental or quasi-governmental body or authority. (g) No Seller Contamination. To Seller's knowledge, Seller has not caused any hazardous substance, waste, or material to be used, generated, stored, or disposed of on or transported to or from the Land or Improvements in violation of any applicable law before or during the period in which the Seller has owned the Property. For the purposes of this paragraph, "hazardous substance, waste, or material" means all petroleum-based products, radon, asbestos, PCBs, and all substances, wastes, and materials that are so defined in the Comprehensive Environmental Response, Compensation, and Liability Act, 42 USC §§9601-9675; the Resource Conservation and Recovery Act, 42 USC §§6901-6992k; and the Hazardous Materials Transportation Act, 49 USC §§5101-5128. (h) Authority of Seller. Seller's execution of, delivery of, and performance under this Agreement are undertaken according to authority validly and duly conferred on Seller and the signatories hereto. (i) No Breach of Agreements. This Agreement and the consummation of the transaction evidenced by this Agreement do not violate any other agreement to which Seller is a party. (j) Nonforeign Status. Seller is not a "foreign person" as defined in IRC §1445(f)(3), and Seller is not a "transferor" as defined in ORS 314.258(2)(b). (k) Third Party Consents. This Agreement is subject to the same third party consent requirements as the Affiliation Agreement. 5.2 Seller's Knowledge. In each event in which any representation of Seller is limited "to Seller's knowledge" or similar phrase, that knowledge must include only the actual, personal knowledge (and not the implied, imputed, or constructive knowledge) of Seller, without any investigation or inquiry whatsoever, except that said knowledge includes a general review of Seller's files. 5.3 Effect of Purchaser's Knowledge. Purchaser agrees that in the absence of an intent on the part of Seller to fraudulently conceal information about the Property or fraudulently mislead Purchaser, Purchaser will not have the right to rely on any warranty or representation of Seller, and Seller will not be liable for any breach of any such warranty or misrepresentation, if and to the extent Purchaser is given access to data or information relating to the Property before Page 6 - EXHIBIT 9.9 PDXDOCS:2008536.2 the Closing Date that reveals, or Purchaser's tests or inspections before the Closing Date reveal, or Purchaser otherwise knows or has reason to know before the Closing Date of any information that reveals the warranty or representation to be incorrect, and in any of such events Purchaser nevertheless elects to close this purchase. 5.4 Survival of Warranties. All Seller's warranties in this Agreement are deemed given only as of the date set forth in this Agreement, but will be updated in a certificate provided to Purchaser at and as of the Closing Date. Seller's liability for any misrepresentation or the breach of any warranty under this Agreement will survive the Closing of this transaction. 6. Purchaser's Representations Purchaser represents, warrants, and covenants to Seller as follows: 6.1 Purchaser's Existence and Authority. ACH and Asante are each validly existing and duly organized nonprofit corporations under the laws of the State of Oregon and each has the full right and authority to conduct its respective business under the laws of the state of Oregon. 6.2 Third-Party Consents. This Agreement is subject to the same third party consent requirements as the Affiliation Agreement. 6.3 No Litigation. Purchaser is not a party to any litigation or civil or criminal proceedings; no petitions in bankruptcy have been filed by or against Purchaser; and none of Purchaser's assets are currently subject to any insolvency, receivership, or foreclosure proceedings. 6.4 No Breach ofAgreements. This Agreement does not breach or violate any term or provision of any other agreement or contract to which Purchaser is a party. 7. Conditions to Closing 7.1 Purchaser's Conditions. Purchaser acknowledges that Seller does not guarantee the satisfaction of the conditions precedent listed in this Section 7.1 and that Seller's failure to satisfy the conditions (for any reason other than Seller's bad faith) will not be deemed to be a default hereunder but will merely be a failure of a condition to closing, in which event Purchaser's sole remedy will be to (1) waive the condition(s) and any claim against Seller with respect thereto, including, without limitation, as provided in Section 5.3, or (2) terminate this Agreement. Purchaser's obligation to close this transaction is subject to the satisfaction of each of the following conditions: (a) Seller's Compliance. Seller's fulfillment of each of its obligations under this Agreement in all material respects. (b) Seller's Representations. The continuing accuracy of all Seller's warranties and representations in this Agreement in all material respects. Page 7 - EXHIBIT 9.9 PDXDOCS:2008536.2 (c) Material Condemnation. The absence of any condemnation or the institution of condemnation proceedings that result in the taking of any of the Land and Improvements with a value of more than $5000. If this transaction closes, Seller will assign to Purchaser on the Closing Date all condemnation awards and rights to awards that were not used by Seller to pay the costs of any restorations of the Land or Improvements necessitated by the condemnation. (d) Material Casualty. The absence of any material damage by casualty to the Improvements that has not been repaired by the Closing Date. For the purposes of this paragraph, a "material damage by casualty" means any damage by fire or other casualty that has not been repaired and paid for by the Closing Date and for which the estimated cost of the remaining repairs exceeds $15,000. If the Improvements suffer any material damage by casualty, then Purchaser has the right and option to terminate this Agreement with respect to any one or more of the parcels of Property which are the subject of the damage within thirty (30) days after the date of the casualty or by the Closing Date, whichever occurs first. Seller will also have the right to cancel this Agreement if the material damage by casualty is not fully covered by Seller's insurance policy. If Seller and Purchaser do not elect to terminate this Agreement, (i) this transaction will close, and (ii) Seller will proceed to effect the repairs that are reasonably possible before closing unless otherwise agreed to in writing by Purchaser. If the estimated cost to repair any damage by casualty as of the Closing Date is less than $15,000, Purchaser will not have the right to terminate this Agreement because of the casualty. All repair cost estimates referred to in this Section will be made by reference to a fixed-price construction contract, which Seller will obtain as promptly as is reasonably possible after the date of the casualty. (e) Title Insurance. The Title Company must be ready, willing, and able to issue an extended coverage American Land Title Association owner's policy of title insurance in the amount of the Purchase Price, insuring title in Purchaser to the Property consistent with the terms of this Agreement and subject only to the title exceptions approved or deemed approved by Purchaser. 7.2 Seller's Conditions. Seller's obligation to close this transaction is subject to the satisfaction of each of the following conditions: (a) Purchaser's Compliance. Purchaser's fulfillment of each of its obligations under this Agreement. (b) Purchaser's Representations. The continuing accuracy of all Purchaser's warranties and representations in this Agreement. 8. Closing 8.1 Closing Date. This transaction will be closed simultaneously with the Closing of the Affiliation Agreement among the Parties (the date that this transaction closes, as evidenced by the recordation of Seller's deeds to Purchaser, being herein referred to as the "Closing Date"). Page 8 - EXHIBIT 9.9 PDXDOCS:2008536.2 8.2 Manner and Place of Closing. This transaction will be closed by Ticor Title in Medford, Oregon, or at such other place as the Parties may mutually agree to in writing. Closing will take place in the manner and in accordance with the provisions set forth in this Agreement. 8.3 Proration, Adjustments. (a) All ad valorem real property taxes, assessments, personal property taxes, utility expenses, current interest on the Umpqua Bank loan and the $82,000 note, and obligations under all repair and maintenance contracts that are not terminated or required to be terminated by this Agreement by the Closing Date (collectively, the "Expenses"), and all rentals from tenants and other use fees receivable under any lease or other agreement concerning the Property (collectively, the "Income"), will be prorated and adjusted between the parties as of the Closing Date. At closing, Purchaser will be given a credit equal to the sum of all accrued but unpaid Expenses, all refundable tenant security deposits held by Seller, and all prepaid but not yet accrued Income, and Purchaser will pay to Seller all prepaid but not yet accrued Expenses and all accrued but not paid Income, except past-due rentals. Any taxes or additional penalties that would be due as a result of removal of the Property from any tax deferral or special use assessment program will be assumed by Purchaser. (b) Adjustments to Common Area Expense Reimbursements: (i) If and to the extent payments are to be made by tenants of the Property to reimburse the owner of the Property for any maintenance and operating expenses, including payments for insurance, real property taxes, assessments, and utility bills ("Reimbursable Expenses"), Seller and Purchaser will be charged or credited with any operating expenses, insurance premiums, taxes, assessments, or utility bills to the extent the same would otherwise be prorated on the Closing Date under this Agreement and, to the extent then received by Seller, the tenants' payments made to pay Reimbursable Expenses will likewise be prorated as of that date. (ii) If any Reimbursable Expenses are adjusted under the terms of any Leases at the end of any lease year or other period to reflect the actual amount of Reimbursable Expenses, or if any tenant's payments of Reimbursable Expenses are not due or paid as of the Closing Date for any period that includes the Closing Date (any period to which any of the foregoing apply being hereinafter referred to as an "Adjustment Period"), the following provisions will apply: After the end of the applicable Adjustment Periods following the Closing Date, Purchaser must ascertain the actual Reimbursable Expenses that have been paid by tenants but that were not included in the closing prorations. The additional payments by tenants will be prorated between Seller and Purchaser in proportion to the respective Reimbursable Expenses incurred and paid by Seller before the Closing Date and incurred and paid by Purchaser after the Closing Date for the Adjustment Period. Purchaser agrees to use reasonable efforts to enforce the provisions in the Leases requiring reimbursement of Reimbursable Expenses during the Adjustment Period, but will not be required to institute legal proceedings to do so. If the tenants' reimbursements actually received by Seller exceed the Reimbursable Expenses paid by Seller for the portion of the Adjustment Period preceding the Closing Date, and if any portion of the excess is required to be repaid or credited by Purchaser to the tenants, Seller will pay an amount equal Page 9 - EXHIBIT 9.9 PDXDOCS:2008536.2 to that portion to Purchaser within ten (10) business days after Seller's receipt of a statement therefor from Purchaser. (c) With respect to any rentals past due on the Closing Date, Purchaser must make commercially reasonable efforts to attempt to recover those rentals from the tenant for a period of thirty (30) days after the Closing Date, and Purchaser will provide Seller a report at the end of the period in which both the efforts and the results thereof are identified. All rentals received from the tenant subsequent to the Closing Date, after deduction of collection costs, will be applied first to the current rent then due and payable and then to past-due amounts and, to the extent attributable to any period before the Closing Date, paid to Seller. Nothing contained in this section impairs Seller's rights to pursue any monetary claims against any tenant who is in default under any Lease before the Closing Date, but those actions must not include any evictions or lease termination petitions. (d) Seller will attempt to have utility meters read as of the Closing Date. To the extent that this is not possible and to the extent that any other obligation for continuing services is incurred, and statements are rendered for the services covering periods both before and after the Closing Date, the amount will be adjusted between the parties as of the Closing Date on a per diem basis. Seller will forward all the statements that are proper statements to Purchaser, and Purchaser will pay them. Seller will remit to Purchaser its proportionate share immediately upon demand. (e) Purchaser will pay all conveyance, excise, or transfer taxes and transfer fees in connection with this transaction, and Purchaser will pay the recording fees for Seller's deeds. (f) Purchaser will pay the premium for an ALTA standard owner's title insurance policy in favor of Purchaser in the amount of the transaction value. Any additional title insurance coverage or endorsements requested by Purchaser or its lender will be paid by Purchaser. (g) Purchaser will pay the escrow and closing fees charged by the Escrow Agent. (h) Purchaser will pay any costs and expenses related to any processing fee charged by Umpqua Bank in connection with its consent to the transaction. (i) Each Party will pay its own attorney fees. 0) Tenant Inducement Costs (as hereinafter defined) payable with respect to any Leases will be allocated as follows between Seller and Purchaser: (i) Seller will be responsible for, and will pay before Closing, any Tenant Inducement Costs listed on the Schedule attached to Exhibit H and annexed hereto, and (ii) Purchaser will be responsible for, and will pay when due, all other Tenant Inducement Costs under the Leases. For purposes of this paragraph, "Tenant Inducement Costs" means any out-of-pocket payments for new leases as described below in Section 9.3. Page 10 - EXHIBIT 9.9 PDXDOCS:2008536.2 8.4 Events of Closing. If the Escrow Agent has received the sums and is in a position to cause the title insurance policy to be issued as described below, this transaction will be closed on the Closing Date as follows: (a) Seller will convey the real property to Purchaser by statutory warranty deeds, subject to the matters accepted or deemed accepted by Purchaser under this Agreement, in the form attached hereto as Exhibit F; provided however that ACH Foundation will convey Parcel XI Tract A (49 Talent Avenue, Talent, Oregon) by a bargain and sale deed. (b) Seller will convey all its interests in the Personal Property to Purchaser by good and sufficient bills of sale substantially in the form attached hereto as Exhibit G. (c) Seller will provide Purchaser with an updated Rent Roll as provided in Section 4.2. (d) Seller will assign to Purchaser, and Purchaser will assume, the Leases by assignment and assumption agreement in the form attached hereto as Exhibit H. (e) In accordance with Section 8.3(b), Seller will deliver to Purchaser a statement of the Reimbursable Expenses incurred by Seller and the income collected by Seller from tenants in connection with the Reimbursable Expenses for the Adjustment Period in which the Closing Date occurs. (f) Seller will provide Purchaser with (i) the Certificate of Nonforeign Status as provided in IRC §1445(b)(2) and (ii) a certificate or other documentary evidence complying with ORS 314.258 that is reasonably acceptable to Purchaser and the Escrow Agent and sufficient to assure Purchaser and the Escrow Agent that no withholding is required under ORS 314.258. (g) Seller will deliver the original copies of all current Leases and contracts relating to the Property that are in Seller's possession or control. (h) Immediately upon Closing, Seller will execute and deliver a notice to each tenant of the Property advising the tenant of the sale of the Property and advising the tenant to pay all future rent to Purchaser. (i) The Escrow Agent will calculate the prorations agreed to herein, and the Parties will be charged and credited accordingly. 0) Any liens to be paid by Seller at Closing will be paid and satisfied of record at Seller's expense. (k) The City, ACH, and Asante will execute and deliver all documents required by Umpqua Bank. Page I I - EXHIBIT 9.9 PDXDOCS:2008536.2 (1) The Escrow Agent will be committed to issuing the policy described in Section 8.5 upon recordation of the closing documents. (m) Upon compliance with the Parties' closing instructions, the Escrow Agent will record the deeds to ACH at Purchaser's expense. 8.5 Title Insurance. As soon as possible after the Closing Date, the Escrow Agent will furnish Purchaser a standard American Land Title Association form of owner's policy of title insurance in the amount of the transaction value for the Property, subject only to the Escrow Agent's standard preprinted exceptions and exclusions for the form and except for the matters accepted or deemed accepted by Purchaser under this Agreement. The costs of additional or extended title insurance beyond standard coverage will be paid by Purchaser, and the availability of any such coverage will not be a condition of closing. 8.6 Possession. Subject to the rights of tenants, Seller will deliver possession of the Property to ACH on the Closing Date. Purchaser will be entitled to receive directly from the tenants all rents coming due after the Closing Date. 8.7 Acceptance of Property. Purchaser acknowledges that Purchaser has assessed, or has had the opportunity to assess, the size, configuration, utility service, environmentally sensitive areas, means of access, permitted uses, status of title, value, condition, and all other material aspects of the Property, and, except as specifically stated herein, Purchaser is not relying on, nor has Purchaser been influenced by, any statement or representation of Seller or any agent or representative of Seller regarding any of such items. Except for any actionable breaches of Seller's representations and warranties contained herein, Purchaser's acceptance of the Property and the satisfaction or waiver of all Purchaser's conditions to closing will be evidenced solely by the closing of this transaction and without any other act or confirmation by Purchaser. Purchaser does not have the option to close this transaction without accepting the Property in its then current condition, and Purchaser acknowledges that except for any Seller's breach of an express warranty stated in this Agreement, Purchaser is acquiring the Property "AS IS, WHERE IS" in its current condition existing as of the Closing Date, without any representation or warranty of any kind or nature by Seller. 8.8 Waiver of Certain Claims. As part of the consideration for this Agreement, Purchaser agrees that except for any breach by Seller of an express warranty stated in this Agreement, Seller has no liability, and Purchaser hereby waives any claims and releases Seller for all liability, for any title, physical condition, or any other aspect of the Property, whether direct or indirect, absolute or contingent, foreseen or unforeseen, and known or unknown. The waiver and release extend to Seller and Seller's affiliates, successors, members, partners, shareholders, directors, officers, employees, and agents, and their respective heirs, successors, and assigns. Without limiting the generality of the foregoing, Purchaser waives all rights to contribution, offsets, and damages that in any manner relate to the compliance of the Property with any law or regulation applicable thereto, including, without limitation, the Americans with Disabilities Act, 42 USC §§12101-12213; the Fair Housing Act, 42 USC §§3601-3631; the Comprehensive Environmental Response, Compensation, and Liability Act, 42 USC §§9601- 9675; the Resource Conservation and Recovery Act, 42 USC §§6901-6992k; the Clean Water Page 12 - EXHIBIT 9.9 PDXDOCS:2008536.2 Act, 33 USC §§1251-1387; the Safe Drinking Water Act, 42 USC §§300f-300j-26; the Hazardous Materials Transportation Act, 49 USC §§5101-5128; the Toxic Substances Control Act, 15 USC §§2601-2692; and any and all other federal, state, and local personal disabilities and environmental laws or regulations. 8.9 Indemnification. Purchaser will defend, indemnify, and hold harmless Seller from and against all actions, claims, losses, liabilities, damages, costs, and expenses (including without limitation reasonable attorney fees) that are caused by Purchaser's failure to perform any landlord's or owner's obligation under any lease of, or contract relating to, the Property on and after the Closing Date or for which Purchaser is responsible in accordance with the terms of this Agreement. Seller will defend, indemnify, and hold harmless Purchaser from and against all third-party claims for premises liability regarding any injury or damage to the third party or its property that occurred on or about the Property before the Closing Date. 9. Conduct of Business 9.1 Assumed Loan. Until the Closing Date, ACH will pay and perform all the obligations under the Umpqua Bank loan when due. The City and ACH agree that no terms or conditions of the Umpqua Bank loan may be modified without Asante's prior written consent. Until the Closing Date, ACH Foundation will pay and perform all of the obligations under the approximate $82,000 loan described in Section 9.3 of the Affiliation Agreement. 9.2 Operations. Between the date of this Agreement and the Closing Date, Seller will continue to operate the Property in accordance with its current management, operation, and leasing standards and practices and will take no steps or actions that it knows would be materially detrimental to the value of the Property. 9.3 Leases. Between the Effective Date and the Closing Date, and without Purchaser's prior written consent, Seller will not renew or modify any Leases or enter into any additional leases of the Property or any portion thereof (a) for terms of more than one (1) year, (b) for rents that are less than the amount set forth on the Rent Roll, or (c) that contain free rent, concessions, or incentives that are inconsistent with those set forth on the Rent Roll. Notwithstanding the foregoing, Purchaser's consent will not be required for renewals or extensions that are contained in existing Leases. No consent required by the terms of this paragraph may be unreasonably conditioned, delayed, or withheld in light of the then-current market and leasing conditions for similar properties in the vicinity of the Property. All expenses, commissions, permitting expenses, tenant improvement costs, and rent concessions relating to any leases and modifications executed after the date of Closing will be assumed by Purchaser as of the Closing Date, and any sums expended by Seller before the Closing Date with respect to any such items under a lease or modification executed after the date of this Agreement will be at the expense of Seller. Subject to the foregoing, Seller retains the sole and unilateral right to accept, modify, or reject any offers to lease the Property before the Closing Date. 9.4 Contracts. Between the Effective Date and the Closing Date, Seller will not enter into any equipment purchase contract that will not be paid in full before the Closing Date or any service or maintenance contract that cannot be canceled upon thirty (30) days' notice at no cost Page 13 - EXHIBIT 9.9 PDXDOCS:2008536.2 to Purchaser unless Seller first obtains the written approval of Purchaser, which approval will not be unreasonably delayed, conditioned, or withheld. 9.5 Insurance. Seller agrees to continue to maintain its current casualty and liability insurance policies on the Property until the Closing Date but has no responsibility for maintaining any such insurance after the Closing Date or to assign any policy to Purchaser. 9.6 Property Maintenance. Between the date of this Agreement and the Closing Date, Seller agrees to maintain and make ordinary repairs to the Property so as to cause the Property to be delivered to Purchaser in substantially the same condition existing as of the end of the Review Period, ordinary wear and tear, damage by casualty, and damage by condemnation excepted. Each Party will promptly notify the other regarding any item of repair, replacement, or maintenance of which it becomes aware and that requires an expenditure in excess of $5000. In no event will Seller be required to make any capital repairs or replacements to the Property between the Effective Date and the Closing Date. 9.7 No Additional Obligations. Except as provided in this Section, Seller has no obligation to maintain, repair, alter, reconstruct, or replace any portion of the Property or preserve or enter into any existing or new leases or service contracts, and Purchaser acknowledges that there exist no express or implied representations or covenants to do so. 10. Legal Relationships 10.1 Relationship ofParties. This Agreement creates only the relationship of seller and buyer, and no joint venture, partnership, or other joint undertaking is intended hereby. No Party hereto will have any rights to make any representations or incur any obligations on behalf of the other. No Party has authorized any agent to make any representations, admit any liability, or undertake any obligation on its behalf. No Party is executing this Agreement on behalf of an undisclosed principal. 10.2 No Third-Party Beneficiaries. No third party is intended to be benefited or afforded any legal rights under or by virtue of this Agreement. 10.3 Joint and Several Liability. If any Party comprises more than one person or entity, the obligations of each person or entity comprising such Party under this Agreement will be joint and several. 10.4 No Real Estate Brokers. Each Party warrants to the other Party that no real estate or other broker or agent was consulted or engaged in connection with this transaction, and each Party will indemnify, defend, and hold harmless the other Parties from and against all claims, losses, and liabilities made or imposed for any commission or finder's fee to any broker or agent and arising out of the actions of such Party. 10.5 Indemnified Parties. Any indemnification contained in this Agreement for the benefit of a Party will extend to the Party's members, directors, officers, employees, and agents. Page 14 - EXHIBIT 9.9 PDXDOCS:2008536.2 10.6 Assignments and Successors. Purchaser may not assign or otherwise transfer this Agreement or any interest herein, voluntarily, involuntarily, or by operation of law, without the prior written consent of Seller in each instance, which consent will not be unreasonably withheld. Subject to the foregoing, this Agreement will bind and inure to the benefit of the Parties hereto and their respective successors and assigns. 11. General Provisions 11.1 Notices. Notices under this Agreement must be in writing and, if personally delivered or sent by facsimile, will be effective when received. If mailed, a notice will be deemed effective on the second day after deposited as registered or certified mail, postage prepaid, directed to the other party. Notices must be delivered, mailed, or sent by facsimile to the following addresses: Seller: City of Ashland Ashland Community Hospital Foundation c/o David Kanner, Administrator c/o Sandra Slattery and Thomas Grimland 20 East Main Street 280 Maple Street Ashland, OR 97520 Ashland, OR 97520 Purchaser: Ashland Community Hospital Asante c/o Anne Golden, Board Chair c/o Roy Vinyard, CEO 280 Maple Street 2650 Siskiyou Blvd. Ashland, OR 97520 Medford, OR 97504 With a copy to: Any Party may change its address for notices by at least fifteen (15) days' advance written notice to the other Parties. 11.2 Time ofEssence. Except as otherwise specifically provided in this Agreement, time is of the essence for each and every provision of this Agreement. 11.3 Invalidity of Provisions. If any provision of this Agreement, or any instrument to be delivered by Purchaser at Closing under this Agreement, is declared invalid or is unenforceable for any reason, the provision will be deleted from the document and will not invalidate any other provision contained in the document. 11.4 Neutral Construction. This Agreement has been negotiated with each Party having the opportunity to consult with legal counsel and will be construed without regard to which Party drafted all or part of this Agreement. Page 15 - EXHIBIT 9.9 PDXDOCS:2008536.2 11.5 Captions. The captions of the sections and paragraphs in this Agreement are used solely for convenience and are not intended to limit or otherwise modify the provisions of this Agreement. 11.6 Waiver. The failure of any Party at any time to require performance of any provision of this Agreement will not limit the Party's right to enforce the provision. Waiver of any breach of any provision will not be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provision. All waivers shall be in writing to be effective. 11.7 Subsequent Modifications. This Agreement and any of its terms may be changed, waived, discharged, or terminated only by a written instrument signed by the Party against whom enforcement of the change, waiver, discharge, or termination is sought. 11.8 Saturdays, Sundays, and Legal Holidays. If the time for performance of any of the terms, conditions, and provisions hereof falls on a Saturday, Sunday, or legal holiday, then the time of the performance will be extended to the next business day thereafter. 11.9 Venue. In any action brought to interpret or enforce any of the provisions of this Agreement, the venue will be in Jackson County, Oregon. 11.10 Applicable Law. This Agreement will be construed, applied, and enforced in accordance with the laws of the state of Oregon. 11.11 Entire Real Property Agreement. This Agreement and the Affiliation Agreement constitute the entire agreement of the Parties with respect to the Property and supersede and replace all written and oral agreements previously made or existing between the Parties. 11.12 No Offer. By providing an unexecuted copy of this Agreement to any person, no Party is deemed to have made an offer to sell or purchase or otherwise indicated its willingness to enter into any transaction with respect to the Property, and this Agreement will not be binding on any Party unless and until it has been fully executed and delivered by Seller and Purchaser. 11.13 No Recording. Neither this Agreement nor any memorandum or short form thereof may be recorded. 11.14 Counterparts. This Agreement may be executed simultaneously or in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same contract. 11.15 Facsimile Copies. Any Party may rely on facsimile copies of this Agreement to the same extent as the originals. 11.16 Statutory Warning (ORS 93.040(2)). THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND Page 16 - EXHIBIT 9.9 PDXDOCS:2008536.2 REGULATIONS THAT, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND THAT LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO VERIFY THE EXISTENCE OF FIRE PROTECTION FOR STRUCTURES AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written. The signature of the Parties on the Affiliation Agreement shall be deemed to be signatures on this Agreement, which is Exhibit 9.9 to the Affiliation Agreement. Page 17 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT A Description of Property (Reference Section I(a) Page 1) [Legal Description of Land] Page 18 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT B Description of Personal Property (Reference Section 1(c) of Exhibit 9.9) [Description of Each Item of Personal Property] Page 19 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT D Tenant Estoppel Certificate (Reference Section 2.5 of Exhibit 9.9) None. Page 20 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT E List of Property Documents (Reference Section 4.1 of Exhibit 9.9) 1. All monthly operating statements for and and year-end statements for , and . Monthly operating statements will contain narrative explanations of major actual versus budget variations in expenses and income. 2. Real estate tax statements for the past three years and any correspondence with local assessors in Seller's possession. 3. Copies of all current service contracts in force. 4. Current rent roll and rent roll for every six months for and 5. Current vacancy rate and vacancy rate summary by month for the past three years. 6. Summary of capital repairs and expenditures since as provided in the narrative of monthly operating statements. 7. Current payroll summary listing each manager and employee by function (include pay rate, average hours per week, and length of employment). 8. List of all significant recurring services costing an average of more than $1,000 per month (include vendor, cost, and frequency). 9. Explanation of current rental concession programs. 10. Current year's detailed operating budget. 11. Property brochures with floor plans. 12. Summary of any pending tenant and third-party claims, governmental citations, and litigation. 13. Any as-built drawings or other plans or specifications relating to the Property that are in Seller's possession or under Seller's control. 14. Any environmental assessments or audits of the Property that are in Seller's possession or under Seller's control. 15. Any engineering reports or studies of the Property that are in Seller's possession or under Seller's control. 16. The Note, Deed of Trust, and all other Assumed Loan Documents. Page 21- EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT F Statutory Warranty Deed (Reference Section 8.4(a) of Exhibit 9.9) [Form of Applicable Deed] Page 22 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT G Bill of Sale (Reference Section 8.4(b) of Exhibit 9.9) For good and valuable consideration, the receipt of which is hereby acknowledged, ("Seller") does hereby sell, assign, transfer, and convey to ("Purchaser") all personal property owned by Seller and located on or in or used in connection with the Property (as that term is defined in the Purchase and Sale Agreement dated 2013, between Seller and Purchaser), and that is described in the Schedule attached hereto and incorporated herein by this reference. Seller hereby represents and warrants to Purchaser that Seller is the lawful owner of this personal property, that this personal property is free and clear of all liens, encumbrances, conditional sales contracts, security interests, and claims, and that Seller has all lawful right and authority to make this conveyance. DATED: 2013. SELLER: By: Printed Name: Its: Date Executed: Page 23 - EXHIBIT 9.9 PDXDOCS:2008536.2 SCHEDULE TO BILL OF SALE (Reference Section 8.4(b) of Exhibit 9.9) [Inventory of Personal Property Included in the Sale] Page 24 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT H Tenant Inducement Costs (Reference Section 8.30) of Exhibit 9.9) None. Page 25 - EXHIBIT 9.9 PDXDOCS:2008536.2 EXHIBIT H Assignment and Assumption of Leases (Reference Section 8.4(d) of Exhibit 9.9) None. SCHEDULE TO ASSIGNMENT AND ASSUMPTION OF LEASES [Identification of Leases] None. Page 26 - EXHIBIT 9.9 PDXDOCS:2008536.2 LIST OF ATTACHMENTS (Exhibits and Schedules) EXHIBITS TO EXHIBIT 9.9 OF AFFILIATION AGREEMENT EXHIBIT DESCRIPTION Ex. A: § 1 a Legal Descriptions of the Land Ex. B: 1 c Personal Property Ex. D: §2.5 Tenant Estoppel Certificate Ex. E: §4.1 Leases; Contracts Ex. H: §8.3 Tenant Inducement Costs Ex. F: 8.4 a Statutory Warrant Deeds Ex. G: §8.4 b Bill of Sale Ex. H: §8.4 d Assignment and Assumption Page 27 - EXHIBIT 9.9 PDXDOCS:2008536.2 Exhibit 9.9 Additional Agreements/Exhibits of Parties Regarding Conveyance of 9.1 & 9.2 Exhibit Description Exhibit A Legal Descriptions of the land/properties Exhibit B Personal Property Exhibit C None Exhibit D Tenant Estoppel Certificate Exhibit E Leases and Contracts Exhibit F Statutory Warranty Deeds Exhibit G Bill of Sale Exhibit H Assignment and Assumption Exhibit H Tenant Inducement Costs Exhibit 9.9 H (8.3(j)) Tenant Inducement Costs None Exhibit 9.9 H (8.4(d)) Assignment and Assumption None Exhibit 9.9 G (8.4(b)) Bills of Sale Bill of Sale For good and valuable consideration, the receipt of which is hereby acknowledged, Ashland Community Hospital Foundation("Seller") does hereby sell, assign, transfer, and convey to Ashland Community Healthcare Services ("Purchaser") all personal property owned by Seller and located on or in or used in connection with the Property (as that term is defined in the Purchase and Sale Agreement dated June 4, 2013, between Seller and Purchaser), and that is described in the Schedule attached hereto and incorporated herein by this reference. Seller hereby represents and warrants to Purchaser that Seller is the lawful owner of this personal property, that this personal property is free and clear of all liens, encumbrances, conditional sales contracts, security interests, and claims, and that Seller has all lawful right and authority to make this conveyance. DATED: 12013 SELLER: Ashland Community Hospital Foundation By: Printed Name: Its: Date Executed: Bill of Sale For good and valuable consideration, the receipt of which is hereby acknowledged, the City of Ashland ("Seller") does hereby sell, assign, transfer, and convey to Ashland Community Healthcare Services ("Purchaser") all personal property owned by Seller and located on or in or used in connection with the Property (as that term is defined in the Purchase and Sale Agreement dated June 4, 2013, between Seller and Purchaser), and that is described in the Schedule attached hereto and incorporated herein by this reference. Seller hereby represents and warrants to Purchaser that Seller is the lawful owner of this personal property, that this personal property is free and clear of all liens, encumbrances, conditional sales contracts, security interests, and claims, and that Seller has all lawful right and authority to make this conveyance. DATED: 12013 SELLER: City of Ashland By: Printed Name: Its: Date Executed: Exhibit 9.9 G (8.4(b)) Schedule to Bill of Sale All tangible personal property with located on the land or in the improvements described in Exhibits 91A and 9.113 with no exceptions. Exhibit 9.9 G (8.4(b)) Schedule to Bill of Sale All tangible personal property with located on the land or in the improvements described in Exhibits 9.2.1, 9.2.2, 9.2.3, 9.2.4, and 9.2.5 with no exceptions. Exhibit 9.9 E (4.1) Leases : Contracts • Facility Lease between City of Ashland and Ashland Community Healthcare Services o 280 Maple Street & 559 Scenic, Ashland Oregon • Facility Lease between Ashland Community Hospital Foundation and Ashland Community Hospital o 49 Talent Avenue, Talent Oregon • Facility Lease between Wesley G & Lily M. Harley and Ashland Community Hospital o 101 Sunny Street, Talent Oregon • Facility Lease between Southern Oregon Family Practice Building, LLC and Ashland Community Healthcare Services o 241 Maple Street, Ashland Oregon • Facility Lease between Ruvert, LLC and Ashland Community Hospital o 268 S. Pacific Highway, Talent Oregon • Facility Lease between Ashland Community Hospital Foundation and Ashland Community Hospital o 317 Maple Street, Ashland Oregon • Facility Lease between Ashland Community Hospital Foundation and Ashland Community Hospital o 530 Catalina Drive, Ashland Oregon • Facility Lease between Ashland Community Hospital Foundation and Ashland Community Hospital o 628 N. Main Street, Ashland Oregon • Facility Lease between Ashland Family YMCA and Ashland Community Healthcare Services o Pool at 540 YMCA Way, Ashland Oregon Exhibit 9.9 D (2.5) Tenant Estoppel Certificate None (See schedule 34.7.3) Exhibit 9.9 B (1(c)) Personal Property All tangible personal property located on the land and improvements described in Exhibits 9.1 A, 9.1 B, 9.2.1, 9.2.2, 9.2.3, 9.2.4, 9.2.5 Exhibit 9.9 A (1(a)) Legal Descriptions of the Land PARCEL I: Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 31' West along said East side-line, 202.00 feet to the northeast corner of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 0°31' East along the west line of said Lot 70.0 feet to the northeast corner of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 9°31' West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City. ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest corner of said tract; thence North along the west line thereof 115.0 feet to the northwest corner of said tract; thence East 142.00 feet to a point 115.00 feet North of the place of beginning; thence South 115.00 feet to the place of beginning. Being a part of Lot 6 of WIMER'S SUBDIVISION to the City of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Situs Address: 278 & 280 Maple St, Ashland, OR 97520 PARCEL V: Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Situs Address: 560 Catalina Dr, Ashland, OR 97520 PARCEL III: Commencing at a point 4.72 chains West of the Northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East, Willamette Meridian Jackson County, Oregon; thence South 0930' East 3.70 chains, more or less, to the North line of Maple Street, in the City of Ashland, Jackson County, Oregon; thence North 89°53' West, along the North line of said Maple Street, 462.13 feet, more or less, to the East line of Chestnut Street, in said City, for the true point of beginning; thence North, along the East line of Chestnut Street, 120.0 feet; thence East, parallel with the North line of Maple Street, 60.0 feet; thence South, parallel with the East line of Chestnut Street, 120.0 feet, to the North line of said Maple Street; thence West, along said North line, 60.0 feet, to the true point of beginning. Account: 1-005691-6 391E05DB 1000 Situs Address: 317 Maple St, Ashland, OR 97520 PARCEL VI: Parcel No Two (2) of Partition Plat recorded October 2, 1990, as Partition Plat No. P-102-1990 of "Record of Partition Plats" in Jackson County, Oregon, and filed as Survey No. 12201 in the Office of the County Surveyor. Account: 1-079073-6 391E05DB 2601 Situs Address: 530 Catalina Dr, Ashland, OR 97520 PARCEL VIII: Commencing at the intersection of the northeasterly right of way line of North Main Street with the west boundary line of Donation Land Claim No. 40 which bears South 00°02'57" West (deed record South 00°03' West) 951.86 feet distance from the accepted northwest corner of Donation Land Claim No. 40 in Section 5, Township 39 South, Range 1 East, Willamette Base and Meridian, Jackson County, Oregon; thence North 28°10'13" West (deed record North 28°12' West a distance of 326.2 feet) along the northeasterly right of way line of said North Main Street for a distance of 326.20 feet to a 1/2 x 24" galvanized iron pipe situated at the westerly corner of that tract of land as set forth in Volume 411, Page 113, Jackson County, Oregon, Deed Records, being the true point of beginning; thence leaving said right of way line, North 61941'47" East (deed record North 61940 East 200.00 feet) along the northwesterly boundary line of said Volume and Page, for a distance of 200.00 feet to a 1/2 x 24" galvanized iron pipe situated at the northerly corner thereof; thence North 28°10'13" West (deed record North 28°12' West, 45.55 feet) for a distance of 46.03 feet to a 1/2 x 24" galvanized iron pipe situated in the westerly boundary line of Donation Land Claim No. 40; thence North 00°02'57" East along said westerly boundary line (deed record North 00°03' East, 61.90 feet) for a distance of 61.90 feet to a set 1/2 x 24" galvanized iron pipe; thence leaving said Claim line, South 61°41'47" West (deed record South 61940 West, 229.30 feet) for a distance of 229.27 feet to a 1/2 x 24' galvanized iron pipe situated in the northeasterly right of way line of North Main Street; thence South 28°10'13" East along said right of way line (deed record South 28°12' East, 100.00 feet) for a distance of 100.51 feet to the point of beginning. EXCEPTING THEREFROM that portion conveyed to the State of Oregon by and through its Department of Transportation by deeds recorded May 19, 1995 as Document Nos. 95-13393 and 95-13394, Deed Records of Jackson County, Oregon. AND FURTHER EXCEPTING THEREFROM that portion lying and situated within the boundary of the following described parcel: Beginning at a point on the West line of Donation Land Claim No 40, Township 39 South, Range 1 East, Willamette Meridian, Jackson County, Oregon , South 0903" West 270.0 feet from the Northwest corner of said claim (said point being the point of intersection of the Southerly right of way line of the Southern Pacific Company, formerly the Oregon and California Railroad Company, with the West line of said claim); thence along said railroad right of way as follows: South 46919' East 189 feet; thence South 42944' East 217.2 feet; South 39909 East 217.5 feet; thence South 60957' West 276.15 feet to the Easterly line of tract described in Volume 265 Page 471 Jackson County, Oregon, Deed Records; thence North 28°12' West, along said Easterly line, 70.0 feet, to the most Northerly corner of said tract; thence South 61948' West, along the Northerly line thereof, 200.0 feet, to the Easterly side line of North Main Street; thence North 28912' West, along said line, 50.00 feet to the Southwest corner of tract described in Volume 33 Page 481, said Deed Records; thence North 61948' East 200.0 feet to the Southeast corner of said tract; thence North 28912' West, along the Easterly line of said tract and its Northerly extension, 233.0 feet, more or less, to the Northeasterly corner of tract described in Volume 288 Page 86, said Deed Records; thence West, along the North line of said tract, to intersect the West line of said Donation Land Claim No 40; thence North, along said line, to the point of beginning. Account: 1-080638-7 391E05AD 601 Situs Address: 628 N. Main, Ashland, Oregon PARCEL XI: Tract A: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84°00' West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said line North 52°41' West 206.40 feet; thence South 84°10' West 396.05 feet to the Easterly side line of the Old Pacific Highway No 99, for the true point of beginning; thence along said line North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936' East 50.0 feet; thence South 84°10' West 100.0 feet to the true point of beginning. ALSO: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence South 84910" West 495.9 feet to the Easterly side line of Old Pacific Highway No 99; thence along said line North 25936" West 200.0 feet; for the true point of beginning; thence North 25°36' West 50.0 feet; thence North 84910' East 100.0 feet; thence South 25936; East 50.0 feet; thence South 84°10' West 100.0 feet, to the true point of beginning. ALSO: Commencing at a point on the East line of Donation Land Claim No 60, Township 38 South, Range 1 West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim No 60; thence 84900 West 395.1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said highway line North 52°41' West 206.40 feet; thence South 84910" West 246.05 feet to the true point of beginning; thence South 84910' West 50.0 feet to the Southeast corner of tracts described in Volume 434 Page 247, Deed Records of Jackson County, Oregon; thence along the Easterly line of said tract, North 25936' West 100.0 feet to the Northeast corner thereof; thence North 84910' East 50.0 feet; thence South 25936' East 100.0 feet to the true point of beginning. Account: 1-027484-9 381W23CA 1300 Situs Address: 49 Talent Ave, Talent, Oregon 97540 PARCEL X: Commencing at a point on the east line of Donation Land Claim No. 60 in Township 38 South, Range 1 West of the Willamette Meridian in Jackson County, Oregon, which point is 330 feet North of the Southeast corner of said Claim, thence South 84°00' West 395.1 feet to an iron pin on the western right of way line of the relocated Pacific Highway No. 99, thence North 52°41' West, along said right of way line, 412.80 feet to the true point of beginning; thence South 84°10' West 39.95 feet; thence North 05°50' West 4.06 feet; thence South 84°10' West 70.33 feet; thence South 05°50' East 4.06 feet; thence South 84°10' West 37.90 feet to the northwest corner of the tract described in deed recorded as No. 94-25870 of the Official Records of Jackson County, Oregon; thence continue South 84°10' West 148.0 feet to the eastern right of way line of the Old Pacific Highway No. 99; thence North 25°36' West, along said right of way line, 98.85 feet to the northwest corner of the tract described in deed recorded as No. 93-21602 of said Official Records; thence North 78°07' East 208.14 feet to a point situated on aforesaid western right of way line, of said relocated Highway No. 99; thence South 52°41' East, along said right of way line, 168.10 feet, more or less, to the true point of beginning. Account: 381W23CA 700 1-027478-2 Situs Address: 209 North Pacific Hwy, Talent, Oregon 97540 Restated Articles of Incorporation - Nonprofit i : o} Secretary of Stale - Corporation 0ivision - 255 Capitol St. NE, Suite 151 -Salem, OR 97310-1327- http:/Aww.FilinglnOregon.com -Phone: (503) 986-2200 NOTE: This document shall have a delayed effective date and time of August 1, 2013 at 12:01 a.m. REGISTRY NUMBER: 51030584 In accordance with Oregon Revised Statute 192,410.192,490, the information on this app#ication is public retard. We must release this information to all parties upon request and it wilt be posted on our webs4e. For office use only Please Type or Print Legibly in Black Ink. Attach Additional Sheet if Necessary. 1) NAME OF CORPORATION: Ashland Community Healthcare Services 2) NEW NAME OF THE CORPORATION: (If changed) 3) A COPY OF THE RESTATED ARTICLES MUST BE ATTACHED. 4) CHECK THE APPROPRIATE STATEMENT: ❑ The restated articles contain amendments which do not require membership approval. The date of the adoption of the amendments and restated articles was . These amendments were duly adopted by the board of directors. 6 The restated articles contain amendments which require membership approval. The date of the adoption of the amendments and restated articles was The vote of the members was as follows: Class(es) entitled to vote Number of members Number of votes entitled Number of votes cast Number of entitled to vote to be cast FOR votes cast AGAINST I 1 1 1 1 0 5) EXECUTION: (Must be signed by at least one officer or director.) By my signature, I declare as an authorized authority, that this filing has been examined by me and is, to the best of my knowledge and belief, true, correct, and complete. Making false statements in this document is against the law and may be penalized by fines, imprisonment or both. Signature: Printed Name: Title: John Stromberg Mayor, City of Ashland 5) EXECUTION: Signature: Printed Name: Title: Anne Golden Board Chair Ashland Community Healthcare Services CONTACT NAME: (To resolve questions with this fiting.) Peter F. Stoioff~ f ftequiretl FruCE55ing Fee $SO s PHONE NUMBER: (include area code.) Processirg Fees are nonrefundable. Please make check payable to'Corporatioa Divis'son.' l 503-992-6463 1Free copies are availa!e at Filinalnoreaon.com. using the Business Name Search program. 32 - Restated Articles of incorporation - Nonprofit (04112) RESTATED BYLAWS OF ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASANTE ASHLAND COMMUNITY HOSPITAL August 1, 2013 ARTICLE I THE CORPORATION IN GENERAL 1.1 NAME AND DESCRIPTION. The name of the corporation shall be Ashland Community Healthcare Services dba Asante Ashland Community Hospital ("AACH" or "Corporation"). It is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. It is part of the Asante Health System ("Asante" or the "System"). 1.2 PURPOSES AND MISSION. 1.2.1 Purposes. The purposes for which the Corporation is organized and operated shall be as provided in its Articles of Incorporation, as restated or amended. 1.2.2 Mission. AACH exists to provide quality healthcare services in a compassionate manner, valued by the communities it serves. 1.3 LOCATION. The principal office of the Corporation shall be located at 280 Maple Street, Ashland, OR 97520. ARTICLE II MEMBER 2.1 MEMBER. The sole Member of the Corporation is Asante. Asante is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. 2.2 ACTIONS BY MEMBER. Unless a greater number is required by its articles of incorporation, by its bylaws or by law, Asante may act, in its capacity as sole Member of AACH, through Asante's Board of Directors, either by a majority vote at a meeting at which a quorum is present or by a consent without a meeting or in any other manner authorized in the Bylaws of Asante, as restated or amended. 2.3 POWERS OF THE MEMBER. In addition to all matters required by the Articles of Incorporation or other provisions of these Bylaws which are required to be approved by Asante, Asante shall at all times have voting rights to the fullest extent allowed to the membership of nonprofit corporations under the Oregon Nonprofit Corporation Act. Without limitation of the rights of Asante as the sole Member of the Corporation, Asante shall have the right to take the following actions with respect to this Corporation and of any corporation or Page 1- RESTATED BYLAWS OF AACH other legal entity of which this Corporation is the sole or controlling member or shareholder, except as otherwise noted below: 2.3.1 To adopt or change the mission, philosophy, or values; 2.3.2 To amend, restate, or repeal the Articles of Incorporation or Bylaws; 2.3.3 As to this Corporation, to fix the number of Directors, elect the Board of Directors and to remove such Directors at any time with or without cause; 2.3.4 To appoint and remove the Chief Executive Officer ("CEO") of the hospital operated by the Corporation and to remove such CEO, with or without cause, after requesting a recommendation from the Board of Directors; 2.3.5 To approve the acquisition of assets, the incurrence of indebtedness or the lease, sale, transfer, assignment, or encumbering of the assets, if the amount involved in any such transaction is in excess of an amount specified from time to time by resolution of Asante, and to approve the sale or transfer of other property; 2.3.6 To approve the dissolution, liquidation, consolidation or merger with another corporation or entity; 2.3.7 To approve on a consolidated system-wide basis the annual operating and capital budgets and approval of any deviations from such budget in excess of an amount or percentage specified from time to time by resolution of Asante; and 2.3.8 To appoint the certified public accountants after receiving the recommendation of the Board of Directors and to receive the annual audit report from such accountants. 2.4 MEETINGS. An annual meeting of Asante, in its capacity as sole member of AACH, shall be held each year at such time and date as the Board of Directors of Asante shall determine. Special meetings of Asante, in its capacity as sole member of AACH, may be called by the Board of Directors of Asante, or by the President or the Chair of the Board of Directors of Asante. 2.5 NOTICE OF MEETING. Notice of meetings of Asante as the sole member of the Corporation may be called by Asante in accordance with Asante's Bylaws. Asante's Bylaws are hereby incorporated in their entirety into these Bylaws. ARTICLE III BOARD OF DIRECTORS OF THE CORPORATION 3.1 POWER OF THE BOARD OF DIRECTORS. The Board of Directors (sometimes referred to as "Board") of AACH shall exercise general governance and control of the mission and business affairs of the Corporation and shall have and exercise all of Page 2 - RESTATED BYLAWS OF AACH the powers which may be exercised or performed by the Corporation under the laws of the State of Oregon and these Bylaws, with due regard for the powers reserved to the Member of the Corporation as stated in Article II of these Bylaws. 3.2 COMPOSITION OF THE BOARD. The Board of Directors of the Corporation shall consist of the same individuals as those then currently serving on the Board of Directors of its sole Member, Asante. The individuals who are ex-officio members of the Asante Board shall be ex-officio members of the Board of Directors of the Corporation. Appointment, term, or removal of a Board of Director from the Corporation's sole Member, Asante, shall constitute appointment, term of office, or removal from such individual's service as a Board of Director of the Corporation without further action. In the event a Member of the Board of Directors of Asante shall resign, such resignation shall automatically cause the resignation of such Board of Director as a Director of the Corporation. The term of office of each Director of AACH shall be coextensive with his or her respective term of office as a Director of Asante. 3.3 VACANCIES. A vacancy on the Board of Directors shall exist upon the death or resignation of a Director, upon removal of any Director by Asante or upon the creation of an additional directorship. Asante may fill a vacancy on the Board of Directors in the manner and for the term provided herein for the election of Directors. 3.4 BOARD CHAIR. The Board Chair of the Board of Directors of the Corporation shall be the same individual then serving as the Board Chair of the Corporation's sole Member, Asante. Such Board Chair shall serve in such capacity so long as such individual is serving as the Board Chair of Asante. 3.5 MEETINGS AND PROCEDURAL RULES. 3.5.1 Annual Meeting. The annual meeting of the Board of Directors shall be held by December 31 of each year. Such meeting shall be held at the principal office of the Corporation or at such place as may be designated from time to time by the Board Chair. The purposes of the annual meeting shall include, without limitation, electing officers as herein provided and transacting such other business as shall be necessary or desirable. 3.5.2 Regular Meetings of the Board. Regular meetings of the Board of Directors shall occur at such times as the Board shall from time to time determine. 3.5.3 Special Meetings of the Board. Special meetings of the Board of Directors may be called as provided in the Asante Bylaws, which provide in Article III Section 10.5 as follows: "Special meetings of the Board for any purpose or purposes shall be called by the Secretary upon request by the Board Chair, by the President and CEO, or by at least one-third (1/3) of the directors." 3.5.4 Notice of Board of Directors Meetings. Notice of all Board of Directors meetings shall be given in the same manner as provided in the Asante Bylaws, which provide in Article III, Section 10.7 as follows: "No notice shall be required of any regular or annual organization meeting which is held at a time and place fixed by these Bylaws or by a previous Page 3 - RESTATED BYLAWS OF AACH resolution of the Board. Notice of the time and place of any other meeting shall be delivered personally, communicated by electronic mail, telephone, or facsimile, or sent to each director by first-class mail, charges prepaid, addressed to the director at the director's address or contact number as it is shown on the records of the corporation, or, if it is not so shown on such records or is not readily ascertainable, to the place where the principal office of the corporation is located. If personally delivered or communicated by electronic mail, telephone, or facsimile, such notice shall be delivered at least twenty-four (24) hours prior to the meeting. If sent by mail, such notice shall be sent at least four (4) days prior to the meeting." 3.5.5 Quorum; Manner of Acting. A majority of the voting members of the Board shall constitute a quorum at any meeting of the Board. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. 3.5.6 Action by Unanimous Written Consent. Waiver of notice of any Board meeting or any action required to be taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the Directors entitled to vote with respect to the subject matter thereof. Any consent signed by all the Directors shall have the same effect as a unanimous vote. 3.5.7 Telephonic Meetings. Directors may participate in and act at any meeting of such Board by means of conference telephone, videoconference or similar communication equipment by which all persons participating in the meeting can speak to and hear each one another. Participation in such a meeting shall constitute presence in person at the meeting. ARTICLE IV AACH ADVISORY BOARD AACH will form an AACH Advisory Board of community members which will consist of the persons on the Ashland Community Hospital Board of Directors immediately prior to the closing of the Affiliation Agreement dated June 4, 2013 among Asante, Ashland Community Healthcare Services, Ashland Community Hospital Foundation, and the City of Ashland ("Affiliation Agreement"), and shall include the current chief of the AACH Medical Staff, up to two additional medical staff members and the Asante Chief Quality and Medical Officer. The Chair of the AACH Advisory Board shall become an ex-officio, voting member of the Asante Board and the AACH Board. The current Chief of the AACH Medical Staff shall become an ex-officio, non-voting member of the Asante Board and the AACH Board. The AACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at AACH, and for confirming credentialing and other decisions of the AACH Medical Staff. The AACH Advisory Board actions and minutes will be submitted to the Asante Board, which shall have the final approval authority. The AACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee at a time to be determined by the Asante Board. Page 4 - RESTATED BYLAWS 0 F AACH ARTICLE V OFFICERS OF THE CORPORATION 5.1 OFFICERS. The officers of the Corporation shall be the same individuals serving as the officers of the Corporation's sole Member, Asante, without further action. In the event any such officer either resigns or is otherwise removed as an officer of Asante, such officer's office with the Corporation shall automatically terminate as of the effective date of their removal or resignation as an officer of Asante. The powers and duties of the officers shall be as set forth in the Asante Bylaws and as otherwise designated from time to time by the Board of Directors of Asante, to the extent consistent with law, the Articles of Incorporation of the Corporation and these Bylaws. ARTICLE VI COMMITTEES OF THE BOARD Except for the AACH Quality Committee and the AACH Appointment Committee, (i) the Corporation shall have the same committees, committee members, and coterminous committee meetings as those committees established by the Corporation's sole Member, Asante, (ii) the Corporation's committees shall meet conterminously with the Asante Board committees established pursuant to the Asante Bylaws, and (iii) the Board committee charters and other rules for functioning of such committees of the Corporation shall be identical to those of its sole Member, Asante. 6.1 Quality Committee for AACH. 6. 1.1 General. The AACH Advisory Board, with additional members, will function as the Quality Committee for AACH, and will be the formal and official point of contact among the Board, management, and the Professional Staff of AACH. The Advisory Board/Quality Committee will review matters relating to medical services provided at AACH, including monitoring patient safety and quality of care as well as performance improvement matters. 6.1.2 Appointment. The AACH Advisory Board/Quality Committee will consist of members as provided in the Affiliation Agreement and these Bylaws. 6.1.3 Membership. The AACH Advisory Board/Quality Committee will consist of the following: 6.1.3.1 Up to four (4) AACH Advisory Board members who were previously Board members of Ashland Community Hospital; 6.1.3.2 The Chief of Staff of the hospital; Page 5 - RESTATED BYLAWS OF AACH 6.1.3.3 The Immediate Past Chief of Staff or the Vice Chief of Staff of the hospital; 6.1.3.4 One (1) or two (2) additional at-large members of the Professional Staff of the hospital appointed by the AACH Board Chair; 6.1.3.5 The senior executive of the hospital; 6.1.3.6 The Asante chief executive for quality; 6.1.3.7 The physician executive at the hospital as an optional member; and 6.1.3.8 Three (3) members of the AACH Board, one of whom is the ex officio member of the AACH Board as chair of the AACH Advisory Board/Quality Committee as defined in the Affiliation Agreement, and the two others are appointed by the AACH Board Chair. A member of the AACH Quality Committee who is not a Professional Staff officer shall be designated as Chair. The AACH Board Chair and the President and CEO of Asante shall be notified of all meetings and invited to attend. The President and CEO of Asante may appoint a member of the management staff to serve as an interim member of the committee during the time the position of a manager designated to serve is unfilled. With respect to review of decisions made under the Fair Hearing Plan of the Professional Staff and other similar matters, any member of the Quality Committee who has actively participated in an investigation or prior decision of a matter before the Quality Committee shall decline to act with respect to that matter at the Quality Committee or upon review of the Quality Committee decision, and any committee member who has acted on a matter in a Quality Committee decision shall decline to act with respect to that matter on any review of such Quality Committee decision. If necessary, additional Board members may be appointed to the Quality Committee to serve with respect to a particular matter in order to constitute a quorum or otherwise constitute an appropriate body. 6.1.4 Meetings. The Quality Committee shall in general meet monthly and shall maintain a permanent record of its activities. The minutes of the Committee shall be presented to the Board at or before its next meeting. The Quality Committee shall conduct joint meetings with other System hospital Quality Committees as appropriate to conduct the committees' work at the System hospitals. 6.1.5 Roles and Responsibilities. 6.1.5.1 The Quality Committee shall receive reports from the Professional Staff of the affiliated hospital on matters relating to quality of patient care, shall evaluate the services Page 6 - RESTATED BYLAWS OF AACH being provided by the Professional Staff and by the departments of the hospital, shall review audits and performance improvement and other evaluation activities of the Professional Staff, and shall make recommendations to the Board concerning services provided in the hospital. 6.1.5.2 The Quality Committee shall oversee preparation for accreditation review of its hospital by the Det Norske Veritas Health Care Inc.'s (DNVHC) Accreditation Program, National Integrated Accreditation for Healthcare Organizations (NIAHO). 6.1.5.3 The Quality Committee shall work to develop a plan to evaluate quality of patient care, risk management, performance improvement, and clinical resource utilization at the hospital and shall monitor and report to the Board on the results. 6.1.5.4 The Quality Committee shall make recommendations to the Board, and with respect to appropriate staff appointment and privileges matters, to the Appointment Committee of the hospital, as to appointment, reappointment, and termination of appointment to the appropriate Professional Staff, the granting, withholding, restricting and termination of privileges of appointees to the staff, the structure, procedures, and policies of the Professional Staff and the adoption, amendment, or repeal of the Professional Staff Bylaws; and actions on other matters arising from or with respect to the Professional Staff. Any recommendations of the Quality Committee with respect to matters involving adverse actions or the Fair Hearing Plan are advisory to the Board only. 6.1.5.5 The Quality Committee has authority to approve bylaws of the Auxiliary Service for its respective hospital and amendments thereto. 6.2 Appointment Committee for AACH. 6.2.1 General. The Board delegates to the Appointment Committee of AACH the authority to make decisions for the hospital with respect to Professional Staff appointment, reappointment, and renewal or modification of clinical privileges in the circumstances set forth below. 6.2.2 Appointment and Membership. The Appointment Committee shall consist of the members of the Quality Committee for the hospital who are also voting members of the AACH Board. The Chair of the Quality Committee, if serving as a member of the Appointment Committee for the hospital, shall hold that position for such Appointment Committee. 6.2.3 Meetings. The AACH Appointment Committee shall in general meet monthly immediately following the AACH Advisory Board/Quality Committee meetings and shall maintain a permanent record of its activities. Two (2) members shall constitute a quorum. The minutes of each committee shall be presented to the Board at or before its next meeting. Page 7 - RESTATED BYLAWS OF AACH 6.2.4 Roles and Responsibilities. The Appointment Committee shall review and evaluate the qualifications and competence of applicant practitioners and shall make decisions with respect to initial appointment and reappointment to the associated Professional Staff, and renewal or modification of clinical privileges as provided in this section. Decisions approving the recommendations of a Medical Executive Committee shall be effective when made by the Appointment Committee of the related hospital, except as provided below. Any decision by the Appointment Committee that is adverse to an applicant shall be referred back to the Medical Executive Committee for further evaluation. All affirmative appointment and privileges decisions of the Appointment Committee shall be presented to the Board at its next regular meeting for ratification as appropriate. Decisions as to appointment, reappointment, and renewal or modification of clinical privileges are not effective until the Board has acted on the matter if, at the time of initial appointment for new applicants or since the time of the most recent appointment or reappointment for continuing appointees, any of the following has occurred: 6.2.4.1 The applicant submits an incomplete application; 6.2.4.2 The Medical Executive Committee makes a final recommendation that is adverse or has limitations; 6.2.4.3 There is a current challenge or a previously successful challenge to licensure or registration; 6.2.4.4 The applicant has received an involuntary termination of medical staff membership at another organization; 6.2.4.5 The applicant has received an involuntary limitation, reduction, denial, or loss of clinical privileges; or 6.2.4.6 There has been either an unusual pattern of, or an excessive number of, professional liability actions resulting in final judgments against the applicant. ARTICLE VII PROFESSIONAL STAFF 7.1 ORGANIZATION AND FUNCTIONS. The physicians and other healthcare practitioners granted clinical privileges at AACH shall be organized into a separate Medical Staff or Professional Staff for AACH ("AACH Professional Staff'). The AACH Professional Staff is an integral part of AACH and Asante. Page 8 - RESTATED BYLAWS OF AACH The AACH Professional Staff shall review qualifications of physicians and other practitioners who provide care in AACH and shall make recommendations to the Board as to appointment and reappointment, privileges, and corrective action with respect to such physicians and other practitioners. The AACH Professional Staff shall effectively review and make recommendations to the Board with respect to quality and safety of the care, treatment and services provided in AACH. The AACH Professional Staff shall have Professional Staff Bylaws which provide for a Medical Executive Committee, departments, and other committees or groups as appropriate to carry out its functions, and which also provide for officers, department chairs, and other designated positions. The AACH Professional Staff Bylaws and amendments thereto shall become effective only after approval by the Board. The Bylaws shall provide a hearing and appeals process for matters affecting appointment, clinical privileges, and corrective action matters. The Board shall appoint to the AACH staff, in numbers not exceeding AACH's needs, qualified physicians and other practitioners. Appointment to the AACH staff is a prerequisite to the exercise of clinical privileges in AACH except as otherwise provided in the Professional Staff Bylaws. There shall also be provision for allied health professionals and other practitioners. Asante has established a Quality Committee for AACH as provided in Article V of the Asante Bylaws and Section 6.1 of these AACH Bylaws, and has also established an Appointment Committee for AACH in Section 6.2 of these AACH Bylaws and delegated to the Appointment Committee the authority to make decisions as to certain appointments as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. Authority granted to the President and CEO of Asante in Article VII of the Asante Bylaws and in the AACH Professional Staff Bylaws may be exercised by the President and CEO of Asante or by a member of management of the System designated by the President and CEO of Asante to exercise such authority with respect to AACH or a particular matter. 7.2 CONSTRUCTION OF BYLAWS. These Bylaws and the AACH Professional Staff Bylaws are intended to be compatible with the Asante Bylaws and should be construed accordingly. Should there be a conflict between the three sets of Bylaws or a question of interpretation as to the meaning of these Bylaws with respect to the AACH Professional Staff Bylaws, the Asante Bylaws, and the decision of the Asante Board shall be controlling. 7.3 ADMINISTRATION AND CARE OF PATIENTS. Practitioners appointed to the AACH Professional Staff have the authority and responsibility for the admission and care of their patients, subject to the limitations contained in these Bylaws, and in the Bylaws and related documents of the AACH Professional Staff, and to any other conditions of their appointment. Page 9 - RESTATED BYLAWS OF AACH 7.4 APPLICATIONS AND APPOINTMENT. Applications for appointment to the AACH Professional Staff shall be made in accord with the procedures established by the AACH Professional Staff Bylaws. Applications shall be in writing and shall contain all material and relevant information concerning the applicant's education, licensure and qualifications, practice history, and previous hospital and other experience. The applicant has the responsibility to provide complete information, which shall be provided to the Medical Staff Office. After evaluation as provided in the AACH Professional Staff Bylaws, the recommendations of the Medical Executive Committee shall be submitted to Board committees as provided in Article V of the Asante Bylaws and Article V of these AACH Bylaws and to the Board. The privileges and appointment of each practitioner appointed to the staff shall be reviewed at least every two (2) years. 7.5 NOTICE OF APPOINTMENT. Staff appointees and applicants for staff appointment shall receive notice of the decision of the Board regarding the initial and later appointments and the clinical privileges granted in accord with the AACH Professional Staff Bylaws. 7.6 HEARING PROCEDURES. A Professional Staff applicant or appointee who has been the subject of an adverse action by the Medical Executive Committee or the Board regarding appointment, privileges, or corrective action and who files a request for hearing as provided in the AACH Professional Staff Bylaws shall be entitled to one hearing pursuant to the hearing procedures of those Bylaws. Written notice of the decision after the hearing shall be given to the practitioner. Hearing procedures shall be in accord with the provisions of the AACH Professional Staff Bylaws and the Health Care Quality Improvement Act of 1986, as amended. 7.7 BOARD REVIEW. The Board shall provide a process for an appeal of an adverse decision made at the AACH Professional Staff level in accord with procedures set forth in the AACH Professional Staff Bylaws. 7.8 SELECTION OF AACH PROFESSIONAL STAFF OFFICERS AND DEPARTMENT CHAIRS. The selection procedures, terms of office, and functions of the AACH Professional Staff officers, Department Chairs, and other officials of the AACH Professional Staff shall be as detailed in the AACH Professional Staff Bylaws. 7.9 QUALITY OF PATIENT CARE. The Quality Committee of AACH shall conduct a continuing review and appraisal of activities of assessing, preserving and assuring the quality of patient care within the hospital as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. The findings of the Quality Committee in its quality assurance activities shall be reported to the President and CEO of Asante and the Board. 7.10 SUMMARY SUSPENSION. The AACH Professional Staff Bylaws shall designate persons who have the authority to summarily suspend the clinical privileges of a practitioner for Page 10 - RESTATED BYLAWS OF AACH cause in accord with the procedures in the AACH Professional Staff Bylaws. The President and CEO of Asante or designee shall promptly give notice of such action in writing to the affected practitioner. Further proceedings with respect to summary suspension shall be as provided in the AACH Professional Staff Bylaws. 7.11 PHYSICIANS EMPLOYED BY ARCH. 7.11.1 When any dispute arises between a physician employed by AACH and the hospital which is not covered by the terms of the physician's employment contract, it shall be governed by this section of these Bylaws. 7.11.2 A physician employed by AACH in an administrative capacity with no clinical duties does not need to be appointed to the staff. 7.11.3 A physician employed by the hospital who carries out both administrative and clinical responsibilities, or who functions with the AACH Professional Staff in a capacity involving the physician's professional capacity may perform such clinical or professional functions only after appointment to the AACH Professional Staff. 7.11.4 Upon termination of the employment of a physician or other practitioner who has both administrative and clinical or professional responsibilities, the President and CEO of Asante or the senior executive of AACH shall determine whether the action is administrative only or whether it involves matters of professional competence or conduct. 7.11.5 If the President and CEO of Asante or the senior executive of AACH determines that the reason for termination involves the individual's professional competence or conduct, the President and CEO of Asante or the senior executive of AACH shall initiate corrective action as provided in the AACH Professional Staff Bylaws. 7.11.6 If the President and CEO of Asante or the senior executive of AACH determines that the reason for the action is administrative and does not involve the practitioner's professional competence, conduct, staff appointment or privileges, AACH shall follow its usual personnel policies. ARTICLE VIII VOTING UPON STOCK OF OTHER CORPORATIONS Subject to the reserved rights set forth in Section 2.3, and unless otherwise ordered by the Board of Directors and subject to the direction, if any, given by the Board of Directors, any officer of the Corporation shall have full power and authority on behalf of the Corporation to vote either in person or by proxy at any meeting of stockholders or members of any corporation, limited liability company, or other entity in which the Corporation may hold stock or other equity interests, otherwise have an opportunity to vote, and at such meeting may possess and Page 11- RESTATED BYLAWS OF AACH exercise all the rights and powers incident to the ownership of such stock or membership which, as the owner thereof, the Corporation might have possessed and exercised if present. ARTICLE IX CONFLICT OF INTEREST Any contract or other transaction of this Corporation in which a Director of the Corporation or a member of any Board committee or subcommittee has a direct or indirect interest, as defined in the Oregon Nonprofit Corporation Act and in the policies of this Corporation, is a conflict of interest transaction. A conflict of interest transaction shall be valid if (a) it is fair to the Corporation at the time it was entered into, (b) it is approved by the Board as provided below, and (c) it complies with the Oregon Nonprofit Corporation Act. If the material facts of the transaction and the Director's interest are disclosed or known to the Board, an approval as described in this paragraph is valid, notwithstanding the presence and participation (but not vote) of the interested Director. Authorization, approval or ratification of a conflict of interest transaction requires the affirmative vote of a majority of the Directors on the Board who have no direct or indirect interest in the transaction, so long as there is more than one such Director. It is the policy of the Board that all actual or possible conflicts of interest between AACH and a member of the Board or of a Board committee (to include a subcommittee) with respect to a matter to come before the Board or committee shall be reported to the Board Chair or the chair of the committee. The Chair shall raise the issue of such conflict at a meeting to consider the matter, and if it is determined at the meeting that a conflict exists, the member shall not vote with respect to such matter. The member may, however, participate in the discussion to provide information. Each member of the Board or of a Board committee shall report to the appropriate Chair any actual or possible conflict with respect to himself or herself, and also with respect to other members. A Chair who becomes aware of an actual or possible conflict shall raise the issue for consideration at the meeting. ARTICLE X INDEMNIFICATION 10.1 The Corporation shall defend, advance expenses on behalf of and indemnify any present or former director or officer for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.2 The Corporation shall have the power to indemnify, defend and advance expenses on behalf of any present or former employee or agent of the corporation for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of Page 12 - RESTATED BYLAWS OF AACH conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.3 The Corporation will only pay for or reimburse expenses in advance of the final disposition of a proceeding upon receipt of a written affirmation of the person's good faith belief that the person has met the standards of conduct of the Oregon Nonprofit Corporation Act and any other applicable law and a written undertaking in accord with such Act to repay the expenses advanced if it is ultimately determined that the person did not meet the standard of conduct. 10.4 Indemnification pursuant to the foregoing authority shall not be deemed to be exclusive of any other rights to which such person may be entitled under any other bylaw, an agreement, the Oregon Nonprofit Corporation Act or otherwise. 10.5 The repeal or modification of this article shall be prospective only and shall not adversely affect any right or protection that is based upon this article and pertains to an act or omission that occurred prior to the time of such repeal or modification. 10.6 The Attorney General of Oregon shall be given written notice at least twenty (20) days prior to the indemnification of a director or an uncompensated officer. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall commence on October 1 and end on September 30 of each year. ARTICLE XII PROHIBITION AGAINST SHARING IN CORPORATE EARNINGS No Member, Director, officer, employee, committee member or other person connected or affiliated with the Corporation, and no other private individual, shall receive at any time any of the net earnings or pecuniary profit from the operations of the Corporation, provided that the Corporation shall not prevent the payment to any such person of such reasonable compensation for services rendered to or for the Corporation in effecting any of its purposes as such compensation shall be fixed by the Board of Directors; and no such person or persons shall possess any proprietary right in or to the property of the Corporation or be entitled to share in the distribution of any of the corporate assets upon dissolution of the Corporation. ARTICLE XIII DISSOLUTION OF THE CORPORATION Upon dissolution of the Corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the Corporation, dispose of all of the assets of the corporation to Asante, its sole corporate Member, provided Asante is still in existence and qualifies as an exempt organization under the Internal Revenue Code of 1986, as amended (the "Code"). If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity that is Page 13 - RESTATED BYLAWS OF AACH organized and operated exclusively for charitable, educational, religious or scientific purposes and qualifies as an exempt organization under the Code (or the corresponding provision of any future United States Internal Revenue Law). ARTICLE XIV INVESTMENTS Except as otherwise provided in the Articles of Incorporation of the Corporation, the Corporation shall have the right to retain all or any part of any securities or property acquired by it in whatever manner, and to invest and reinvest any funds held by it, according to the judgment of the Board of Directors. ARTICLE XV EXEMPT ACTIVITIES Notwithstanding any other provisions of these Bylaws, no Member, Director, officer, employee or agent of the Corporation shall take any action or carry out any activity by or on behalf of the Corporation not permitted to be taken or carried on without penalty by an organization exempt from federal taxation as now exists or as may hereafter be amended. ARTICLE XVI AMENDMENTS No amendment of these Bylaws shall be effective without the written approval of the Member. In addition, the Board of Directors shall regularly review these Bylaws and recommend any revisions to these Bylaws to conform to applicable requirements of state or federal law and/or accreditation standards. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 DEPOSITORIES. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, financial institutions, mutual funds or other depositories as the Board of Directors may designate. 17.2 CHECKS. All checks, drafts, or other orders for the payment of money issued in the name of the Corporation shall be signed by such officer or officers or person or persons, whether or not officers of Corporation, in such manner as shall from time to time be determined by the Board of Directors. 17.3 CONTRACTS AND INSTRUMENTS. Subject to any limitations contained in these Bylaws or by resolution of the Board of Directors, all deeds, mortgages, bonds and other contracts or instruments of the Corporation shall be signed on behalf of the Corporation by the President/Chief Executive Officer of Asante or such other officers as may be designated by the Board from time to time. Page 14 - RESTATED BYLAWS OF AACH 17.4 AGENTS AND REPRESENTATIVES. The Board of Directors may appoint such agents and representatives of the Corporation with such powers and with the authority to perform such acts or duties on behalf of the Corporation as the Board of Directors may deem appropriate, consistent with these Bylaws, the Articles of Incorporation of the Corporation and applicable law. 17.5 ELECTRONIC COMMUNICATIONS. To the fullest extent permitted by law, the Member, Board of Directors and Board Committees may utilize electronic communications such as email, fax and other electronic communications for purposes of distributing notices of meetings, voting by ballot or otherwise, executing unanimous written consents as otherwise authorized by these Bylaws, and for all other legitimate purposes of communicating. Dated this day of August, 2013 Secretary of the Corporation Page 15 - RESTATED BYLAWS OF AACH Exhibit 32.4.1 ACH Financial Statements Audited Financial Statements for periods ending June 30, 2011 and June 30, 2012 See attached. PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES. DBA ASHLAND COMMUNITY HOSPITAL FINANCIAL STATEMENTS AND REQUIRED. SUPPLEMENTARY.INFORMATION YEARS ENDED JUNE 30, 2012 AND 2011.' PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL TABLE OF CONTENTS YEARS ENDED JUNE 30,2012 AND 2011 INDEPENDENT AUDITORS' REPORT 1 MANAGEMENTS DISCUSSION AND ANALYSIS 2 BOARD OF DIRECTORS, REPRESENTATIVES, AND HOSPITAL ADMINISTRATION 8 FINANCIAL STATEMENTS BALANCE SHEETS 9 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS 11 STATEMENTS OF CASH FLOWS 12 NOTES SO FINANCIAL STATEMENTS, 14 REQUIRED. SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS - FUNDING: STATUS 32 PDXDOCS:2005030.6A plbrlrwJLmLLY ~ WWnUb.YbIK11+1{LIOCT CllftonLarsonAllen INDEPENDENT AUDITORS':REPORT Board of Directors Ashland Community Healthcare Services Ashland, Oregon We have audited the accompanying balance sheets of Ashland Community Healthcare Services as of June 30, 2012 and. 201 I_ and the related statementsof revenues, expenses, and changes in net assets; and cash flows for the years then ended. These financial statements are the responsibility of the management of Ashland Community Healthcare Services, Our responsibility is to express an opinion.on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally, accepted In the Unitec(States of America and the standards' applicable to financial audits contained. in Government Auditing Standards Issued by the Comptroller General of the Uniled'.Sfates. Those,standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are frae of 'material misstatement. An.audit includes examining, on a test basis, evidence supporting the amounts and disclosures In the financial statements. An audit also includes assessing the accounting principles used and significant' estimates made by management,. as wellas evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ashland Community Healthcare Services as of June 30, 2012 and 2011, and the results of their operations, changes in their net assets, and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United. States of America require that the management's discussion,and analysis .on,pages 2 through 7 and the schedule of funding progression page 32 are not required parts of the basic financial statementsbut -is supplementary information, required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the, finandal statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing. standards generally accepted in the United States of America, which consisted of Inquiries of management about the methods of preparing the information and statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide assurance on the Information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. z/`D CllftonLareonAllen LLP Bellevue, Washington October 24, 2012 (1) PDXDOCS:2005030.6A ASHLAND COMMUNITY. HEALTHCARE.SERVICES DSA ASHLAND COMMUNITY HOSPITAL MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Introduction ' Ashland Community Healthcare Services (ACHS), dba: Ashland Community Hospital (the Hospital), offers readers of our financial statements this narrative overview and analysis of the financial activities of the Hospital for the years ended June' 30, 2012 and 2011. Wis encourage readers to consider the information presented here in conjunction with. the Hospital's financial statements, Including the notes thereto: The Hospital is a nonprofit corporation: The Hospital Was incorporated on April 8, 1996 under the Oregon nonprofit corporate laws,' With the City of Ashland (the City) as As sole corporate member. The articles of Incorporation state that the corporation Is organized 'exclusively for charitable and educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code." All board members are approved by the. city council and may only be removed for cause. - Although the present Hospital has its root M the early 1900's, the current facility was constructed as a 34-bed hospital in 1961 and is now licensed for 49 acute care beds, following numerous additions. From the mid-1920s•to 1996, the Hospital was owned tiy'the City of Ashland. In 1996, the Hospitars major operations and the majority of the net. assets were transferred from the City and the Hospital entered into a long-term facilities lease with the City. - . The Hospital is governed by`a board of directors, consisting of not less than tenor more than twelve members, except on the occasion there may be up to thirteen directors during the term. of an Immediate Past Board Chair. The board of directors has delegated the day-today operations to management. Overview of the Financial Statements This discussion and analysis is Intended to serve as an Introduction to the Hospital's audited financial statements. The financial statements are composed of the balance sheet, statement of revenues. expenses, and changes in net assets, and the statement of cash flows. The financial statements also include notes to the financial statements that explain'in more detail some of the Information in the financial statements. The financial statements are designed to provide readers with a broad overview of the Hospital's finances. Required Financial Statemente The Hospital's financial statements report information of the Hospital using accounting methods similar to those used by private sector health care Hospitals. Thesestatements offer short and long-term information about Its activities. The. balance. sheet Includes all of the Hospital's assets and liabilities arid provides information about the' nature and amounts of investments in resources (assets) and the obligations to the Hospitars creditors - (liabilities). The balance sheet also provides the basis for evaluating the capital structure of the Hospital and assessing the liquidity and financial flexibtlity of the Hospital An of the current year's revenues and expenses are accounted for in the statement of revenues, expenses, and changes In net assets. This statement measures the success of the Hospitars operations over the past three .years and can be used to determine whether the Hospital has successfully recovered at of its. costs through its patient service revenue and other revenue sources. Revenues and expenses are. reported on an. accrual basis, which means the related cash could be received or paid In a subsequent. period. (2) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE'SERVICES DBA ASHLAND COMMUNITY HOSPITAL MANAGEMENTS DISCUSSION AND.ANALYSIS - JUNE 30, 2012 AND 2011 _ Required Financial Statements (Continued) The. final required' staternenfis the statenlenbof cash flows. The statement reports cash receipts, cash payments, and net changes in cash. resulting from operations, investing and financing activities. It also provides answers. to such questions as where did cash come from, what was cash'used for, and what was the change in cash balance during the reporting period Financial Analysis of the Hospital The balance sheet and the statement of revenues, expenses, and changes in net assets report the net assets of the`-Hospital. and the changes, In them. The Hospital's netassets-- the difference' between assets and liabilities= is a way to measure financial health or financial position. Over time, sustained Increases or decreases In the Hospital's net assets are one indicator of whether its financial health is improvingot,detedorating, However, other nonfinancial factors such as changes in economic condition, population growth, and new or changed governmental legislation should also be considered. Balance Sheet - A summary of the balancesheetsat June 30, 2012, 2011, and 2010 is presented below. Condensed. Balance Sheet (in Thousands) J1me 30, Change 2012 - 2011 Change 2011- 2010 2012 2011 2010 $ % $ % currant Aucts $ 11,669: 13,998 S 14,384 i .(2.427)' -t].3X S (388} -2:]% NoneunrordCash acid lnveslinanls 3,029 1,864 (53) -T7% 1,146 80.8% Cap6al.0.1seb 23,387 26,246 25,683 (879) 3.5% (1,147) -5.6% Oilier Ane4 375 634 810 58) 60.9% (17 21.7% Total A9sels 7-3n§7- 41,905 - - 41,1. T 2.W Current tiabst" S' 6XI 3 7.385 S 7,14 S (424) -51% 3 238 3.3116 Ldg-Te Uawlies' 8.533. 8.712 8,502 (179) -2:1% (7BD). -8.3% Total llabiiflas 16.494 16,097 16.849 (603) 3,7% (552) -3.3% l nested vt Cap6al Assets Net of - Related Debt 14,442 15,008 15,992 (586) 38% (984) 8.2% Resixted by Donor 222 279 - (57) 100.0% 279 0.0% ureestrkAUN' -8,129 10,521 10.130 (2.382) -227% 391 349% Trial NetA eta. 22,793 25,808 28,122 3.015 ~11.7% ('314) 43%'. Total uabtlgies eM NM Assets S 38,267 S 41,905 S 42,771 'f (3,61% A.6% S (888) 2.0% Total- net assets decreased by approximately,. $3;0, 15,000 in 2012, decreased by approximately. $314,000 in 2011, and Increased by $2,017,000 In 2010. The change in net assets results primarily from excesses or deficits 61 revenue oiler expenses. (3) PDXDOCS:2005030SA ASHLAND COMMUNITY HEALTHCARE SERVICES D13A ASHLAND COMMUNITY. HOSPITAL - MANAGEMENTS DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Revenues. Expenses, and Changes In Net Asse The following table presentsa-summary of the-Hospital's.. historical revenuesiand expenses for the years ended June 30, 2612. 2011, and MO: Condensed. Statements of Revenue, Expenses, and"Changes-in Net Assets(In Thousands) Jule 30. ChaMo W12.2011 - Change 2011 .201 1 0 2012 2011 2010 f s - % Net Patient Service Revenue' $ 47,767 ; 49,183 f, 47,822 f (1,416) -2.9% f 1201 2.6% 0ther.00e aug Revenue 492 .617 M3 (125) 40.3% 218 -25.9%. Total OpwaWg Revemes 48,259 49.M 4$755 (1,641) -31% 1,61S 21% Salarlos. Waged ant senrefits 27,490. 26.847 24,509 -643 2.4% 2,344 94% DeprWallon 2,50, 2,607 2,694 (15) -0.6% (87j -32% Other Opecaling Expeem •21,780 21,156 20;388 604 2.9% 770 3.6% Operating Expemes 51,842 50,610 47,583 Y,232 0% 3.027 - 64% Opera*V 1n a (loan) (31583) (810) - 1,172 (2,145); 264.8% 491 41.9% Nonopefat4g Reverse 250 275 845 R5) -9.1% (5]0) -61.5% Es (Dared) of Reimnlea aver Espenaee (3,333) (535) 2,017 (2,110) 405.6% (79) .3.9% Cmidaalorafor Caplal 318 X221 - 07 100.0% 221 0.076 Total Net Aeaets, Beginning of Year 26.808 26,122 24;106 (314). -11% 2,017 6.4% Total Nei Asfeta. End of Year 5' 22,793 f 25,808 f 26,122 f (3.015) -111.7% 6 (1141 ®.2% (4) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL MANAOEMENT.S DISCUSSION AND ANALYSIS JUNE '30 2012. AND 2011 Operating and Financial Performance The following summartzes changes involume for the year ended Jum s 30; 2012: June 30, Change 2012-2011 - 2012 2011 variance % Med)Surg Admits 978 -11018 (38) -3.7% 'ICU Admits 162 160 2 1.3% OSAdmhs 374 348 26. 7.5% Total Admits 1;514" 1;544 '(30) -1.8% Calvaries 362 940 22 6.5% Mad/SurgPatient Days, 3;824 :3783 41 i.1% ICU Patient Days 492 535 57 13.1% OB Patient Days 762 741 21 2.8% Pallecr Days 5,078 4,959 119. 2.4% Medicare Patient Days 2,757 2,758 (1) 0.0% Total Outpatient Reg. 58,281 58,897 (416) -0.7% ER Visits 8,171 8.151 20 0.2% Radiolo9y'studies- 23,692 23,808 (116) .0.5% Physical; Therapy 10,900 12;913 (2,013) -15.6% OR Minutes-.Inpatient 116,285 112,659 3,628 3.2% OR Minutes Outpatient., 187,459 194,52& (7,063) -16% Total OR Minutes 303,744 307.181 (3.437j -1.1% Inpatient Cases- 637 674 '(37) -5.5% Outpatient Cases: 1,829 1,872 (43) -2.3% Special Studies. 702 .740 (38) Total Cases. $188 ,31286 (118) -3.6% Hum. Health Visits 7,603 6,624 (1,021) -11.8% Hospice. Days of Care 7,343 8,959 (1,818) -18.0% Adjusted Patient Days 10,739 10,935 (196) -1.8% Total Hours Paid 654,566 618,378 36188 5.9% Total FTE'8 313 297 16 5:4% Volume; in major service areas remained consistent. of increased. slightly over results from the prior .year. Major ch'angesin.cluoll • total ICU Days increased; by 13%"(57 days) • Physician Therapy Treatments decreased by 15.6% (2,013 treatments). • Home Health visits decreased by 11.8%(1;021 visits) • Total Hosplce Days of Care. decreased by 18'A (i,616 days) (5), PDXDOCS:2005030.6A ASHLAND' COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL MANAGEMENTS DISCUSSION AND ANALYSIS JUNE 30, 21012 AND, 2011 Ooeratlna and Financial Performance (Continued) The following-,summarizes the HospitaPs'changes in'revenue, expenses, and change in net assets for the year ended June 30, 2017. June 30, Change 2011 - 2010 2012 2011' s % Gross Padent Service.Revenue S 941300 S 93.313 ` 987 1.1% Total Revenue Adjustments and Discounts 46,536 44;130 2,408 5.5% War Dedudons ' ' - 49% 47%' Net Patient Service Revenue 47,784 49;183 (1,419) -2.9% Oilier Operating Revenue 492 617 (125) -20.3% Nonoperating.Revenua and Expenses 250 275 _(26) -9.1% Salaries and Wages 21,664 20,493 1,071 5.2% Employee Benefts .5,928 6,354 (428) 6.7% Profassbnal Services '4,666 4,935 (289) -5.5% Capital Assets - Hospital 23,367 24,246 (879) -3.6% Cash and investments 1,413 5.447 (4,034) -74.1% Long-Term Debt 6,925 912318, (313) -3A% Malpractice Liability Contingency. 100 100 0.0% During the fiscal year 2012, the Hospital sawa slight decrease of $1,419 in Net Patient Service Revenue,, even though Gross Patient Service Revenue saw a slight increase,$987. This wast caused by alncrease,in contractual adjustments, (2%) related to a higher volume of Medicare and Medicaid patients during the year. • The $125;000 decrease in other operating: revenue was mainly due'to,a decrease'in non-patient food sales, decrease in rural health grants, and decrease in rebates. • Total ..salaries'and-wades increased.by.approzimately $1,071,000: This was mainly due to the market adjustments and the, addition of. our Center for Family Medicine,,which employees 23 staff members, including 0 physicians. • Employee benefits were relatively gat from the previous year, despite an increase in covered employees, 666 to a decrease in overall claims expense. • Professional services item on the P&L consists of fees for consultants, legal fees, auditors, and fees for the anesthesiology,and Emergency Room contracts.. (6) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES D" ASHLAND COMMUNITY HOSPITAL MANAGEMENTS DISCUSSION AND ANALYSIS JUNE 30, 2012 AND 2011 Ooeratinaand Financial Performance (Continued) • Total capital assets decreased by $879,000 mainly due a reduction In capital: purchases during the year due to losses from operations. The few capital items that were. purchased were offset by depreciation of prior assets. Items purchased during the fiscal year included Nurse Cali System, Cardiac Monitors, Portable Ultrasound, updated Radiology Room, and minor facility renovatlons: • Total cash and investments decreased by $4 mil.: This was mainly due to losses from operations during the fiscal year. • Malpractice #ability contingency remained consistent with the previous years as there were no significant changes in coverage. Economic and Other Factors and Next Year's Budaet The Hospital's board and management-considered many factors when setting the 2013 budget Of primary importance in setting the 3013 budget is the status of the economy, which takes Into account market forces and environmental factors such as;. • Medicare and Medicaid reimbursement rates • Privacy legislation HIPAA) • Increased expectations for quality at a lower price • Increasing employees. costs, inducing health care coverage • Cost of supplies and substantial in ceases In depreciation and Interest costs Contactirio the Hospital's Finance Department the Hospital's financial statements are designed to present users with a general overview of the Hospital's finances and to demonstrate'the Hospital's accountability. If you have questions about the report or need additional financial information, please contact Administration, Ashland Community Healthcare Services,. 280 Maple Street, Ashland, Aregon97520. m PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES' OBA ASHLAND. COMMUNITY HOSPITAL BOARD OF DIRECTORS, REPRESENTATIVES AND HOSPITAL ADMINISTRATION JUNE 30,,2012 AND 2011 OFFICERS Douglas Diehl, M.D., Chair Rev. Harvey Ray, Secretary (par5al year) 3988 Piedmont Terrace 1988 Tolman Creek Road Medford, OR 97504 Ashland, OR 97520 Douglas Gentry, Chair Elect Anne Golden, Secretary (partial year) 'Treasurer (partial year) 247 3`° Street ;574 Long Way Ashland, OR 97520 Ashland, OR 97520 Vain Williams, Treasurer (partial year) 744 Heiman Street Ashland, OR 97520 DIRECTORS Linda Butler Carol Chrlsbiob. 357 Relten Drive 675 Pracht Street Ashland, OR 97520 Ashland, OR 97520 Steve Miner Rick Moms, M,D. 406 Merrill Circle 152 AImeda Ashland, OR 97520 Ashland, OR 97520 Tom Reif, CPA Anne Golden 918 Walker Avenue 247 3'° Street Ashland, OR 97520 Ashland; OR 97520. Made. Donovan, 150 E. Main Street Ashland, OR 97520 HOSPITAL ADMINISTRATION MarkMarchet8, Hospital CEO. Ashland Community Healthcare 280 Maple Street .Ashland, OR 97520 la> PDXDOCS2005030.6A ASHLAND' COMMUNITY HEALTHCARE SERVICES -DBA ASHLAND COMMUNITY HOSPITAL,. 13ALANCE SHEETS JUNE 30, 2012 AND 2011 2012 2011 ASSETS CURRENTASSETS Cash and Cash Equivalents $ 1,207,4W S 5,234,362 Patient Accounts Receivable, Net 8,336,474 7,018,298 Other Receivables 149,467 26,707 Inventories 1,419,732 1,351,882 Prepaid Expenses. 456,193. 366,623 Total Current Assets 111;569,275 13,995,872 NONCURRENT CASH AND INVESTMENTS Health trulursnce Reserve. 1'p 90,372 1,416,676 Board Designated Debt Reserve 1,560,000 1,400,000 Long-Term Investments 205,310 212,426 Noncurrent Cash and Investments 2,975.882- - 3,029,104 " CAPITAL ASSETS, NET. Land 306,412 306,412 Construction in Progress 228,820- 75,896 Depreciable Capital Assets,. Net 22831,597• 23,863,397 Total Capital Assets, Net 23,366,829 24,245,705 OTHER ASSETS Investment in Siskiyou Imaging 224,532 220,559 Other Assets .:150,398.. 414-,234 Total Other Assets, 374,928 634,793 Tot.NAssels S 38,288,714 S 41,905,474 See accanWR*g Notes to.Finandal Statements. W) PDXDOCS:2005030.6A 2012 2011 LIABILITIES AND:NET ASSETS CURRENT LIABILITIES. Cudent Maturities of. Long-Term Debt 492,068 'S 625,241 Acwunts Payable 4,171,779, 2,261,119 Estimated Thinl-PaityPayecSettlemems 1,000,000 750,000 Ammed Expenses: Payroll and Payroll Related Expenses 460;793 802,156 Compensated Absences 1`;39,078 X1,231;193 Self Funded Health Insurance 581,943 717,300 Pension Expenses 923,305 998,305 Total-Current'Liabillees 6:960,964 7;385,314 LONGTERM LtABILMES Estimated Medical Malpradice Liability 100,000 100,000 tong-Term Debt, Net of Current Maturittes 8,433,064- 8,812.568 Total Long-Tenn Liabilities 8,533,064 8;712,568 Total Liabilities 15,,494,028- .16;097,882 COMMITMENTS AND CONTINGENCIES NET ASSETS - Invested in Capital Assets Net of Related Debt 14,441,697 15;007,896 -Restricted by Donor for Specific Opera9ng:Purposes 222,245 279,094 Unrestricted - 8,128,744 10,520,602 Total Net Assets 22,792,686 25,807,592 .Total Liabilities and Net Assets $ 38,286,714. $ 41,905.474 (10) PDXDOCS:2005030.6A ASHLAND. COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL. STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS YEARS ENDED JUNE 30, 2012 AND12011. 2012 2011 OPERATING REVENUES' Net Patent Service Revenue $ 47,764,779 $ 49.182,455 Other Operating Revenue. 491,800 616,941 Total Operating Revenues. 48,256,579 49,799,396 OPERATING EXPENSES Salaries and Wages, 21,583,838 20,493,163 Supplies 9,377,802 8,818,376 Purchased Services b,041,827 4,877,093 Employee Benefits 5,926,015 6,353,490 Professional and Physician Fees 4,665,711 4,935,033 Depredation .2;592,110 2,607,472 Insurance, Licenses, Taxes and Other 1;918,392 1,923,893 Rent and Lease. Expense - 754,453 601,129 Total Operating Expenses 51.840,146 50,609,649 -OPERATING LOSS (3,583,567) (810,253) NONOPERATING REVENUE. AND EXPENSES investment Income, Nat: 12,916 40,340 Income from Investment In Siskiyou Imaging 95,074 103,754 Other Nondperafing Revenues 142,164 130,744 - Total Nonoperating Revenue and Expenses 250.154 274,838 DEFICIT OF REVENUES OVER. EXPENSES (3;333,413) (535,415) OonulOutions.for Capital 318,507 221;123 Net Assets- Beginning of Year 25,807,592 26,121,894 NET ASSETS -.END OF YEAR $ 22,792,686 $ 25,807,592 'See accompanying Notes to,Financlel Stalements. PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL 'STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30„2012 AND 2011. , 2012 2011: CASH FLOWS FROM OPERATING ACTIVITIES Receipts from andon Behalf of Patients -S 46,694,603 $ 48,730,954 Payments to Suppliers and Contractors (21,447,840) (20,524,211): Payrnems.to.Employees (27,866,688) -(26,905,061) Other Receipts and Payments, Net 369,040 165,428 Net Cash(Us6di Provided by Operating Activities (2,250,885) 1,467,110 CASH FLOWS FROM NONCAPITAL_ FINANCING ACTIVITIES Noncapital Contributions 19,355 22,536 CASH' FLOWS FROM CAPITAL AND RELATED,FINANCING ACTIVITIES. Principal Payments on Long-Term Debt (633,426), (782,259). Interest Paid '(368,267) (354,088) Conbibubons for Capital 318,507 221;123 Capital Expenditures (1;392,485) (841,408) Net Cash Used by Capital and Related Financing Activities (2,075,671) (1,756,630) CASH FLOWS FROM INVESTINGACTIVITIES Interest and Dividends on Investments. 1,020,032 29;398 Proceeds fromSales of Investments (1,060,000): Distdbobons 1rum'Investment In Sisktyou Imaging 91,100 142,800 Rental Income and Other - 122,810 108,208 Net Cash Provided by Investing Activities 233,942 280,406 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (4,073,259) 13,422 Cash and Cash Equivalents - Beginning of Year 8,051,Od0 8,037,618 CASH AND CASH EQUIVALENTS - END OF YEAR S 3;977,781 S. 8,057,040.. RECONCILIATION TO CASH AND CASH: EQUIVALENTS ON THE BALANCESHEETS Cash and Cash Equivalents $ 1,207,409 $ 5,234,362 Health Insurance Reserves 1,190,372 11418,678 Board Designated Debt Reserve 1 580 000 1,400,000 Total,Cash and Cash Equivalents 3, 77,781 S 8,051,040 ,SSe accompanyurg Noss to F/nantlaf Statements. (12) PDXDOCS:2005030.6A 2012 2011 RECONCILIATION OFOPERATING-LOSSTO NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES Operating Loss $ (3,583,567) $ (810,253) Adjustments to Reconcile Operating. Loss to Cash (Used) Provided by Operating Activities: Depreciation- 2,592,110 .2 ,607,472 Interest Expense: Considered Capital Financing Activity 388,267 354,088 (Increase) Decrease [n Assets: Patient Accounts R eceivable (1,320,176) ,(801;501) Other Receivables- (122,760) (10,513) Inventory (87,850) (74,796). Prepaid Expenses. (69,570) (46,292) Other Assets 263,838 136,735 Increase,(Decrease) in'Liabilitiesr Accounts Payable (89,340) 344,626 Third-Party. Payer Settlements 250,000 150,000 Accrued; Payroll and Payroll. Related Expenses (341,363) (424,877) Accrued Compensated Absences 99,883 166,832 Accrued Self Funded Health Insurance (135,357) 199,637 Accrued Pension Expenses (75,000) (83;046) Accrued Medical Malpractice liability - 441,000 Net Casfi.(Ueed) Provided by Operating AGivities S (2,250,885) S 1,487,11 NONCASH INVESTING AND FINANCING ACTIVITIES Equipment Obtained under Capital Leases S 320,749 379,032 Obligations Ass= ad under Capital Leases 320,749 319,032 (13) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 36,2012 AND 2011 NOTE -1 DESCRIPTION OF REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ReoortinaEntity Ashland Community Healthcare Services (ACHS) dice. Ashland Community Hospital (the Hospital) was established as a not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code (IRC) to maintain and operate the community "hospital. The Hospital board of directors was established by the Articles of Incorpora0on on March 20, 1996. The City of Ashland, Oregon (the City) Is responsible- for electing the Hospital's board of directors and, therefore, the Hospital is considered. a,govemmental entity. The City appoints not less than 10 or more than 12 Individuals (except that on occasion there may be up to 13 directors during the term of an Immediate Past Board Chair) to the Hospital board of directors, which is 'responsible for managing the Hospital. The'board members are not compensated for their services. Ashland Community Hospital Foundation (ACHE) is a fundraising organization whose purposes.(nciude supporting the Hospital.and the-heafth.of the surrounding community by raising public awareness with. respect to the Hospital's heeds. The Hospital and ACHF are considered related parties. The Hospital. received. $359,070 and $310,364 In capital and operating contributions,from ACHFin2012 and 2011, respectively.. In 1996, the Hospital's operations and the majority of the net assets were transferred from the City. All assets and liabilities were transferred to the Hospital, except for certain property, plant and equipment, notes payable, and deferred compensation assets and liabilities. Any contingent liabilities were assumed by"Hospital. The Hospital has signed a long-term facilities lease with the City (Note 8)'. Measurement Focusand Basis Ig,08ccountina Basis of accounting refers to whenrevenues and expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The accompanying basic financial statements have been prepared on the accrual basis of accounting in conformity.with the U.S. generally acceptedaccounting principles. Revenues are recognized when earned and expenses are recorded when the liability is incurred. In reporting its, financial activity, the Hospital is subject to the application of accounting pronouncements issued by the Government Accounting Standards Board (GASB).'In 1993, GASB Issued Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government Entities that use Proprietary Fund Accounting (the Statement), which provides guidance on the effect of GASB pronouncements on governmental entities using bueinessAype accounting and financial reporting' In accordance with the Statement, the Hospital has elected to follow the GASB hierarchy exclusively regarding authoritative litersture issued after November 30, 1989. (14) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SER"CES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30..2012.AND-.2011 NOTE 1 DESCRIPTION OF REPORTING ENTITY.AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Use of Estimates The preparation of . financial statements in conformity with accounting principles generally accepted in the. United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilites and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expense during the reporting period:. Actual results could differ from those estimates. Cash and Cash'Eduivalents For purposes of the statements of cash flows, cash and cash equivalents are considered to be. highly liquid Investments with an original maturity of ninety'days or less, and exclude assets whose use. is, limited. Cash and cash equivalents ere. valued at cost, which approximates fair value. Patient Accounts Receivable. Net The Hospital provides an allowance for uncollectibie self-pay and miscellaneous commercial insurance accounts. Patients are not required to provide collateral for services rendered. Payment for. services is required, upon receipt of,an invoice, after payment by. Insurance, If any. Self-pay accounts are analyzed for collectibility based.on the months past due and payment history. An allowance is estimated for these accounts based on the historical experienceof the Hospital. Accounts'lhat. are determined to be uncollectible are, sent to acollectionagency and written off at. that time. Inventories Inventories are stated at cost (principally on the first-in, :first-out basis) not in excessof market. value: Market value is determined by comparison with recent purchasesor realizable value. Health Insurance Reserve The Heal Insurance Reserve consists of cash and cash equivalents restricted by the Hpspitals Board of. Directors for the payment of future.self-funded health insurance claims. These funds are valued at cost, which:approximates fair value. Board Desinnated Debt Reserve The Board Designated Debt Reserve consists of cash restricted by the Hospital's board of directorstfor the payment of future maturities of long-tens debt obligations. These reserve funds, are'valued. at cost, which approximates fair value. Investments and Investment Income. Investments in debt and equity securities are reported affair value based on the quoted market prices. Interest, dividends, and gains and losses; both realized and unrealized; on investments In debt and equity securities are,included innonoperating revenue, fts) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE. SERVICES DBAASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 301 2012 AND 2011 NOTE 1 DESCRIPTION OF. REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital 62setsCapital assets are reported :at :historical cost. Contributed capital assets are reported at their.estimaled.fair value at the time of their donation. All capital assets other than land are depreciated or amorlized (In the case of capital looses) using the .straight-line: method of depreciation using these asset lives: land improvements 10 to 20 years, building and improvements 10'to 30 years, fixed equipment 10 to 20 years, and major moveable equipment .3 to 20 years. The Hospital capitalizes all assets over $5,000 with a useful life greater than three years. Investment In.Siskivou Imaging The Hospital is a one-third owner of Sisk you, lmaging,.LLC. The Hospital accounts for this investment using the equity method.. Equity method, accounting records the Initial _ Investment at cost. The carrying value is adjusted for subsequent capital contributions, dividends and a proportionate share of Income or losses. Other Assets Other assets consist of long-term deposits, prepaid advances and loans to physicians, and an investment in residential real estate. The Hospital has long-term deposits of $43.952 and $139,463 at. June 30, 2012 and 2011, respectively. Prepaid advances and loans to physicians were $106,444 and $154,751 atJune .30. 2012 and 2011, respectively. The Hospital's residential real estate. investment Was made with an officer of the Hospital and was equal to $120,000 at June 30, 2011. The Hospital's interest in real estate represented 26:33 percent of the residence occupied by the officer. The Hospital's interest In the residence was held at cost. During the fiscal year ended June 30, 2012, the Hospital restructured this agreement as a ban from the officer in the amount of $120,000 bearing interest at an annual rate of 2 percent. Interest payments are due annually and principal no later than June 30, 2016. Principle, and interest due to the Hospital at June 30, 2011 was $122,400. Self-Funded Health Insurance The Hospital is self-insured for medical and dental benefits provided to ;eligible employees. Estimated self-insurance reserves represent an estimate of medical and dental costs trimmed. but not yet' billed and processed, through lhedate of the balance sheets. The estimated liability is based on historical experience related to the nature and volume of ciaim expenses. Managements evaluation of the adequacy of the estimate is based on historical claims paid. Estimated Medical Malpractice Liability The Hospital. has purchased claims-made liability insurance coverage, which covers only asserted malpractice claims. The Hospital recognizes expenses associated with reported claims and.estimated claims Incurred but not reported in the period in which the incidents are estimated to have occurred,. rather than when a claim is asserted. 118) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30,2012'AND4011 NOTE 1 DESCRIPTION OF REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Assets: - Net assets ofthe.Hospital are classed in three components. Net assets invested in capital assets net. of related debt consist of capital assets net of accumulated depreciation and reduced by the current balances of any, outstanding. borrowings used to' finance the purchase or construction of those assets. Restricted by donor for specific operating purposes are; noncapital net •assets that must: be used fora particular purpose, as. specified by creditors, grantors, or contributors external to the Hospital:. Unrestricted net assets are remaining: net assets that do not meet the definition of invested in capital assets. net of related debt or iestricred. At. June 30, 2012 and 2011, the Hospital had $222,245 and $279,094, respectively, of restricted contributions. Operatina Revenues and Expenses The Hospital's statement of,revenues, expenses,. and changesin net assets distinguishes between operating and nonoperating revenues and expenses. Operating revenues-result from exchange transactions-associated with providing"health care services - the Hospital's principal activity.. Nonoperating.revenues, Including: rental.income, investment income, and contributions neiceived for purposes other than capital asset acquisition are reported as nonoperating-revenues. Operating expenses are,ail expenses incurred to provide health care services. Net Patient Service Revenue Net;,patient service revenue is reported at the estimated net realizable amounts from patients, third-party payers, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustments are accrued on an esiimated.-basis ' in -the' period the related services; are rendered.and adjusted in future periods.as final settlements are :detennined. Charity Cam The•: Hospital'orovides care to. patients. who meet certain criteria under its charity care policies' without charge or at'amounts. less than its established, rates. Because the Hospital does, not.pursue collection of amounts determined to qualify as charity care, they are not reported as net patient, service revenue. Foregone, revenue for charity care providedduring 2012 and. 2011, measured by the Hospital's -standard charges, was $1,437,888 and $1,665;247; respectively. - Grants and Contributions. From time to time, the Hospital receives grants: and contributions "from individuals and private organizations. Revenues from grants and contributions (including contributions of capital assets): are recognized when all eligibility requirements, including time requirements, are met Grants and contributions may be: restricted for either specific operating purposes. or for capital purposes. 'Amounts that are unrestricted or that are restricted to a specific operating. purposes are-reported as nonoperating revenues. Amounts restrictedao-capital acquisitions are reported after excess"of revenues over expenses: - (t71 PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012.AND2011 NOTE 1 DESCRIPTION OF REPORTING ENTITY. AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Hospital We tax-exempt organization and is not subject 10 state or federal income taxes, except on unrelated. business income as defined under Section 501(c)(3) of the IRC. The Hospital has adopted guidance in the income tax standard regarding the recognition and measurement of uncertain tax positions. The standard requires the Hospital to determine whether it is more-likely than,hot that a tax position will be sustained upon examination on the technical merits of the position, assuming the taxing authority has full knowledge of all information. If the tax position does not meet the more-likely-than-not recognition threshold, the benefit. of that position Is not recognized In the financial statements. The Hospital recorded no assets or liabilities related to uncertain tax positions or unrecognized tax benefits as a resultof the adoption of the standard. Subsequent Events In preparing these financial statements, the Hospital has evaluated events and transactions for potential recognition or disclosure through October 24, 2012, the date the financial. statements were available to be Issued. NOTE 2 NET PATIENT SERVICE REVENUE The Hospital has agreements with third-party payers, that provide for payments to the Hospital at amounts different from its established rates. A summary of the payment arrangements with major third-party payers follows: Medicare Inpatient acute care services rendered to Medicare program beneficiaries are paid at .predetermined,' specific rates for each hospital discharge. Discharges are classified according to a list. of diagnosis related groups (DRGs). Each DRG has a. payment weight assigned to it, based on the average resources used to treat Medicare patients in that. DRG. The Hospitals' classification of DRGs and the appropriateness of their admission are subject to an independent review by a peer review organization. Most outpatient services to Medicare beneficiaries ani paid prospectively based on ambulatory payment classifications (ADCs). The Hospital is paid a tentative rate with final settlement determined after submission and audit of the Medicare cost reports by the Medicare fiscal intermediary. The, Hospital's cost reports have been reviewed and/or audited by the Medicare. fiscal intermediary through 2007. (18) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30,.2012,AND,2011. NOTE.2. NET PATIENT SERVICE REVENUE (CONTINUED) Medleald Both inpatient. and outpatient acute care services-. rendered to Oregon Medical Assistance: Program (OMAP) beneficiaries are paid on a~ tentative rate, with final settlement determined based on costs per patient day and.ratios of ancillary costs to. related ancillary charges as computed.in the finalized Medicare cosYteport for the applicable fiscal year: Services rendered'to Meoicaid`Oregon Health Plan participants are paid based on managed care contractual rates. 'The. Hospital is reimbursed for cost- reimbursable items at a tentative rate with final settlement determined after submission of annual cost reports: by the.Hospital'and audits' performed by the Medicaid fiscal intermediary. The Hospital's Medicaid cost reports have, been audited by the Medicaid fiscal -intermediary through 2007. The Hospital's classification of patients under the. Medlcald prograni and the appropriateness of their: 'admission are subject to an independent review. CertatnOther Pavers The Hospital has. also entered into payment agreements with certain commercial insurance carriers,. health maintenance hospitals, and preferred provider Hospitals. The basis for payment-to the Hospital under these agreements includes prospectively ,determined,mtes per. discharge,. discounts from established charges, and prospectively determined daily rates. Net.. revenue from the Medicare and Medicaid programs accounted'for approximately 40 percent and 8, percent, respectively, of the Hospital's net patient revenue for the year ended 2012; and 40 percent-and 9.*cent; respectively,' of the Hospital's net patient revenue for the year ended 2011. Gross revenue, from the Medicare and Medicaid programs accounted'. for approximately 51 percent and .9 percent, respectively, of the Hospital's gross patient revenue for the:year ended 2012; and 53 Lpercent and 8 percent, respectively,. of the Hospital's: gross patient revenue for the year ended 2011. Laws and regulations governing the,Medicare:and'Medicaid programs are ' extremely complex and subject to Interpretation. As a result, there. is at leasta reasonsble possibility that recorded estimates will change by a material amount in the near term. Net; patient revenue increased by approximately $1,400,000-for the year ended June 30, 2011, Aue to the difference between previously billed charges related'to periods prior to'fiscal'2011 tha£were,re-billed. in fiscal 2011 and. charges originally collected. tt9) PDXDOCS2005030.6A "ASHLAND COMMUNITY- HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS -JUNE; 30„2012 AND 2011 NOTE2 NET PATIENT SERVICE REVENUE (CONTINUED) A~summary of patient and resident revenues and contractual adjustments is as follows at June 30: 2012 2011 Gross Patient Service Revenue: $ 94,300,415 93,312,699 Less Revenue Adjustments: Medicare CaMractuai Adjustments 29,148,093 29,798,349 Medicaid Contractual Adjustments- 4,205,131 ;3,082,892 Other Payer doturaauet Adjustments 9,884,193- 8,041,845 Charity Care 1;437,888 1,885,247 Provision. for:Bad""Debts 1,880,331 1,541,311 Total Revenue Adjustments and Discounts 46,535,838 44,130,244 Net Patient Service Revenue $ 47,764,779 $ 49,182,455 . , NOTE !3 PATIENT ACCOUNTS.RECEIVABLE Patient accounts receivable,reported`as current assets by the Hospital at June 30 consisted of these amounts: 2012 2011 Receivable from"Patients " and. their: Insurance Camera $ 8,955,577 $ 6;344,340 Receivable from Medicare 1,071,919. 1,467,189 Receivable from Medicaid 523,097 891.769 Total Patient Accounts Receivable. 10,550;593 8;703,298 Less;: Allowance for. Uncoliectible Amounts 2214,118 X188(((. JU 66 NetPatierlt Accounts Receivable 3 The Hospital. is located in Ashland, Oregon. The Hospital grants credit,: without collateral, to its patients, most of whom are local residents and are insured under third;party.payer agreements The,mix of gross::pafient accounts receivable from patients and third-party. payers at June 30 was as follows: - " 2012 2011 Medicare 30% 35% Medicaid 8- 12 Other Theo-Party. Payers 42 28 Blue Cross 9 12 Patients 11 13 Total 100% " 100% (20) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, AND 2011 NOTE 4 INVESTMENTS .AND.INVESTMENT INCOME The Hospital's investments consisted of the following at June 30: FairValue at Investrtrenl Maturity (In Years) Investment Type June 30, 2012 Less Than 1 -1 to 5 510 10 10. Corporate Bards S 205,310 S' -.S 205.310 $ $ Fair Value at Investment Mawrily (InNears) Investments Typo June 30.2011 Lass, :Than 1 1.105 51010 to- CanpOraleBonds S 212,426 $ S S '212,42fi s The Hospital's investment income consists Of the.following for the years ended June 30: 2012 2011 -Interest Income 18,139 $ 28,940 .Net Unrealized. Gains on Investments. (5,223) 11,400 Investment lnb3me,.Nei 12,918 40,340 Interest Rate Risk - As a means of limiting its exposure :to-fair value losses arising from rising interest rates, the. Hospital's investment- policy limits maturities in fixed income securities to aperiod of ten`years,or less._and requires: the. weighted average maturity of the Hospital's portfolio not to exceed two Years., Credit Rate.Rlsk - The Hospital's investment policy limits' investments in corporate bonds to the top four ratings issued by nationally recognized statistical rating organizations and limits mutual funds to those with a five star Morningstar rating. As of June 30, 2012, the Hospital's investments. consisted of one corporate bond. in the amount of $205,310. The corporate: bond was rated SAA1 by Moody's Investors -Service andA-by'Standard &Poor's. Tlie., Hospital is, In compliance with t ieir'.Investment policy, which requires investments In bonds to. be rated BBB or higher: Custodial,Credit Risk - For an imiestment, custodial credit risk is the risk thaC in the event of the failure of the counterparty, the. Hospital may not be able to recover the value of its . inJeetrnerds that are in "possession of an outside party. The Hospital does not have any investments subject to custodial credit risk at June 30, 2012 and 2011.. (21) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 36, 2012 AND 2011 NOTE .5 CAPITAL.ASSETS ksummary Tot the accounts and related accumulated depreciation as of.June 30, 2012 follows:; July 01, 2011 Additions Transfers Ratiremads J. 30. 2012 L.d It 308,412 f - f 306,412 ' Lard lnlprovemen151 700,149 - - - 100,149 0uddage and lmprovanenla 28.715,169 474,058 - - 27,189.227 Ebsd.Equipment, 313,979 - - - - 313.979 Major Moveable Equlprnenr 17,759,566 1,066,248. 18,845,814 Conduction In Progress 75,896 .162.924 228.820 Total l(tstorlcel cost 45,271; 1711,713,230 - 48,984,401 Lela: Accumulated eepredatbm . Land lmprovemelas - (63,226) 15,762) - - (88,988) auedings and umpome+neris (6,766,5N) (1,130,930) - - (7,905,474) Fixed Equipment ,(214,392) (22.296) - (138.688) k,i Memeble Equonnent (13,982,304) (1,424,118) (15,906;422) Tole) Acwrivulate00epnecietion (21,025,486) (2,592,106) (23,617,572) Total capital Assets; Nei S 24.245,705 f (878,878) f $ s 23,388,82D Asummary.of the accounts and related accumulated' depreciation as'of Jurie:30, 2011 . follows: July 01, 2010 Additions Tramfens Reeramees June 30, 2011 lane `S 308;412. 3 - f f f 308,412 Land tox,nx ementa 100,14 100,149 aukur)" and lmpm'amnsts 28,546.402: 45.352 4123,415 - 28,716,189 Pond Fg67plnent 313,979. 313,879. mi. Noveable Equipment 18,576:149 698,772 284,645 - 17,759,688 Comlr Jon In Progress -267,844 216,312 (408.060) 76,896 Towp iwodcelposl. 44,110,735: 5(160,438 - - 45,271,171 Less: Amumulated Dolwac atbn: Lard impmvmnents, (57,268) .(5,940) (63,228) adNBngs end Improvements (5,640,993) (1.124.551) - - (6,765,544) -fixed E9Wpmm4, (192,033) .(22,359)' - (214,392) Met. Mmeeble Egripnwt (12,529,881) (1454,620)- (13,982,304) Total Accuns/aled Depmoiallm (18,417,998) (2,807,470) (21,025,466) Total. Capital Assets, Net f 25,692,139 f (1,417,03q f f f 24,245;705 Construction in progress at June 30, 2012' consisted of various renovation projects. Total costs'are.anticipated to,approximate $300,000. The projects are expected to be capitalized in fiscal year 2012.. (22) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS' JUNE 30, 2012 AND, 2011 NOTES CAPITAL ASSETS (CONTINUED) . Equipment under capital lease obligations as of June 30 is as.follows: 2012, 2011 Historical Cost $ 1,888,874 8 1,559,285 Accumulated Amortization 729904 (477,121) EquiprnemUnoar Capital Lease Obligation„Net 1,158,970 $ 1,082,164 NOTES INVESTMENT IN SISKIYOU IMAGING The Hospital. has an investment with a local, radiology group and -a nonprofit corporation for the purpose of, providing inpatient and outpatient magnetic resonance.imaging (MRI) and other such services through a limited liability company to individuals within the community. The Hospital has a one-third interest in this joint venture at June 30, 2012 and 2011, which is accounted for using the equity method:df accounting. For the years ended June 30, 2012 and 2011, the Hospital recognized $95,074 and $103,754, respectively, of nonoperafing revenue for its. share of net income earned by Siskiyou` Imaging, LLC. Additionally, the Hospital leases space to Siskiyou Imaging, I.I.C. Rental income of $81,462 and $79,703 for the years ended June 30, 2012 and. 2011, respectively, is included in' other, operating revenue: The Hospital received cash, distributions of $91;100.and -$142,800 from Siskiyou Imaging, LLC,. for the years ended June 30, 2012wd 2011, respectively. The Hospital's recorded investment in Siskiyou Imaging, LLC.was $224,532 and $220,559 as of June 30, 2012 and 2011, -respectively. . (23) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE' SERVICES DBAASHLAND COMMUNITY HOSPITAL. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 - NOTE ;6. INVESTMENT IN SISKIYOU. IMAGING (CONTINUED) Summarized financial'information from the financial statements of Sisidyou Imaging, LLC, at June Wand for the year ended Is. presented bel w: 2012 2011 Cash and Cash EgWvalenta 322,267 $ 335,433• Other Current Assets, Net 181534 176,067 Property,and Equipment, Net 167,065 152,816 Other Noncurrent-Assets 5 369 Total Assete 876,235 '.6 ,318: - Current Liabilities $ 2,640 $ 2,640 Me_mbers'.Equity 673595 661,676 Total Liabilities and Members' Equity _ 076:235 8 ,31 Total Revenue $ 1,134,318 $ 1,236,431 Total Expenses 849098 (925189) Net Income 85, 2 $ •911,282. NOTE.? LONG-TERM LIABILITIES Long-termllabllkles at June 30 consisted of the following: Amae4a D. Ady 01, 2011 AdClons Reductions Jive 30.2012 wan l Year Long-Term Debt: Sergery . 6pansion Loin $ 8,724,580 $ - S (286,447) $ 8.438.113 $ -305,507 Capital Lease 051iga0ars 513,249. 320;749 (346,971) 487,019 ,186,561 Total Long-Term Debt. 9,237,809 320.749 (633,426) 8,925,132 492.065 Estunaled Medical Malpract ce OaNty iW.ODO 100,000 Toter Long-Term LlabNees E •9.337.808 $ 320,749 $ (073.428) $ 9,025,132 S 492,068 Anwicas Due July 01; 2010 Additions payments June 30; 2011' NNNn I Year Long-Teal Debt: Surgery EFanslon Loan E 8,9M678 $ Y (2 2.018) $ 8,724,580 s 203,547 Equipment Loan 190,798 - (190,798) - - , ,Capital Lease Obiigallons 513,864 319.032. (319,447) 513,249 331.894 Total Long-Term Debt• 9,701.035 319,032 (782,259) 9;237,809 625,241 EstMated Medical Malj me Liability 541,600 (441.000) 100,000 Total Long-Tenn LlabNUes E 10,242.038' E .919,032 $ (1,223,250) .5 9,337,809 It 625,241 (24) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARESERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012. AND 2011 NOTE 7 LONG-TERM LIABILITIES (CONTINUED) Surgery Expansion Loan: The Hospital had a construction loan with a maximum borrowing of $10 million; which was converted to a long-term note. payable In'June 2006. The note is secured by the constructed building: The initial 60-month period of the note included principal and. interest payments of $53,200 per month ata fixed Interest rate of 4.0 percent During fiscal 2011, at the end of the initial 60-month period, the interest rate changed from a fixed rate to a variable'rate based on the weekly average ;yield on U.S. Treasury Securities-ad(uMeid to a constant maturity of five years. The terms of the loan also provide that the interest rate cannot be less than 4'percent, or more than9 percent during the term period of the 'note.. In addition, the loam agreement requires the Hospital to'meet certain financial covenants on an annual basis. At June 30, 2012, the Hospital did not meet the financial covenants. Ttie'financial institution has issued aletter of waiver through June 30, 2013. At.June '3Q 2012, the interest rate on the loan was equal to 4.09 percent. Monthly payments. on.theaoan are due through January 2016, with a final balloon payment due in February 2016. - - - Equipment Loan: The tens-loan was in the'emount of $1,341,084,.secured by equipment; bearing interest on the unpaid principal balance at anannual rate of 5.45 percent. Principal and interest payments of $25;687 were due monthly; and matured in February 2011. Scheduled principal and interest repayments. on long-term debt are as follows: Loans Payable Capital Lease Obligations Year Emina June 30: Principal Interest Principal Interest 2013 'S 305;507 $ 331,580' 186,561 $ 67,861 2014 317,954 319,233' 124,722 12,982 2015 330,908 306,279 67,520 8,616 2016 7,483,744 176,459„ 65,169 -4,967 2017 - - 49,047 1,328 :Total 5 1, 9 - 48 ;0 9 95,752r (25) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE8 OPERATING L]FASES The Hospital teases various facilities and equipment under operating lease "agreements. Lease. expense for the years ended June 30, 2012 and 2011 was $754;453 and $601,129, respectively. The minimum future lease commitment under'the operating leases having a remaining tens in excess of one year as of December 31, 2012 is as follows: Year Endino June 30, Amunt 2013 S 230,80 2014 136,OOb 2015 132;400 2016 63,600 2017 36,200 Total --5§nw The Hospital facility monthly payment is $3,016 and was determined at July 1, 1996, the date certain other assets were transferred to the City. This amount is not necessarily reflective of the market rate for the facility. The facility lease agreement requires the Hospital. to. maintain a,current ratio of 2.0 or greater and a-debt service coverage; ratio.of 1.25 or greater. The City may terminate its lease with the:. Hospital If the Hospital is in default of these covenants for two successive quarters; forcing the Hospital to liquidate its assets end submit any remaining net assets'to. the City. As of June 30, 2012, the Hospital was.in default of the covenant The City hasIssued a letter of waiver through June 30, 2013. NOTE 9 DEFERRED COMPENSATION ARRANGEMENTS The Hospital offers its employees a deferred compensation arrangement created in accordance With IRC Section 403(b). The arrangement, available to all Hospital employees, permits them to defer, a potion of their'salary until future years. Participation in the arrangement Is optional. The deferred compensation Is not available to employees until termination,. retirement, death, or unforeseeable emergency; however, participants may transfer assets between investment managers. The Hospital administers the deferred compensation arrangement. The arrangement does,not represent assets or liabilities of the Hospital and is,therefore, not recorded in the Hospital's financial statements. (2e) PDXDOCS:2005030.6A ASHLAND.COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE 10 DEFINED CONTRIBUTION PLAN The Hospital adopted the Ashland Community Hospital Retirement Savings Plan (the Savings Plan) on April 1, 2006, to provide employees hired after March 31,-2006, with a retirement plan' that encourages retirement savings. by.: employees and provides retirement benefits from the Hospital. To be,eligible to participate in either the savings plan or profit sharing, employees must have completed 225 hours of service In a calendar quarter and have a status of full ,or part time. The Hospital may match participant contributions to the Savings Plan up to 3 percent of eligible contributions, based on quarterly approval by the board of directors, Ifthe: board of directors does not formally determine the amount for the profit sharing plan year before July 1 of the following plan year, the amount shall be 3percent of a participants eligible compensation. Participants become 20 percent vested in Hospital contributions after their first 900 hours of service in a calendar year. In addition, the employee's vested amount increases by 20 percent each year that they work 900 hours unfil.they are 100 percent vested. Employer contributions under the plan for the years ended June 90;:2012 and 2011 were $584,643 and $561,026, respectively. NOTE 11 DEFINED BENEFIT PENSIONPLAN Plan Description The Hospital has a .single-employer defined benefit pension plan called the Ashland Community Hospital Retirement Plan.(the Plan). The Plan Is a governmental plan under Section 414(d) of,the IRC and received a favorable determination letter from the Internal Revenue Service: in 1997. The Hospital administers the Plan and the board. of directors has the power to amend or terminate the Plan.. The. Plan was frozen effective December 31, 2006, eliminating future benefit accruals and closing the Plan to new entrants. The plan benefits are based on the greater of the amounts accruing due to.years of service, the employee's compensation during the. last three years of employment, or the benefits. earned under the Oregon Public Employees Retirement System (PERS). Participants may direct the investments in their employee. accounts. Theparticipant may select from nine different fund options including a stable fund and three strategic allocation funds -conservative, moderate, and aggressive - investing primarily in debt and equity securities. Upon termination, vested participants. may elect to defer retirement benefits unfit normal retirement, elect early retirement, or receive a cash distribution for the balance in the employee account.. Vested participants who elect the distribution forfeit all future benefits from the plan.. Nonvested participants will receive payments in the amount ofthe employee account and forfeit all other benefits under the Plan. Fundlna Policy In accordance with the funding policy, The Hospital is required to contribute the :actuarial required contribution to the Plan on an annual basis. (27) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30,2012-AND2011 NOTE 11 DEFINED BENEFIT PENSION PLAN (CONTINUED) Funded Status and Funding Pr4aress The following are the actuarially determined amounts as ofJuty' 1, 2011, the most recent actuarial valuation date: Actuarial Value of Plan Assets ; 16;739,075 Actuarial Value of Liability (23,903719 Unhavded Actuarial Accrued Liability 3~Tii3-4, Actuarial Value of Assets as a Percentage of Accrued Liability 70.0% Annual Covered Payroll S 10,399,107 Actuarial Value of Assets as a Percentage of.Accrued Liability 68.9% The unit'credit cost method does not identify or separately amortize unfunded actuarial liabilities. Therefore, information about funded status and funding progress has been prepared using the entry age actuarial cost method and is intended to:aerve. asa surrogate forthe funded status and funding progress of the Plan. The schedule of funding; progress; presented as Required. Supplemental Information (RSI) tolloviing'the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets are increasing or decreasing. over time rotative to the actuarial accrued liability for benefits. Annual Pension Cost and Net Pension Oblloation The Hospital's annual pension cost and net pension obligation to the Plan for the current year were as follows: Annual Required Contribution (ARC) $ 609,439 Interest on Net Pension Obligation 48,222 Adjustm ant to ARC (63,055) Annual Pension Cost. 794,606 Contributions Made (900,000) Change In Nei Pension Obligation (105,394) Net Pension Obligation - Segiming of Year 602,778 Net Pension Obligation - End of Year $ 497;384 (28) PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE'S ER V ICES DBA:ASHLAND COMMUNITY HOSPITAL NOTES TO.FINANCIAL STATEMENTS JUNE 30,'2612 AND 2011 :NOTE 11 DEFINED BENEFrr-PFNSION PLAN (CONTINUED) Annual Pension Cost and Net Pension Obligation (Continued) The annual pension trend information is as follows: Three-Year Information Trend Annual Percentage Pension of APC Net Pension Year Endina June 30. -Cost (APC) Contributed Obligation 2012 794,606 113% $ 487,384 2011. 941,080 96% 602,778 2010 946,353 63% 919,527 The Hospital's annual-pension costs recognized in the financial statements for the years ended June 30; 2012 and 2071 was:approAmately$817.000 and $226,000; respectively. In June,2012, GASB issued Statement No. 68, Accounting arid Roporting for Pensions, an amendment of GASB Statement No..27. This statement changes a number of accounting and disclosure requirements for organizations with defined benefit pension plans, and other types'of Pension plans, Among other requirements, the statementrequires the liability of employers and nonempioyer contributing entities to employees'for defined benefit pension (net liability) to be measured as the portion of the present value. of projected benefit payments to be.provided through the pension plan to current active and inactive employees thatis atbibuted.to those employees',past periods of service (total pension liability), less the amount of the pension plan's fiduciary neLposition. The provisions of thisstandard are effective for years beginning after June 15, 2014, with earlier 'application encouraged. The, Hospital has not yet sssesse& the impact of this statement. Actuarlal Methods and Assumptions The actuarial valuation on.July-1„2011 was. performed using the:following significant assumptions: Valuation Method for Pension Benefits, ,Unit Credit Valuation of Assets Market Value Cost of. Living Adjustment for Retirement Annuities 2.0% Valuation Interest (Blended Discount Rate) 8.0% Rate of Retum on Employer Assets 8.0% Rate of Return cn£mployee Contributions 8.0%. Amortization Metnodand Period RP 2000 -Combined Health (29) PDXDOCS:2005030.6A ASHLAND COMMUNITY' HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 ,NOTE 12 COMMITMENTS AND CONTINGENCIES Risk Management and. Malpractice Claims The Hospital is exposed to various risks of loss from torts; theft of, damage to, and destruction of assets; business interruption; errors: and omissions; employee injuries and illness, and natural disasters. Commercial insurance coverage,is purchased for claims arising from such matters. Settled claims from these risks have: not exceeded. commercial insurance coverage for the past three years: The Hospital's malpractice Insurance is a claims-made policy. Should this policy lapse and not. be replaced with equivalent coverage, claims based upon occurrence during its term, but'reported subsequarn thereto, will be uninsured. Workers Compensation The Hospital has a self-insured workers- compensation plan. The Hospital has contracted with a third party administrator to oversee plan operations. The Hospital pays injury claims,. administrative expenses and Insurance premiums. Amounts paid by the Hospital for workers compensation claims were-$92,908 and $137,419 for the years ended June 30; 2012 and 2011, respectively. City Retirement Plan Prior to July 1, 1996, Ashland Community Hospital operated as a. division of the City. Employees of the City participate in PERS. Upon separation from the City, Ashland Community Healthcare 'Services agreed to assume responsibility for any contingent liabilities of Ashland Community Hospital. The. City was notified by PERS that the, program is under-funded and that the Hospital may be asked to make additional retirement contributions for current and prior Hospital employees who were covered by PERS through the City. No payments were made by the Hospital to PERS in 2012 or 2011. The amount to be paid or aschedule of payments has, not yet been determined. Contingent Liabilities In the normal course of business.- therexc uld be various outstanding. contingent liabilities such as, but not limited to, the following: Lawsuits alleging negligence in care • Environmental pollution • Violation of regulatory body's, rules and regulations • Violation of federal and/or state laws No contingent liabilities such as, but riot limited to those described above, are reflected in the accompanying financial statements. No such. liabilities have been asserted and, therefore, no estimate of loss, Wary, is determinable. (30i PDXDOCS:2005030.8A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL NOTES TO FINANCIAL STATEMENTS' JUNE 30, 2012 AND 2011 NOTE 12 COMMITMENTS AND CONTINGENCIES (CONTINUED) Affiliation Ahreemerd In August 2011 the board of directors of the Hospital concluded that affiliation with another larger hospitoi. or health care. system was'the bestoption for the. continued survival and growth of Ashland Community Healthcare Services dba Ashland Community Hospital. Foilowing.a detailed and structured process for the analysis of altemstives; in April 2012 the Hospital entered into a period of exclusive and confidential negotiations with Dignity Health. Costs associated with the negotiations as of June 30, 2012 were approximately $274.,000. These negotiations continued. throughout 2011 and 2012, culminating in the signing of a formal Memorandum of Understanding between the Hospital and. Dignity Health in August 2012. It is anticipated that the Hospital's relationship with Dignity Health will be: finalized In November 2012. f3p PDXDOCS:2005030.6A ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASHLAND COMMUNITY HOSPITAL OTHER POST-EMPLOYMENT BENEFITS-FUNDING STATUS JUNE.* 2012 AND 2011 Funding Status The followingtable presents the three most recent actuarial Valuations for the Hospitars defined pension plan and provides Information that approximates the. funding, progress of the plan: Defined Benent Ponelon.Plan Schedule of Fundina Progress Unfunded UAAL as 'Actuarial Actuarial Actuarial a%of Value of Accrued Accrued Funded - Covered Covered Actuarial Valuation Date Assets Liabiity Liability (UAAL). Ratio Payroll Payroll JUN 1, 20D4 $ 10,728,755 E.12,810,258 5 (2,081.501) 83.8% S 12,254,829 17.0% July 1, 2007 18;131,159 20,914,950 (2,783,791) 86.7% 12,485,720 22.3% July 1, 20Ci9 13,198,923 22,385,490 (9.168,571) 59.0% 10.172,559 90.1% July 1, 2011 16,739.075 23,903,719 (7,184,644) 70.0%. 10,399,107. 68.9% (32) PDXDOCS:2005030.6A T= ,EAshland< {Iorn{m~umv 1Vlontlilyinanaal' Report , For June 2013 'Presented: July 2013 r d 42 k S p e ty + pWi si y ( L S y. f 4 t) ~ r y R 4 F q bFyl 5 ~ L %'yl^ ~r *'r":`ar a '~`St.1fS~1N,$ t`r''C,~pi'c.~~t~, r1 _ +r r°a4r*. t y ' rr_i t .a h. 1 t 8 . t ' .Q w 5 ' Ashland Community Hospital Summary of Operational and Financial Results For Period Ended Jun 30, 2013 Volume in general. • Volumes significantly down in Jun compared to May. • Jun volume compared to May: ➢ Major Increases • 11.59%-Hospice Days of Care (72 Days) ➢ Major Decreases • 28.57%Total Admits (40 Admits) • 11:93°/rTotal Outpatient Registration (5,83 Visits) • 14:9%o-ER Visits (101 visits) • 14.22%Radiology Studies (296 Studies) • 32.510/o-PT Treatments (330 Treatments) • 33.61"/o OR Minutes Total (6,981 minutes) • 18.17%-Home Health Visits (115 visits) • May 2013 Year-To-Daie compared to May 2012 YTD: ➢ Mosrareas.are significantly down from the same period last year. Exceptions include Hospice and Radiology, which are relatively consistent with prior year. Patient Revenue: • Gross patient revenue was at $6.1 mil compared to $7.9 in May. Deductions from Revenue. • Total deductions from revenue were S3.1 mil (51 A1% of gross revenue) compared to $4.2 in May (53.34% of gross revenue). Total Medicare and Medicaid patient mix during June was at 60.70%, compared to 66.2% in May. Total Operating Expenses: • Total salaries expense as a percentage to net revenue was at 55.1 % compared to 51.3% in May. Target is 43.2% YTD 49.2%. • Total supplies expense as a percentage to net revenue was 17.2% compared to 20.4% in May. Target is 17.1 % YTD 16.5%. Net Income: • Hospital generated a net loss of $571,443 compared to a net loss of $308,127 in May. Year to date loss of 3,033,119 to 'a loss of $3,333,418 for FY2012 Balance Sheet • Total Cash and Investments was $3.1 mil compared to $2.7 mil in May • Total days in net accounts receivable was 55.7 compared to 56.7 in May. The target is 50 • Debt service YTD ratio is 7.01 compared to-0.38 in June 2012. The Goal is 1.25 Misc Items: + Jun fmancials include $75,000 expense for frozen pension plan (Employee. Benefits). Offset was to accounts payable as funds were not transferred to a cash account. Total Accrual is $825,000. • There was a net expense of $61 K related yearend inventory adjustments. • We received $33,681 in EHR incentive payments for Family Practice.physicians. • We received $146,000 from the foundation during the month for the Home Health/Hospice relocation. Ashland Community: Hospital Summary of Financial Information As of June 30, 2013 Profitability Jun Jun YTD FY13 YTD FY 12 2013 2012 Jul-Jun Jul-Jun 1 Net Operating Revenue $ 3,019 $ 4,000 $ 44,439 $ 48,186 2 Operating Expenses $ 3,754 $ 4,194 $ 48,191 $ 51,840 3 Income From Operations $ (735) $ (194) $ (3,752) $ (3,654) 4 Operating Margin -24.35% -4.85% -8:44% -7.58% 5 Net Income $ (571) $ (480) $ (3,033) $ (3,333) 6 Profit Margin -18.91% -12.00% -6.83% -6.92% Liquidity Jun May Apr Mar 2013 2013 2013 2013 7 Cash $ 1,957 $ 1,595 $ 2,665 $ 2,650 8Investments $ 1,166 $ 1,070 $ 1,070 $ 1,068 9 Total Investments Cash $ 3,123 $ 2,665 $ 31735 $ 3,718 i Capital Structure Jun May Apr Mar 2013 2013 2013 2013 10 Total Debt $ 8,438 $ 8,473 $ 8,515 $ 8,578 Financial Indicators Jun May Apr YTD Target 2013 2013 2013 FY13 FY 12 11 Net Days in A/R 55.7- 56:7 51.94 55.7 50 12 Salaries as a % of Net Revenue 55.1% 51.3% 46.7% 49.8% 43.28% 13 Salaries per APD $ 2,915.79 $ 2,200.00 $ 3,091.80 $ 2,589.93 New Measure 14 Supplies as a % of Net Revenue 17.2% 20.4% 18.0% 16.9% 17.1% 15 Bad Debtas's % of Gross Revenue 3.22% -5.91% 1.36% 1.00% 3.00% 16 Days Cash on Hand 24.97 21.03 29.25 24.97 50.00 Debt Covenants/Compliance Jun Jun Target FY13 FY 12 FY12 17 Debt Service Coverage -0.34 -0.38 1.25 18 Current Ratio (Working Capital) 1.95 2.16 2.00 Ashland' Community Hospital Summary of Financial Information As of May 31, 2013 Acutai Budget Variance Variance Revenue Jun-13 May-13 Dollars Percentage Gross Patient Revenue 6,054,488 8,173,772 (2,119,284) 25.93% Bad Debt 195;343 209,800 (14,457) - -6.89% Contractual: Adjustments 2;739}464 3;938,175 (1,198;711( -30.44% Charity 33,053 119,199 (86,146) 42.27% -Other Deductions 144,920 96,287 .48,633 50.51% Total Deductions.From Revenue. 3,112,780 4,363,461 (1,250,681) -28.66% %To Total Revenue 51.41% 53.38% -1.97% -3.69% Net Patient Revenue 2,941,708 3,810,311 (868;603) •22.80% Other Operating Revenue 77;012 60,615 16,397 27.05% Net Operating Revenue 3,018,720 3,870,926 (852,206) -22.02% Expenses Labor Related Salaries & Agency 1,662;603 1,904,351 (241,748) -12.69% Employee Benefits 591,985 496,836 95,149 19.15% %To Net Revenue 55.1% 49.2% 5.88% 11.95% Non Labor Related Fees 180,719 140,188 40,531 28.91% Supplies-Medical Related 518,053 703;979 (185,926) -26.41% %to Net Revenue 17.2% 18.2% -1.02% -5.64% Supplies-Not Medically Related 27,102 49,115 (22,013) -44.82% Purchases. Services 416;109 362,470 53,639 14.80% Other Expenses 92,283 148,598 (56,315) -37.90% Depreciation - 184,621 217,751 (33,130) -15.21% Insurance 46,256 50,260 (4,004) -7.97% Interest 33,982 30,688 3,294 10.73% Total Expenses 3,753,713 4,104,236 (350;523) -8.54% Income From Operations (734,993) (233,310) (501,683) 215.03% Other Non-Operating. Revenue 163,548 24,921 138,627 556.27% Net Income (571,445) (208,389) (363,056) 174.22% Beginning Cash Balance 959,028 (957,822) 1,916,850 -200.13% Cash Collections 3,533;396 3,623,810 (90,414) -2.50% Cash Payments 3,175,701 3;738,304 (562,603) -15.05% Debt Retirmem Transfer - - 0.00% Ending Operating Cash 1,316;722 (1,072,316) 2,389,038 -222.79% Board Restricted Cash 1,080,000 1,580,000 (S00,000) -31.65% Board Restricted Investments 725,433 722,657 2,776 0.38% Total Cash and Investments 3,122,155 1,230,341 1,891,814 153:76% 3 ~z } } y b m o O P r '~"6 pPIP .a N m N _ mNP bn a. '.I n) P) Y m .I ( M I V rqi ri H I H iW'l l O' a W N . n w( O I N~ H I ri Y F N~ C V w 'O P N m n _ w n n_ V Y D.V s N N~ l 'P I W -1 ~ 4 O n ` P N ry } N O N N N ~n n • O n~I wI w p~nl p m .N. w9 ~nN~e of n e~~W~.: n ~ i n i V } O N tl _ O N } q n O O p. n C~ r; It 1~ 1! I~r O N I P~I V N n I W e a n rl m n W M r ri n N i ' n ' O ri n ~ } N nW0 p m i ry N yn m Onn . V V n N nn . n n) PI i ~ m` W F` H V d y 9 ~ QG®1~1 p 11 ~ 5 f(~yW~/ ~.0 ~ y y6 u m' d } K .t~] R i ww N~ zN Iuq 91 O m Y pry ¢q ryO .i pu 5W ZV F W9 P„ V V ~o{ m Z H y ~ 'O.p O Hu C. 2 ~ tl[Wf .d60 m~ 6'ip01 ~ H ~ q N 2 000111 4 V m4 H Cep m {O. 0 tl N O N 0. O H N Y q H '%y O N K O Q p9U g4 4 K ffi ~ qQ~ ~ tl b ~ ~ ~'s m qd n ~ U 4. a' ~ ~ ~ tS mm ;og ne~.il wm" P H n_ nn~~'"wn ~1' NI w Y Y } Y i1 = w n _ O - . o_ n w _ m I O t F es( N I b ^ N N _ n r o n N Y . ~ 5 et N q n n n n m p w O P'N O~mry .a ^ I 'P •I : N . q V O N n r. P„ ry r N I p: ti O n n H d n p ; i 111~~~ } m } n N = N r q n N n P P H W ~ n b n O O l O 1 N I t Y Y P N P . n n .1 N V n♦ n V n n w ~ VpM1 NN bry N N {$bHaf. • V n O p Y O N w N n w w I e rY n n n n n w M I rl q N 1 N m DATE: 07/19/13 O 1348 Aahl=d Conv ity Hasp GL •-LIW-- PAGE 1 USER: 14099 'ASHLAND CONH@RTY HOSPITAL SALANCH SRERT . 06/30/13 CURRENT LAST MONTH FAVORABLE END OF'THAR FAVORABLE 06/30/13 05/31/13 (UNFEVOR) 06/30/12 (ODIDAVOR) ASSETS CURRENT ASSETS CASH 877,105, 515,254 361,852 603,880 273,226 BOARD RESTRICTED-DEBT RETIREMM T 1,080,000 1,080,000 0 11580,000 (500,000) INVESTMENTS 441,217 443,774 (2,558) 86,394 354.823 INVESTMENTS-RESTRICTED DEBT RETIREMENT 725,433 725,148 285 722;445 2,986 ACCOUNTS RECEIVABLE 11,787,822 12;500,104 (712.282) 14,801,203 (3,013,381) CONTRACTUAL A STMDMS (5,345,310) 15,732,927) 387,617 (6,765,276) 1,419,966 NET ACCOUNTS RECEIVABLE 6,442,512 6,767,177 (324,665) 8,035,927 (1,593,415) NOTES RECEIVABLE 6 COMP TRANS 128,584. 131,250 (2,666) 142;769 (14,185) PHYSICIAN INCOME GUAR PHIS REC. 71.165 74,015 (2,849) 106,443 (35,278) INVENTORY 1,390,668 1,429,285 (40,617) 1,419,732 (31,064) PREPAID ASSETS 374,456 423,860 (49,404) 456,193 (81,736) PREPAID DEPOSITS 39,741 39,741 0 43.952 (4,211) INVESTMENT INN f PREMIUM REC 2,300 1,436 862 4,297 (11997) HONES INTEREST RECEIVABLE 0 0 0 2,400 (2,400) TOTAL CURRENT ASSETS 11,571,181 11,630,942 (59,761) 13;204,431 (1,633,250) FIXED ASSETS LARD 306,411 306,411 0 306,411 0 LAND IMPROVEMENTS (OTHER) 100•150 100,150 0 100,150 0 BUILDINGS (HOSPITAL BUILDING) 509.382 509,382 0 509,382 0 FIXED EQUIPMENT 313,979 313,979 0 313;979 0 MOVEABLE EQUIPMENT 19,919;116 19,886,909 32,207 18,845,824 1,073,303 LEASEHOLD IMPROVEMENTS 26,883,724 26,883.724 0 26,679,845 203,879 CONSTRUCTION IN PROGRESS 9 17,632 117,6321 228,820 (228,820) TOTAL FIXED ASSETS 48,032;762 48.D18,187 14,575 46,984,400 1,048.362 ACCUMULATED DEPRECIATION (25,978,224) (25,793,604) (184.621) (23,617,573) (2,360.651) NET FIXED ASSET'S 22,054,538 22,224,584. (170.045) 23.366,827 (1,312,289) OTHER'. ASSETS INVEST IN REAL ESTATE. 0 0 0 0 0 RESTRICTED CONTRIBUTIONS (226,179) (220,179) 0 (222,246) 2,067 INVEST IN SISXIYOU IMAGING 224,307 206;229 18,077 224,532 (226) RESTRICTED-HEALTH INSURANCE 842,929 805,734 37,195 4,190.372 (347,443) TOTAL ASSETS 34,472,776 34,647,310 (174,534) 37,763,917 (3,291,141) V DATE: 07/19/13 0 1348 Ashland Com nl0y HOOP GL `*LIVE*! PAGE ,2 USSR: 14099 ASHLAND COMMMNT1'T HOSPITAL . BALANCE BESET. . 06/30/13 . CURRENT LAST M.ONTE FAVORABLE 'IOM OF YEAR FAVORABLE 06/30/13 05/31/13 _(UNPAVOR) 06/30/12 (UHPAVOR) LIABILITITES AND NET WORTH CURRENT LIABILITIES CURRENT PORTION. OF LT DEBT 4161826 423,458 6,633 481;545 64,719 ACCOUNTS PAYABLE 2,718,472 2,574,804 (143,666) 2,249.099 (469,373) PENSION LIABILITY-DEFINED BENEFIT 773,305 773,30S 0 773,305 0 PENSION LIABILITY-DEFINED CONTRIBUTION 132,000 88,000 (44,000) 150,000 18,000 PAYROLL. WITHHOLDINGS 1,259,201 1,070,953 (188,248) 1,414,003 154,803 SBLP INSURED-IENR 597,258 496;731 (10D,527) 581,943 (15;315) MEDICARE PAYABLE 100,000 100.000 D 402,369 302,369 MEDICAID PAYABLE 230,000 230,000 0 597.631 367.631 TOTAL CURRENT LIABILITIES 6,227,061 5,757,251 (469.810) 6,649,895 422.834 LONG-TERM. LIABILITIES NOTES PAY- UNPUUA BK- SORG ADD 7,843,364 7.863.766 20,402 8,143,129 299,765 LEASE PAY. STRYKER 0 0 0 65,209 65,209 LEASE PAY. BIONERIEUX 17,279 19,071 1,792 24,838 7,559 LEASE .PAY.. D£ LAGE LANDEN 159,900 166,796 6,896 210,411 50:513 TOTAL LONG-TERM DEBT 8,020,543 -8,049,633 29,090 8•,443,586 423,043 OTHER LIABILITIES MALPRACI INSUR LIAR TAIL 100,000 100,000- 0 100,000 0 PENSION LIABILITY-EXTRA ACCRUAL 0 0' 0 0 0 TOTAL OTHER LIABILITIES 100,000 100,000 0 100.000 0' TOTAL LIABILITIES 14,347,604 13,906,984 (440,720) 15,193,481 845,877 NET WORTH NOT-PROFIT I= BALANCE 22,570,436 22,570,436 0 22,570,436 D RESTRICTED FUND BALANCE '0 0 0 0 0 NET GAIN/LOSS (3,033,119) (2,461,676) (571,443) 0 (3.033,119) NET WORTH - 19,537,317 20,108.760 (571.443). 22,570,436 (3,033,119) 'TOTAL LIABILITIES AND NETWORTH - 33,SB4,921 34,015,644 130,723 37,763.917 31878,996 RATIOS CURRENT RATIO 1.86 2.02 (0.16) 1.99 (0.13) DAYS IN ACCOUNTS RECEIVABLE 55.70 56.70 1.00 59.59 3.89 ti' fir~{{; A~ N- N 0 0 W m r r - Y . • I O P' m ~ N r I r O I f1' V m I m--= N m P O N I = V - - - - - - - - - - - - - - - - • '..4 m r N m, r N N P D ~ Q .N rvm m-~~~ImP n ~~I N a e r r ~ y C A m P ~ py4+ Y q Vq S V P ~ w G O •n ~ „ C H Y ~,6 V u U 6 ~ O M V pyF Y O V > p °Y~ yV ~ 4 y 0. p >y~ ~ V m tl A ~J Y C~ ~ Y ] MR F M O F q. gytl ~ O Y N~ a 6 qg Y q PY ~ JA JO .r N y p ' U. 4 J ~ ~ T w p p p y qq qy F p O H R 0. Y C 'J P O' J. Y ~~y . H1 ~ V y Y C C b 0 J• Ll D ~ E E J 4'4 L'L .j W V 'q q ~ rp4 3 V ~ > > V..1Y V F U V „ pp~ 'J A yq P P F b VV C N F r1.Y A 9 V F p 4 g 7 N P q .y V A q 6 N O E y Q 4 4 Y- P A Y 4 M>-- C V L I E i 6= b G g •pK6p{} F~ yy P. Y. p J r h M Y M 4 I Y - Y ~ M N n !2 V Yt m.N O N V N b' n ' • Yy r n N m r n n rv O V - w N lmV a. b YYY i I.N ♦ n n n n P r• n rv - N n I tin ° n b n I n n N N6 N - r b q _ m P ~5 r ry'N ~.M r n 0 r N n N - N V O D tS - - - { rty '?r -.pro m n n ~ e n ~.p e~P'e n' 0 q p N ° - - X6Q ~ 'v nn O ~ {~ha(3 0 `r„rr„ r } w tl N n I N UG 4 RW tl O ~ qW qqW m p Y C C w a 4 C O F ~ ~ ~ a ~ ~ny w a x , 6 5 ,y~~ amp ~~~a 4~ 1+ F~ N O S 1' ~ N F ~ 4 r py y _ tl _9 C!Z7 yy Y u_ „Y]Ny S J M V r n tl N N n 1. N .tli .1 PP tl N n O N Y w w r ~ ~ n N m A N tl tl F0.N O O MMI I V L'. ~i Q N W O # C~ IN !6 Ol '.W c'l 1A' V3 f9 fA f9 "fie~M H to 1A i. yj w . O (Npi O.h cO "pp'jtLOp I R5 a jN ~i 7 [~i m i4j ai LL @ _L*x a mwlrviaw~ugipdt, a 1h. ~ "in Njo v o E co to 'I - et' 0 N e^ [ ~i ~ T mm ' m C m .C.3 A t m O1 m ey w q m N . eIN~~,~ry!a °a c4 w J <h 4N ~O i, ~ iy [O V. ~ ~ m 3 O t C > 2 CD LL r q ~,uen to ..w--JJ w w w~ w ri rn #r,:{' ,L_° m W am J I~~ 'a t r d ro .t.. zo, 0 g ~ ~ p IN N = v N c - N Pis i t"q € o rn F F ° W d, tk ~w w~rA ise ~IW` ` .t m v m 69 O O c0 IO# iN{ 1taQ N ~tM N Jt~O m~ W S m ro O N C E m iY } Sk 1`e~" r t i W" O q. W L Q m N ' ll. s t5.,c `6.e c t0 C Q col { too! en «w,in `w#W",0 MI S c W X. ° yS,~' W. W m a krk m IL S I Vmf p3 'tO"10~h N'1 n0 ij~ e i' g S ~ ~ f t ^i i i Y a Q C a N m- W m r #n ( Rl 7o f R[ W ` #~IN ~ffp O~aOD ~O m W IV 40i i iii (N V 7~ tr.~ N O IT -"4,1 Aw W ~,M,};M#~~f9 W #ki'i N'Y w(((w'1 m t Nm. aW¢+ O 01"01 I h'If N CD(D ~NtW {e-ial 2 w CL } rn O C. O z ow am It N ~x ( C d m W '~t[A VI tlf fA Vi "N~YA sN. O. U ~r~ ,>r'~ ~ ~ V a C f etI # f~ v~ m o c H' 'o 0 Li is 0'a Fir ro i t' m. m € -O Fi yE o LL}r4i °W LIP,* M 4r}$$~i G f C4 0 N 4 C tLLt i~, q ua I m o' c dI A~[®n m~Wtdyyt 0~0Q`O ~rr~~ PPP~~ cc $ C U= m CA!, 0 0 (L :CD; 1w U. a) M Schedule 32.3 No Violation; Approvals The Umpqua Bank loan documents contain (a) a due on sale clause, triggered upon the transfer of the real property collateral without Umpqua Bank's consent; and (b) an event of default described as "[a]ny change of ownership of twenty-five (25%) or more of the common stock of Borrower." PDXDOCS:2009317.2 Schedule 32.3.2 Necessary Approvals from Court or Governmental Agencies Umpqua Bank's consent to the transaction is required under the loan documents with Umpqua Bank. The consent of City, as sole member of the ACH, is required. ACH is notifying the Oregon Health Authority and other agencies and Centers for Medicare and Medicaid Services that the sole member of ACH is changing pursuant to the terms of the Affiliation Agreement. PDXDOCS:2005030.6A Schedule 32.4.3 ACH Material Changes to Accounting Methods or Practices No exceptions. PDXDOCS:2005030.6A Schedule 32.4.3 ACH Material Changes to Accounting Methods or Practices No exceptions. PDXDOCS:2005030.6A Schedule 32.4.4 Liabilities Not Reflected in the ACH Financial Statements 1. Contingent potential liability to Centers for Medicare and Medicaid Services: o for fees or expenses resulting from the Medicare Secondary Payer audit performed by Noridian Healthcare Solutions on June 5, 2013; and o for failure to have Stark-compliant written agreements with certain community physicians who worked shifts as hospitalists and for potential overpayment as a result of Stark law noncompliance. 2. Ashland Community Retirement Plan is underfunded as defined in Audited Financial Statements (please see Schedule 32.4. 1) Footnote 11 under governmental accounting standards and will be substantially more underfunded when no longer treated as a governmental plan. 3. $120,000 Promissory Note dated May 25, 2012 to Mark E. Marchetti and Honey Bell Marchetti, along with the Third Addendum to CEO Employment Agreement also dated May 25, 2012 (original agreement entered into June 23, 2004 between ACH and Mark E. Marchetti and Honey Bell Marchetti), along with a Trust Deed dated May 25, 2012, Jackson County Official Records Document No. 2012-018840, utilizing Lot 20 of the Oaks of Ashland as security for the $120,000 Promissory Note. PDXDOCS:2005030.6A Schedule 32.4.6 Accounts Holding Plan Funds • Transamerica Retirement Solutions TA069223 00001 - 403(B) Plan • Transamerica Retirement Solutions GP61245 00001 - Retirement Plan • Transamerica Retirement Solutions GP61245 00002 - Defined Benefit Retirees • Transamerica Retirement Solutions TA080300 00001 -401(A)Plan PDXDOCS:2005030.6A Schedule 32.5 Interim Changes 32.5.1 - Changes in Financial Condition Only as set forth in Schedule 32.4.4 of this ACH Disclosure Schedule. 32.5.4 - Management Changes Only the following: Changes in ACH's management pursuant to the Management Agreement with Asante and already disclosed to Asante; 32.5.5 - Amendments or Terminations of Material Contracts On June 17, 2013, ACH sent Regence B1ueCross B1ueShield of Oregon ("Regence") a termination of ACH's agreements with Regence, with the termination effective September 1, 2013. PDXDOCS:2005030.6A Schedule 32.4.5 Donor Restricted Funds As set forth in the YTD ACH financial statements as of June 30, 2013, ACH has $390,783.02 of funds subject to donor restrictions. PDXDOCS:2008624.1 Schedule 32.6 Legal Proceedings [Except as disclosed on Schedule 32.6, ACH is not a defendant in or, to the knowledge of ACH, threatened with any action, suit, proceeding, state or federal investigation, complaint, claim, charge, hearing or arbitration which may materially and adversely affect its businesses or financial conditions or the ability ofACH to perform hereunder. Except as disclosed on Schedule 32.6, to the knowledge of ACH, ACH has not received written notice of any investigation or threatened investigation by any federal, state or local governmental or regulatory agency, including those involving its business practices and policies, which could have, in the aggregate, a materially adverse effect on ACH, or its respective business.] Actual or Threatened Actions, Suits, Proceedings, and Investigations Medical Malpractice Litigation Helen Moress vs. Ashland Community Healthcare Services (DBA Ashland Community Hospital) and Favorites Healthcare Staffing, Case No. 126364L3, Jackson County Circuit Court Employment-Related Claims and Litigation Name Date of BOLI NLRB EEOC Civil Claims Status Claim Christine 2/1/2012 X X BOLI Duarte Dismissed 11/19/12 EEOC Dismissed 01/24/13 Christine 4/27/2012 X Dismissed Duarte 05/31/12 Christine 4/5/2013 X - Case No. Duarte 130774L3, Jackson County Circuit Court PDXDOCS:2005030.6A Lynn 11/23/2011 X Dimissed Getzoff 04/18/12 Lynn 7/20/2012 X - Case No. Getzoff 123479L2, Jackson County Circuit Court Wendy 5/4/2012 X - Case No. Resnick 12204L2, Jackson County Circuit Court Anna 4/21/2012 X Dismissed Laca 08/21/12 Anna 11/21/2012 X - Case No. Laca 125552L9, Jackson County Circuit Court Korrina X Dismissed Nelson 05/02/12 Korrina X Dismissed Nelson 05/24/12 PDXDOCS:2005030.6A Korrina 8/30/2012 X - Case No. Nelson 123706L2, Jackson County Circuit Court Other Claims and Litigation Lisa Sanchez Navarro vs. Ashland Community Healthcare, Case No. 126374L2, Jackson County Circuit Court Written Notices of Actual or Threatened Investigations Only as set forth in Section 32.4.4. PDXDOCS:2005030.6A Schedule 32.7 Licenses and Permits 32.7.1 - Licenses and Permits • Permit to Operate Elevator, State of Oregon, CAP 0002500, Exp. 9/30/13 • Permit to Operate Elevator, State of Oregon, CAP 0003500, Exp. 9/30/13 • Permit to Operate Elevator, State of Oregon, CAP 0004500, Exp. 9/30/13 • Certificate to Operate Underground Storage Tanks, State of Oregon Department of Environmental Quality ('DEQ"), Registration Certificate Number 15-12205- 2013-OPER, Tank Permit BGKCF, Tank ID No. 1, Expires June 30, 2014. • License, Oregon Health Authority Public Health Division, Health Care Facility License, License No. 14-1445, Class: Hospital GEN-OB-HHA, Exp. 12/31/13 In obtaining this license it was noted that the physical therapy services at the YMCA were not included on this license as a satellite facility. This location has been in operation since 2002. The billing for this location has been under the hospital provider numbers as a department of the hospital. Pursuant to written communication with Asante on June 28, 2013 it was decide to close this facility effective July 31, 2013. The 90 day termination notice has been given to the YMCA for the lease there. The employees in this area and the Medical Director have been informed of the closure effective July 31, 2013. • License, Oregon Health Authority Public Health Division, Health Care Facility License, License No. 13-141445, Class: HHA, Exp. 12/31/13 • License, Oregon Health Authority Public Health Division, Health Care Facility License, License No. 16-1045, Class: Hospice, Exp. 12/31/13 • License, Oregon Health Authority Public Health Division, Health Care Facility License, License No. 14-1445-1, Class: Hospital Satellite Location, Exp. 12/31/13 • License, Oregon Health Authority Public Health Division, Health Care Facility License, License No. 14-1445-2, Class: Hospital Satellite Location, Exp. 12/31/13 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91683 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91685 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 78147 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 3497 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 2508 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 75565 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 94976 PDXDOCS:2005030.6A • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91688 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91687 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91686 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 91684 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 75567 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 75566 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 36796 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 90769 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 68464 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 90470 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 31150 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 90469 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 34649 • Permit to Operate, Building Codes Division Boiler and Pressure Vessel Program, Permit No. 93071 PDXDOCS:2005030.6A Schedule 32.7.2 Notices of Revocation, Termination, Suspension, or Limitation ACH is subject to a survey by the Oregon Health Authority ("OHA") relating to the ACH's patient safety initiative. The aforementioned survey occurred June 10th to the 14th with no findings by OHA. PDXDOCS:2005030.6A Schedule 32.9 Material Noncompliance with Laws, Regulations, Ordinances, Decrees or Orders Only as described or referred to in Schedule 32.4.4 of this ACH Disclosure Schedule. PDXDOCS:2005030.6A Schedule 32.10.1 List of Real Property Owned by ACH • 287 Maple St. Ashland, OR 97520 - Maintenance Shop and Misc. Offices • 600 Chestnut St. Ashland, OR 97520 - On-call sleep house • 323 Maple St. Ashland, OR 97520 - Storage PDXDOCS:2005030.6A Schedule 32.10.2 Exceptions to Title to Assets (other than Real Property) 1. Oregon UCC Financing Statement File No. 7599272, filed on April 26, 2007 by secured party TCF Equipment Finance, Inc., naming Ashland Community Healthcare Services as debtor, as amended by File No. 7599272-1, filed on August 13, 2008, and continued by File No. 7599272-2, filed on March 12, 2012. 2. Oregon UCC Financing Statement File No. 7927087, filed on April 4, 2008 by secured party Winthrop Resources Corporation, naming Ashland Community Healthcare Services as debtor, as continued by File No. 7927087-1, filed on January 22, 2013. 3. Oregon UCC Financing Statement File No. 8106371, filed on October 13, 2008 by secured party Winthrop Resources Corporation, naming Ashland Community Healthcare Services as debtor. 4. Oregon UCC Financing Statement File No. 8159073, filed on December 22, 2008 by secured party US Express Leasing, Inc., naming Ashland Community Healthcare Services as debtor. 5. Oregon UCC Financing Statement File No. 8159762, filed on December 24, 2008 by secured party US Express Leasing, Inc., naming Ashland Community Healthcare Services as debtor. 6. Oregon UCC Financing Statement File No. 8163488, filed on December 31, 2008 by secured party US Express Leasing, Inc., naming Ashland Community Healthcare Services as debtor. 7. Oregon UCC Financing Statement File No. 8166757, filed on January 2, 2009 by secured party US Express Leasing, Inc., naming Ashland Community Healthcare Services as debtor. 8. Oregon UCC Financing Statement File No. 8181131, filed on January 23, 2009 by secured party US Express Leasing, Inc., naming Ashland Community Healthcare Services as debtor. 9. Oregon UCC Financing Statement File No. 8630382, filed on September 30, 2010 by secured party Stryker Finance, a Division of Stryker Sales Corporation, naming Ashland Community Healthcare Services as debtor. 10. Oregon UCC Financing Statement File No. 8856869, filed on August 16, 2011 by secured party Siemens Diagnostic Finance Co. LLC, naming Ashland Community Hospital as debtor, as assigned to new secured party Siemens Financial Services, Inc. by File No. 8856869-1, filed on October 21, 2011. PDXDOCS:2005030.6A 11. Oregon UCC Financing Statement File No. 89024491, filed on October 11, 2011 by secured party Beckman Coulter, Inc., naming Ashland Community Hospital as debtor. 12. Oregon UCC Financing Statement File No. 89034382, filed on October 25, 2011 by secured party DiaSorin Inc., naming Ashland Community Hospital as debtor. 13. Oregon UCC Financing Statement File No. 89143651, filed on March 15, 2012 by secured party De Lage Landen Financial Services, Inc., naming Ashland Community Healthcare Services as debtor. 14. Oregon UCC Financing Statement File No. 89225978, filed on June 19, 2012 by secured party Olympus America Inc., naming Ashland Community Hospital as debtor. 15. Oregon UCC Financing Statement File No. 89242659, filed on July 6, 2012 by secured party Olympus America Inc., naming Ashland Community Hospital as debtor. 16. Oregon UCC Financing Statement File No. 89254026, filed on July 19, 2012 by secured party Winthrop Resources Corporation, naming Ashland Community Healthcare Services as debtor. 17. Oregon UCC Financing Statement File No. 89295003, filed on September 6, 2012 by secured party INC Equipment Finance, LLC, naming Ashland Community Healthcare Services as debtor. PDXDOCS:2005030.6A Schedule 32.10.3 List of Real Property Leases with ACH as Tenant, Lessee, or Subtenant • Leased from City of Ashland: 0 278-280 Maple St. Ashland, OR 97520 - Main Hospital 0 560 Catalina St. Ashland, OR 97520 - Internal Medicine Physicians / ACH IT Department • Leased from ACH Foundation: 0 530 Catalina St. Ashland, OR 97520 - Parking 0 317 Maple St. Ashland, OR 97520 - limited storage 0 628 N. Main St. Ashland, OR 97520 - Family Practice Physicians 0 209 North Pacific Hwy. Talent, OR 97540 - Storage (Planned conversion to Home Health and Hospice) 0 49 Talent Ave. Talent, OR 97540 - Family Practice Physicians / ACH Business Office • Leased from Other Entities: 0 1970 Ashland St. Ashland, OR 97520 - Home Health and Hospice 0 540 YMCA Way Ashland, OR 97520 - Aquatic Physical Therapy 0 241 Maple St. Ashland, OR 97520 - Vacant (Old Southern Oregon Family Practice currently used for storage) 0 268 S. Pacific Hwy. Talent, OR 97540 - Lab draw station PDXDOCS:2005030.6A Schedule 32.10.4 List of Real Property Leases with ACH as Landlord None PDXDOCS:2005030.6A Schedule 32.10.5 List of all ACH Locations • 287 Maple St. Ashland, OR 97520 - Maintenance Shop and Misc. Offices • 600 Chestnut St. Ashland, OR 97520 - On-call sleep house • 323 Maple St. Ashland, OR 97520 - Storage • 278-280 Maple St. Ashland, OR 97520 - Main Hospital • 560 Catalina St. Ashland, OR 97520 - Internal Medicine Physicians / ACH IT Department • 530 Catalina St. Ashland, OR 97520 - Parking • 317 Maple St. Ashland, OR 97520 - limited storage (condemned) • 628 N. Main St. Ashland, OR 97520 - Family Practice Physicians • 209 North Pacific Hwy. Talent, OR 97540 - Storage (Planned conversion to Home Health and Hospice) • 49 Talent Ave. Talent, OR 97540 - Family Practice Physicians / ACH Business Office • 1970 Ashland St. Ashland, OR 97520 - Home Health and Hospice • 540 YMCA Way Ashland, OR 97520 - Aquatic Physical Therapy • 241 Maple St. Ashland, OR 97520 - Vacant (Old Southern Oregon Family Practice currently used for storage) • 268 S. Pacific Hwy. Talent, OR 97540 - Lab draw station PDXDOCS:2005030.6A Schedule 32.11 Affiliates and Subsidiaries • Health Future, LLC • Southern Oregon Linen Services • Mountain States • Siskiyou Imaging PDXDOCS:2005030.6A Schedule 32.13 Insurance All of ACH's insurance policies are provided by PayneWest Insurance, with the exception of coverage for medical malpractice and general liability provided by Mountain States. A summary of such policies is attached, as follows: See attached. PDXDOCS:2005030.6A PayneWest~ Location Schedule 1 1 Hospital 278-280 Maple Street Ashland. OR 97520 2 1 Medical Office 287 Maple Street Ashland OR 97520 3 1 Medical Office 600 Chestnut Street Ashland OR 97520 4 1 On Call 560 Catalina Ashland OR 97520 5 1 Medical Office 323 Maple Street Ashland OR 97520 6 11 Home Health 1970 Ashland Street Ashland OR 97520 7 l Aquatic Physical Therapy 540 YMCA Way Ashland OR 97520 8 1 Maintenance/ Storage 101 Sunny Street Talent OR 97540 9 1. Business Office 49 Talent Avenue Talent OR 97540 10 1 Medical Office 628 E. Main S. Ashland OR 97520 11 1. Medical Offices 241 Maple SC Ashland OR 97520 12 1 Offices 731 N. Main S[ Ashland OR 97520 13 1 Offices 317 Maple St Ashland OR 97520 Ashland Community Hospital Jay Ghristansett PDXDOCS:2005030.6A PayneWest Property Insurance Company: Lexington Insurance Co Policy Number. 014498276 Policy period: 09/01/12 to 09/01/13 Coverage DetalI - • All risk including Earth Movement and Flood covering. Real Property. Personal Property, Business Interruption and extensions of coverageper the policy schedule. • Special Form,' Replacement Cost, 90% Coinsurance • Blanket Building & Business. Personal Property Limit 580,000,000 • Deductible: Sl0,000 per occurrence except as noted Extensions of coverage Sub4imits: Will apply on a. per occurrence basis &are part of. not in addition to the.above limit Limit Coverage $ 50,000.000 Earth Movement- Annual Aggregate ? 't'i;e • _ cr Deductible 2%1 5100,000 Minimum Per Location (c t Sprinkler Leakage -loss or damage due to water or other substance discharged from any fire protection equipment resulting from Earth Movement: Deductible er $100,000 ot:i~ • Named locations only 5' 50,000.000 Flood- Annual Aggregate • Deductible per occurrence per location: 5 100,000 S 3,000,000 Business Interruption -4Qrj j"a • 48 hours wailing period vC60i • 180 days mended period'of Indemnity a"•"~' $ 1.000,000 Extra Expense- Greater of the sublimit or 15% of the reported Annual Business interruption values $ 250,000 Spoilage $ 80.000,000 Equipment Breakdown • Excluding glass or vacuum tubes Deductibles: • Property Damage: $5,000 • Medical & Diagnostics Equipment: $25,000 • Business interruption Waiting Period: - 24.hrs $ 500,000 Electronic Data Processing, Data and Media Ashland Community Hospital Jay Chdslenstin PDXDOCS:2005030.6A PayneWest~ Property Extensions of Coverage Suh-Limits (Continued) Limit Coverage $ 100,000 Fire Brigade Charges, $ 10,000,000 Debris removal I OMM or 25% of loss whichever is less) $ 100,000 Professional Fees $ 250,000 Expediting Expenses $ 50,000 Limited. Pollution Coverage Annual,Aggregate S 5,000,000 Newly. Acquired Property-90 days' $ 1,000,000 Misc.. Unnamed Location.,; Coverage S 250,000 Fine Arts S 1,000,000 Accounts Receivable $ 1.000,000 Valuable Papers & Records $ 500,000 Electronic Data and Media S 1,000,000 Errors and Omissions $ 500,000 Transit- Per Occurrence & Conveyance S 110001000 Fungus, Mold and Mildew-Resultant Damage $ 500,000 Service Interruption 24 hours waiting period $ 100,000 T=% Shrubs, Plants & Lawns • 52.500 any I item. $ 250,000 Underground Pipes. flues and drains S 250.000 Patients & Employees Personal Property on premises • Max $10,000 per any one individual S 250,000 Pavements, Sidewalks Roadways Bui lding Ordinance & law $ Policy Limit Coverage A: Undamaged Portion of the building $ 5,000,000 Coverage B: Demolition $ 5,000,000 Coverage C: Increased Cost of Construction Property premium: $116,534.70 Ashland Community Hasoitel Jay Chiisiense(7 PDXDOCS:2005030.6A PayneWest~ Property Limits Property Statement of Values Loc Bldg Subject Amount Co-Ins Valuation Causeof # # Loss 1 1 Hospital - 278-280 Maple St Building S. 50,000,000 90% Repl Cost Special Business Personal Property S 16,000,000 90% Repl Cost Special Business Income S 3.o0Q000 Extra Expense S 1,000;000- 1 1. Auxiliary Tenant's Improvements and $ 15,000 90% Repl Cost Special Betterments Business Personal Property, $ 10,000: 90% Repl Cost Special 2 1 Medical Office - 287 Maple St, Building $ 175,000 90% Repl Cost Special Business Personal Property' S 70,000 90% Repl Cost Special 3 1 Medical Office-600 Chestnut Building S 215,000 90% Repl Cost Special Business Personal Property $ 15,000 90% Rep] Cost Special 4 1 On Call Building- 560 Catalina Building $ 2,000,000 90% Repl Cost Special Business Personal Property $ 900,000 90% Repl Cost Special 5 1 Medical Office-323 Maple Building $ 225,000 90% Repl Cost Special 6 1 Home Health Care -1970 Ashland St. Business Personal Property S 150,000 90% Repl Cost Special - - Ashland Community Hospital Jay Chnsiensen PDXDOCS2005030.6A PayneWest~- Loe Bldg Subject Amount Co-Ins Valuation Cause of # N Loss 7 1 Aquatic Physical Therapy - 540 YMCA Way, Business Personal Property $ 2,000 904 Repl Cost Special 8 1 Maintenance/ Storage -101 Sunny Si Business Personal Property $ 75,000 90% Repl Cost Special 9 1 Business Office -49 Talent Ave Business Personal Property $ 1,130.000 90% Repi Cost Special 10 1 Medical Office - 628 N. Main Building $ 900.000 90% Repl Cost Special Business Personal Property S 250,000 90% Rep] Cost Special 11 1 Medical Office -241 Maple St Building.. $ 915,000 90% Rep] Cost Special Business Personal Property $ 800,000 90% Repl Cost Special 12 1 Medical Office-731 N. Main St. Building $ 900,000 90% Repl Cost Special 13 1 Medical Office-317 Maple St. Business Personal Property $ 10,000 90% Repl Cost Special Additional Interests The following are Loss Payees as their interest may appear. • Creckridge, Capital LLC • Umpqua Bank ISAOA • Santa Barbra Bank & Trust • Stryker Capital • Celtic Leasing Corp: • Beckman Coulter Capital. • Winthrop Resources Corp. • Ashland Community Hospital Foundation • Dr. Bruce Johnson, Dr. Morris, Dr-Pairick Honsigner Ash" Community Hasphai Jay cAtWeasen PDXDOCS:2005030.6A PayneWest~ Crime / Fidelity Insurance Company: Travelers Casualty &Surety Company Policy Number. 105674335 Policy period: 09/01/12 to 09/01/13 Coverage Detail 3 yr. rate guarantee until 9/1/13 Subject Amount Deductible Coverage A -.Fidelity • Employee Theft $ 1,000,000 $5,0000 • ERISA Fidelity $ 500,000 0 • Employee Theft of Client Property Not covered. n/a Coverage B- Forgery of Alteration $ 250.000 $1,000 CoverageC - On Premises S 250,000 $1,000 Coverage D - in Transit S- 250,000 $1,000 Coverage E - Money Orders & Counterfeit Not covered n/a Coverage F - Computer Crime, • Computer Fraud $ 250,000 $1,000 • Computer Program and. Electronic' Data 50.000 $1,000 Restoration Expense Coverage G - Funds Transfer Fraud S 250.000 $1,000 Coverage H - Personal Accounts Protection Not covered n/a Coverage 1- ClaimExpense $ S,000 0 CrimelFidelity Premium: $4,047.00 Ashland Community Hospital 1sy christens5n PDXDOCS:2005030.6A PayneWest Commercial Automobile insurance Company: Travelers Indemnity Policy Number: BA9220N200 Policy Period: 9/1/2012 - 9/1/2013 Limits Description S 1,000,000 Liability Combined Single Limit $ 1,000,000 Uninsured/Underi nsu red Motorist Protection $ 15,000 Personal Injury Protection -per schedule s included Hired and Non-owned Auto Liability .Include Auto Physical Damage - per schedule • Comprehensive Deductible-$500 • Collision Deductible-$500 $ Included Hired Auto Physical Damage • Comprehensive Deductible-$100 • Collision Deductible -SS00 $ Included Hired ~andNon-owned Au to, Liability S Included Hired Auto Physical Damage • Comprehensive Deductible-$100 Collision Deductible-$500 Commercial Automobile Premium: $2,428.00 Ashland Community Hospital Jay Chnsleasen PDXDOCS:2005030.6A PayneWest Vehicle Schedule Comprehensive Collision Vehicle0 Year Make/ Model VIN Liability Deductible Deductible 1 1999 Ford / Windster x $500 Comp. 5500 2FMZA5145XBC22685 2 2007 Ford I F150 X $500 Comp, 5500 IM512277NA84101 Driver Schedule Name Date of Birth State Drivers License a Champion, Daniel L 09/20/47 OR - 0078764 Coal, Lynette Y 01/28/47 OR 2435164 tloeptner, Kurt R 07/07/59 OR 4937862 Keever, Richard G 04/20/50 OR 1046486 Megarit, Rick 04/17/60 OR 4006721 Goff, Pam 08/22/51 OR 1297765 Norris, Linda: 04/19/48 OR 1504353 Center, Debbie 07/26/56 OR 2150984 Alexander, James 03/19/56 OR 5999791 Westensee, Richard 03/13/63 OR 3072637 Overmyer. Victor 12/21/44 OR 9791866 Moore, Wayne 05/26/50 OR 1304261 Payton, Loretta 09/27/52 OR 3738820 Ashlapd Community H~spgal Jay Christensen PDXDOCS:2005030.6A PayneWest~- Billing Errors & Omissions insurance Company: Lloyds of London Policy Number. 454175 Policy Period: 9/1!2012 -9/11201 3 Coverage Detaill Maximum Policy Aggregate - $1,000.000 Retained: $25,000 - 25% Coinsurance - Each Claim MDefense Endorsement -Coinsurance waived if panel council retained Unknown Prior Acts Included Subject Amount. Multimedia. Liability • Each claim $ 1.000,000 • Aggregate S 1;000:000 _ Security .&'Privacy Liability • Each claim $ 1.000,000 • Aggregate S 1.000,000 Privacy. Regulatory Defense & Penalties + Each claim S 1,000,000 • Aggregate $ 1,000,000 Privacy Breach Response Costs • Each claim S 1,000,000 • Aggregate S 1.000,000 Network Asset. Protection • Each claim S 250,000 Aggregate S 250.000 Privacy Breach Response Costs • Each claim $ 1,000.000 • Aggregate $ 1,000,000 C_vbcr Extortion • Each claim S' 1,000,000 • Aggregate $ 1,000,000 Billing Errors & Omissions Premium. $51,293.05 Ashland Co m umly Hospital, Jay Chnstensen PDXDOCS:2005030.6A PayneWest Employment Tax Surety Bond Insurance Company: Cincinnati Surety Bond Number: 032788 Polity period: 09/09/12 to 09/09/13 Coverage Detail Subject Amount Deductible Surety Bond $ 418,913 None Bond Premium: $6,483 Workers Comp Surety Bond` Insurance Company: Safety National Casualty Bond Number: SIB3429OR Policy period: 04/01/1.2 to 04/01/13 Coverage Detail Subject Amount Deductible Surety Bond $ 300,000 None Bond Premium: $5,250 Astttand Commumty Hospital Jay chds7 nsert PDXDOCS:2005030.6A PayneWest Directors & Officers Employment Practices Liability Insurance Company: Federal Insurance Company l G Policy Number. 81658600 Policy period: 07125/2012 to 07125/2013 L'Q Qo - r,eaa~ Coverage Detail Maximum Policy Aggregate -$1,000,000 Retained - $35.000 Each Claim Extended Reporting Period -1 yr, Limit Coverage $ 10,000,000 D&O Individuals $ 10,000,000 D&O Entity S 10,000,000 Employment Practices Liability S 10,000.000 Third Party Liability $ 10,006,000 Anti-Trust Sublimit (D&O Entity, D&O Individual) S 50.000 WC Sublimit S 250.000 EMTALA Sublimit. S 100,000 Excess BenerrtTransaction Excise Tae Sublimit $ 250,000 H1PAA Sublimit S 250,000 Violation Employee Privacy $ 250,000 Workplace Violence Endorsement $ 100,000 Wage&Hour - Defense only O&OlEPLI Premium: $54,636.00 Ashland Community Hospital Jay Christensen PDXDOCS:2005030.6A . -L PayneWest Storage Tank Pollution Liability Insurance Company: ACE American Insurance Company Policy Number: 621866775006 Policy period: 11/21/12 to 11/21/13 Coverage Detail Limit Coverage 5 2:000,000 Per Storage Tank Incident S 2,000,000 Aggregate for all Storage Tank Incidents $ 2,000,000 Aggregate Limit Legal Defense. Expenses Per Storage Tank Incident S 4.000,000 Total Policy Aggregate for all Storage Tank Incidents $ 2,500 Deductible per Incident. Retroactive date e .11/21104 Schedule of Covered Tanks Location Tank Gallon Size Tank Type Ashland Community 15,000 gallons UST Hospital Pollution Liability Premium: $350.00 AshlOfid Communtyr Hospital ,lap Christensen PDXDOCS:2005030.6A PayneWest~ Premium Summary Premiums Une of Business - ^Current Premium Property $ 116,534.70: Directors & OfOcerslEmployment Practices Liability 54,636 00 Business Auto _ _ . _ 2,428.00 Billing Errors & Omissions 51,293.05 Crime/ Fidelity 4,047.00 - - Workers Compensation Surety Bond 5.250.00 Employment Tax Surety Bond 6,483.00 Storage lank Pollution Ltabtlity 350.00 Total Premium: $ 241,021.75 PDXDOCS:2005030.6A Schedule 32.13.2 Insurance Policies Not in Full Force and Effect No exceptions. PDXDOCS:2005030.6A Schedule 32.14 Taxes No exceptions. PDXDOCS:2005030.6A Schedule 32.15 List of ACH Employee Benefit Plans Hi story • Prior to July 1, 1996, employees of Ashland Community Hospital participated in the Oregon Public Employees Retirement Plan ("PERS"). • Following ACH's termination of its participation with PERS, ACH entered into the Ashland Community Hospital Retirement Plan, which was terminated December 31, 2006. • Following termination of the Ashland Community Hospital Retirement Plan, ACH formed the Ashland Community Hospital Retirement Savings Plan, a Defined Contribution, along with a deferred compensation arrangement under IRC Section 403(b). Certified Financial Statements Relating to Benefit Plans: ACH has not received an external audit of the Benefit Plans. Other Employment Benefits: Health Insurance - First Choice Health Network Prescription Drug Benefit Dental Plan Vision Service Plan Flexible Spending Account Life Insurance Long Term Disability Accidental Death & Dismemberment Insurance Workers Compensation Employee Assistance Fund Earned Time Off Earned Sick Time Bereavement Leave Jury Duty Tuition Reimbursement Computer Purchase Program Bike Loan Program Wellness Program Liability Insurance Severance Pay Guidelines (See attachment to Schedule 32.22.1.7) PDXDOCS:2005030.6A Schedule 32.15.2 ACH Disclosures Related to Benefit Plan Contributions, Payments and Funding Rules • The accounting standards currently applicable to ACH are those of the Governmental Accounting Standards Board ("GASB"). Pursuant to the GASB rules, all plan contributions have been timely made and ACH is not subject to ERISA. • Following Closing, ACH will be subject to the accounting standards of FASB and will be subject to ERISA. Plan payments have not been timely made pursuant to FASB. • ACH has accrued pension liability of approximately $75,000 per month during the current fiscal year. No payments have been made to reduce the underfunded status of the plan. PDXDOCS:2005030.6A Schedule 32.15.6 Post-Employment Benefit Plans The following retired persons are currently receiving benefits through ACH's medical insurance plan, and will remain on such plan until they reach the age to qualify for Medicare benefits: • William Stone • Ruth Coulthard • Diana Stone • Sharon Wagman • Michelle Perry PDXDOCS:2005030.6A Schedule 32.16.1 Termination Proceedings Regarding Medicare and Medicaid No exceptions. PDXDOCS:2005030.6A Schedule 32.16.2 ACH Contracts Not in Compliance with Laws, Rules, and Regulations Regulating Delivery of Health Care Services by Providers See Schedule 32.4.4. PDXDOCS:2005030.6A Schedule 32.17 Accreditation ACH was notified of a temporary hold of hospice-related payments from CMS, pursuant to a notice from Noridian Healthcare Solutions, dated June 7, 2013. The notice is set forth below: On June 21, 2013, ACH received a notice from Noridian, by email, stating that the temporarily hold was terminated and payments would resume. Payments have resumed as of the date of the Closing Date. ACH is also accredited by the following: • American College of Radiology - Computed Tomography Services and Mammographic Imaging Services • U. S. Department of Health and Human Services - Certified Mammography Facility • Centers for Medicare & Medicaid Services - Clinical Laboratory Improvement Amendments • COLA Lab Accreditation through Education - Laboratory • The College of American Pathologists - Laboratory • Jackson Co. Environmental Public Health - Food Services • Oregon Board of Pharmacy - Pharmacy PDXDOCS:2005030.6A Schedule 32.18 No Defaults 32.18.1 - Defaults • ACH has breached a financial covenant or covenants of the loan documents between ACH and Umpqua Bank (Loan No. 3068534826). Umpqua Bank has waived its rights triggered by the breach(es) until June 30, 2013. ACH has requested that Umpqua Bank extend its waiver until the Closing. Umpqua Bank has expressed its intent to extend the waiver until Closing. • ACH has breached a financial covenant or covenants of the following agreement: Facilities Lease by and between City and ACH, dated June 18, 1996. City has waived ACH's default triggered by the breach(es) until the earlier of June 30, 2014 or the Closing. 32.18.2 - Material Contracts Contracting Party Date of Name of Agreement Notes: contract/agreement Ashland Anesthesia 7/1/2009 Anesthesiology Amended 05/20/13 Associates, LLC Service Agreement Ashland Community 10/18/2011 Commercial Lease 317 Maple Street Hospital Foundation Ashland, Oregon Transfers to ACH on Closin ; ACH -Tenant Ashland Community 1/1/2011 Lease Agreement 530 Catalina Drive Hospital Foundation Ashland, Oregon Transfers to ACH on Closin ; ACH - Tenant Ashland Community 6/29/2011 Commercial Lease 628 North Main Street Hospital Foundation Ashland, Oregon Transfers to ACH on Closin ; ACH -Tenant Ashland Community 6/29/2011 Commercial Lease 49 Talent Avenue Hospital Foundation Ashland, Oregon Transfers to ACH on Closin ; ACH -Tenant Ashland Community 1/25/2013 Commercial Lease 209 N. Pacific Hwy Hospital Foundation Talent, Oregon Transfers to ACH on Closin ; ACH - Tenant Ashland Emergency 7/1/2011 Professional Services Amended 04/01/2013 Associates, P.C. Agreement Auto-Chlor 1/19/2006 Dishwashing Machine Auto renewed in 2011. PDXDOCS:2005030.6A Contracting Party Date of Name of Agreement Notes: contract/agreement Agreement De Lage Landen 3/12/2012 Master Lease Financial Services, Agreement Inc. Diversified Clinical 6/l/2006 Clinical wound care Amended date Service, Inc. with hyperbaric 01/01/2011 oxygen therapy management and support services agreement. Celtic Leasing Corp. 8/l/2008 Master Lease HealthCo Information 3/21/2007 Sales and Software Systems, Inc. Support Agreement Meditech 12/4/2002 Health Care Information System Software Agreement Medford Pathologists, 9/l/2005 Agreement for Automatically renewed P.C. Provision of on one year terms starting Pathology and September 1, 2006. Medical Director Services Microsoft 6/30/2012 Volume Licensing Philips Healthcare, a 9/3/2010 Multi-Vendor Service division of Philips Diagnostic Electronic North Management America Corporation Agreement Southern Oregon 10/1/2011 Commercial Lease Family Practice Building, LLC Stryker Finance, a 10/7/10 Equipment Lease division of Stryker Agreement Sales Corporation Thermo Asset 5/1/2010 Statement of Services Addendum 05/01/2013 Management for Thermo Scientific Services, Inc. Lifecycle Asset and Services Management Solution PDXDOCS:2005030.6A Schedule 32.19 Exclusion from Health Care Programs No exclusions. PDXDOCS:2005030.6A Schedule 32.20.1 Noncompliance with Environmental Laws No exceptions. PDXDOCS:2005030.6A Schedule 32.20.2 Written Notification of Investigations or Enforcement Actions of any Applicable Environmental Laws No exceptions. PDXDOCS:2005030.6A Schedule 32.20.3 Disclosure of Items on ACH Real Property Outlined in Section 32.20.3 of the Affiliation Agreement ACH has an underground storage tank, which ACH is licensed to operate pursuant to the State of Oregon Department of Environmental Quality ('DEQ"), Registration Certificate Number 15- 12205-2013-OPER, Tank Permit BGKCF, Tank ID No. 1, which expires June 30, 2014. PDXDOCS:2005030.6A Schedule 32.20.4 List of Environmental Reports 1. Asbestos Surveys 1995 to present. Coleman Creek Consultants and Global Pacific Environmental. 2. Mold Surveys 2007 to present. Coleman Creek Consultants. 3. Polarized Light Microscopy (PLM) 1998. EMSL Analytical and Peak Environmental Services. 4. Bulk Sample Analysis Report. ECS/Wagner Environmental. 1994 5. DEQ Site visits. 1994 6. Formaldehyde Vapor Analysis. 2012. Advanced Chemical Sensor Inc. 7. PSC Environmental Services. 2003-2012 Hazardous Waste Roundup Xylenes, Methanol Waste, Mercury thermometers, lead. PDXDOCS:2005030.6A Schedule 32.22 Employment Matters 32.22.1.2 and 32.22.1.4: Please see Schedule 32.6 for information related to these employment matters. 32.22.1.5 - Employment Agreements Employed Physicians All physicians employed by ACH have written employment agreements with ACH. The terms of their employment are set forth in their respective employment agreements. Employment Manuals and Policies Brochures: Ashland Community Hospital Foundation - taking steps to support those in our community Ashland Community Hospital - making strides in community care for you Employee Assistance Program Provided by EASE Ashland Community Hospital 403(b) Plan Ashland Community Healthcare Services Summary of Ashland Community Hospital Retirement Savings Plan January 1, 2007 Letters: Welcome letter from the Chief Executive Officer with the Mission, Vision, and Values on it CareWorks USA letter on Family Medical Leave Act and Oregon Family Leave Act Handouts: Mission, Vision, Values, and Philosophy of Care Basic Principles of Ethics and Summary Standards of Conduct Job Description Introductory Performance & Development Evaluation Employee/Volunteer Authorization and Consent to Create, Use, and Disclose Photographs for Public and Marketing Purposes Organization Chart Employee Recognition Questionnaire Recycling Flier W-4 Form Automatic Credit Authorization Form Cafeteria Deduction Consent Heart to Hand - Give a Gift from your Heart United Way Form PDXDOCS:2005030.6A Rapid Response Team Benefit Summary Benefits at a Glance for Traditional Plan Benefits at a Glance for Core Plan Vision benefit Summary Benefit Rates Benefits Portal Life and Accidental Death & Dismemberment details Term Life Insurance Personal Accident Insurance Secure Travel (CIGNA program) Long Term Disability Benefits ACH Wellness Program Employee Assistance Services Enterprises Retirement Savings Plan details ACH Benefit Discounts Form I-9 Confidential Employee Information Policies handed out: Conflict of Interest Privacy, Confidentiality and Security of Medical Records and Other Protected Health Information Confidentiality of Patient health Information Ashland Community Hospital Behavioral Expectations Per Diem Employees Social Networking and Blogging 32.22.1.6 - Compensation See attached. 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00 M N l0 4 N M l0 r4 4 M Ln l0 4 0 M r- M 00 to M Ln to O t/)- Ln N r- t/)- O M M R Ln M 00 rn r- l0 O I~ O l0 I~ O M M ci c I l0 O rI I~ N Ln l0 OFl N N l0 M N 00 00 M I~ M r- c-I I- Ln l0 Ol l0 N Ln Ln 00 rl N rl I- N r-I l0 c-I v), Ln v), m v), rn v), oo v), rI v), m v), o v), Ln v), N oo j), r" i Ln J), oo J), ci i Ln J), r i o . . . . . . . . . . . . . . . . . . l0 N r-I M r-I M l0 l0 M r-I rn rn r-I Rt O r-I Ln l0 N M rn r-I M c-I M rI rI rI M M rI N rI M c-I c-I O O c-I O c-I O rI 0 -i -i -i c-I 0 r, c-I O O N O O O O O O O O O O N O O 00 00 r- 00 l0 00 00 Rt 00 00 00 00 r- 00 00 O M O M O O I- O O O O r- O O O O Ln 00 l0 I- r- 00 r- r- r- l0 O N r- l0 r- r- Ol 00 Rt r14 O N N O N O Rt Rt Rt N Ln O O l0 N 00 r- ~o r- r- r- r- ~o 00 r- 00 r- 00 r- ~o 00 r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln N H LL 2 N w C7 (D = IU > _ Y Q Z w Q Q Y H Z co Z ca_i1 o_ U u Q N u Z cn ~ 2 c~i1 Q O U o_ o_ 2 2 O X O O O co O O O co X O O O O O X w R ~ w W LL LL L p L LL 0 L LL LL LL LL LL L w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q N N c-I c-I l0 N O) N Ln c-I N l0 rI Ol N rI rI O rI l0 Ln Rt r14 N c-I Rt Rt 00 l0 l0 O 00 00 Ln l0 M I- r-I O r-I Rt M l0 r-I r- Rt O Rt Ln Rt l0 l0 l0 M l0 l0 l0 Ln l0 l0 M M Ln l0 c-I c-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I r-I Q N Q Z W' Q N Q Q W W J W' Z U W Q Z co W z Q z z w Q 0 Q Z N Q 0 Q Q N Z Q N w H p z Q w w vNi cN Y z w Q N W Q C W Y co J J Q Q Q N S Q co m Q co Q Q co w W co Q 0 CO CO co co co co co l0 N M I- O Ol N cI Ol M 00 N l0 Ln N Ln R:J: O DO r-I 0 I- N Ol I- O 00 N N 00 r-I l0 I- ~ LfI 0 0 O Ln M I- R r- N rn Ln l0 N M LO CF) I- O c I ~ r-I Ln N 00 00 Ln r I r-I I- l0 0 V), c-I c-I V), i/~ 00 i/~ N i/~ N i/~ M Ln 00 i/~ M r-I V), V), N V), N V), V), N V), N U) 00 cI l0 l0 N Rt r- N 00 M Rt 00 00 CF) Rt ri U r-I I- N N to 00 O O Ln M c I Ol O l0 l0 N 0 I- N cI cI 0) Rt r lfl r Ol Il O N 01 O M Ln I~ O M O r-~ M O r i I" ri to Ln to 0 Ln r I N N l0 l0 r-I Rt N Ol Ln r14 I- to 0_ c-I N c-I c-I c-I O O O O O O O O 00 N O O O O N l0 N N l0 00 O O O 00 Ol N O O O O r-I r M M ri N O 06 O 4 ri to O O 00 M r-I l0 qj)- 00 l0 r- l0 N 0 r-I N 0 Rt 0 N O 0) l0 I~ l0 M M Ln r- 00 to to r14 O Rt Ol O N O O O l0 I~ Ol Ol l0 N N c I M 00 RZF O M M M 00 00 N I- M r- Ln M Ln 00 OFl O N Ol Ol N l0 O O O Ol c I I- O O O Ln rn m j), r- j), r- j). r i Ln j), ri i Ln j), ri i Ln j), r- j), J), i Ln J), Ln J), i M J), i/), N Rt Rt 00 ri M N Ol I- 00 00 to r14 N ri ri Rt r14 c-I c-I rn c-I c-I M M N c-I N Ol M O c-I c-I c-I c-I c-I Ol l0 Ol Ol Ol l0 ri c-I c-I -q ri O O O O O O O O O O O O O N O 00 N N N 00 O O O 00 O 00 00 00 00 00 I- 00 Rt r- r- r- Rt 00 00 00 Rt 00 O O Ln O M O O O O O O O to r- O M O Ln Rt r- 00 N r- l0 M N r- ri I- r- r- r- Ol l0 M 00 ri O N O N Ln r14 O O O O O O N l0 N N N I" r- r- r- r- 00 r- r- to to to to to r- 00 r- r- r" O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 2 L: 00 - N H U = N w - - LU V) J co Q Z Z Z W Z Z Z Q Z Z w Z Q a_ a_ co u 0 O O O O O O O O 0 O O O 0 O O X 0 O U Rt Rt W R 0 LL LL LL LL LL LL L LL LL L LL LL L LL W W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q M O r- O M to O to 00 Ln to rn Ln to 00 to Ol ri I- N c I Ol O O M M I- M N Ln r- O N N Ln c-I M N Ln rn O r- Ln r14 N N N N M 00 Rt to to l0 to to M Rt Rt M l0 l0 l0 M M M Ln l0 l0 c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c J G J W J ~ Q 0 Z Q J W Z a C, 2 LWi U z Z W cJ N L: z W 2 H ~ Z Q Z < Q m c Q U z W Z U O (n Q W z J Q ~1 Z J Z Z Z GN OH w m W Q W -i co J Q W Y 0 0 Y ~ W a W w z LL LU m m z 0 m m m co Q Q 2 0 a Lug m m m m m U U v Q U m u U Ln O Ln O -1 Ln rn O M N O O 00 m O I- O 0) R:I: Ln Ln O 0 M - to CF) M CF) Ln r-I N N O to 0 N O 00 Rt r- M Ln M to r14 to O 06 o6 (6 LfI l0 N l0 M l0 c-I O -i ri 0 Ol N M LfI c I c I l0 N ci i/~ N Ol 00 M Lr (N. 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Ol 00 N r- ci O Rt Rt 00 Ol N 00 to r14 00 cr l O Lr N Ol N 00 c I 00 R:F Ol M M I~ N N Ln M I~ 0 0 N ~o Ln M N N M 00 M N to O M 0000 l0 M CF) ci O O to to r14 c I O Ol V), Ol V), O V), V), i/)- m o v), DO v), r-, v), o v), Ol v), Ln v), m v), r-, v), o v), o v), Rt M Ln ~o ~o O 00 F M O Ln 00 I- M N Rt to O 00 N c-I c-I M c-I CF) l c-I M M N c-I c-I c-I c-I c-I c-I Ln Ln C l rn rn r I ri O ri CF) ri ri ri ri ri O O O O O p O O O N O N N O O O O N O O O O O O O - to r- r 00 00 00 r- 00 Rt 00 00 00 00 O Ln O O O O O O I- O O to O r- O O O N 00 N I- 00 r- M O r- r- M r- to r- Rt M r" M N M O N Rt Rt Rt N O Ln O Rt r14 r-I Ln O 00 r- 00 Q0 r- 00 00 r- r- ~o 00 ~o 00 r- r- 00 ~o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln > 0 0 U _ a w a _ ~he 0 DU Z a w H Z Z Q Z Y Q ~ Q 0 a p cn U U H N Q H U U Q = U w a a 2 J a a 2 J a 2 a O X O O X O O O O O O Co O O O O O w w Rt O Rt LL a LL LL LL LL LL 0 LL LL LL a LL LL LL LL 0 w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q O Ln r- N N Ln Ln to 00 r-I ri N O 00 r-I r- ~o rn Ln ~o rn M M r1 M r- ri Rt r1 r- O O M M M N M ~o O Rt M N to r14 O r- r- N r- Rt to Rt M Ln Ln Ln Ln ~o M Ln M Ln M ~o r-I c-I r-I c-I c-I r-I r-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I z> Q E J U w Q Z H Q Q w _ -j w w Q 2 tail w Z a w Q Q Z Q z cl = U_ _ V) 2 0 -4 In LL I N Q z J w 2 Co Y Q U U> 0 w 0 p z Q p H co Q Q Q J U Q co a z Q Q 2 z N 2 U a U H > Q 2 2 U w 2 U U w N Q Q Q 2 U U 2 2 U U U U U U U U 00 < c-I Ln 00 l0 N Ln r14 00 c I N I~ ri M O 00 M O Ln 00 ~ rn O rn r- rn 00 00 O 00 lD Ol O I- M r- N c I O l~0 OMl v)- 001 V), c-I V), N V), r1i i/~ i/~ c-I i/~ NN U) Ol cI 0) Ln M Ln N CF) CF) I- CF) N l0 U Ln M l0 CF) l0 r-I O l0 r-I CF) l0 Ln Rt 0 l0 I- N Ln l0 N l0 Ol Rt Ln M Ln Ln r- x X . . . . . . . . . . . . . . l0 I~ N 4 0o Ln I~ O 0o I~ Ln l0 I~ 00 0 O l0 N Ln Ln r- l0 Ln 00 r-I l0 N 0_ r-I r-I N O l0 N O O O O O O O O O O N M ri 00 00 O O l0 O N 00 N O r-I rn M Rt 00 O O Ln O r-I 00 I- O t/? r- r-I t/} rn O t/? 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I- Ol N 00 M M M N M l0 M RZF l0 M O o0 Ln Ln O Ln oo RZF N Ln l0 N M Ln M M l0 M M Ln r I M N 00 Ol Ol c I c I O O I- O Ol 00 c I 00 O O LfI LfI M l0 l0 00 c-I O O O O 00 I- c-I r-I O O c-I I- Rt Rt R 00 r" r" rn r- Ln l0 l0 N O I-~ c-I c-I M M c-I N c-I c-I N c-I M M N c-I 0 c-I Ln O O c-I c-I c-I c-I c-I c-I O c-I O c-I c-I O O O O O O O N O 00 O O O O O O O O O O O O O Q0 r- Rt 00 00 00 00 00 00 Rt 00 R 00 00 O I- O O O O O O O O O M O O O to O O I- r- O M M M M M Ol 00 00 I- O N r to O N Rt N N Rt O O to N N N Rt c-I M O c-I Ln to r- r- r- r- 00 r- r- 00 r- r- r- r- r- 00 Q0 r- 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln (A U U z 2 (A LU (D z Q z z z vii z z a w a J J J U J w O J U U U Z U U Q p U p 2 N Q U CO O O O CO O O O O O O O co O co O O O U H U H H H H H H U 0 H 0 H H H d O LL O LL LL LL LL LL LL O LL 0_ LL LL a_ a_ w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q M Ln l0 00 M 00 I- 00 r- r I I- r- r- r- Ol Ol N I- Rt Ln r I rn r-I O 00 O rn r I r-I l0 r-I rn M 00 Ln N 00 l0 rn O Rt l0 r- Rt r-I Ln rn rn r-I rn 00 00 Rt Ln Ln Ln Ln Ln Q0 M l0 M M Ln Ln Rt M Rt c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q 2 Q Q Z Q w H w w w Z z p w U J w Q Q Q p u z J w N 2 N J p w J >w U co 2 w J w J O O LL~ co Q p co w w Z > H Q w 2 C7 LLi U J Y w 2 o .1 2 D H U Q cn O ~he w V O Y J w (D Z Z N p >J p nj z u LL > V U O z O Ov O 3: 3: v u v J U O U D O O U U U D D U O U U U U U 00 00 O M l0 00 c-I Ol N c-I la0 l0 O l0 I" lfl r! 00 Ln I~ M I, ri 00 0 00 Uf N O N Rt O Rt r- M r-I Rt N O N p 00 I" Ln Ol N Ln r- r- O r- 00 0 06 00 I~ 00 CF) l~0 0000 M N CF) 00 0 M 00 N r-I F, V), I- V), n j l0 rj r-I V)- V), N V), N N U) CF) N cI I- to to M Ln CF) Ln N Ln N l0 CF) U rn Rt O M O r-I Ln M Ln I- Rt r- 00 r-I r-I 0 l0 Cl ri Lq M UP UP rV l0 6 Cl UP I" UP Rzj: M I- Rt Ln l0 00 Rt Ln rn 00 M Ln rn l0 00 0 Rt Rt M M r-I to N r- r- Ln 0_ O O N O 00 l0 O Rt O O O O O O O O O O r-I N Ol 00 N O Rt N 00 to N O Rt O O M l0 6 6 O N O N ri 06 6 r-~ M O O l0 r-I Ol ri qj)' 00 ri Rt qj)' O N qj)' to 0) O Rt N V) 0 i/)- r-I to M N N ri O 00 Ln Ln r- 00 M 00 O Ln Ln 06 M -:F rn ri 06ri O M O -:F ri l0 O Ol Ol M LfI l0 LfI r- N 00 LfI M r-I M I~ O 00 Ol c I Ol N N l0 I- O 00 Ol c I O 00 Ln c I O O j), ri i lfl v), r- v), lfl v), Ln v), Ln v), r- v), ri v), Ln V), N V), 00 V), r-I V), r14 v), ri v), m Ln J), Ln . . . . . . . . . . . . . . . . . . I- M Rt Ln Rt r-I r-I I- N N ri 00 l0 Ln l0 r-I I- N c-I N M c-I M M N c-I M N N c-I 0) M lO O Ln 00 lO Ol 00 ri ri ri l0 Un Ln Cl O O O O O O O O O O O 00 O O 00 O N O O O 00 O O O N 00 R to to Rt 00 r- l0 00 00 00 Rt Rt 00 Rt r- Ln O O O Ln O Q0 O O O O O O O M O O 00 I- r- r- O M r-I N M l0 00 r- to to to O N N O c I O O l0 O O Rt Rt O to Ln N Rt O lfl lfl r- 00 r- r- 00 00 r- 00 00 r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u U U U C7 J ~ N w z z z z z z a_ O 2 z U w (D N J U a Z Q Q 2 z JO a 0 U 2 U N Q > 2 O a co O co co co co co co co O O O O O O O O O O O O O O O w U LL O d d LL LL LL LL LL LL L~i w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q c-I c-I Ln N Ln rn r- ri O M Ln I- Ln Q0 O l0 r- cI rn rn rn O r-I O M Ln Rt l0 r- l0 00 r- r-I l0 rn l0 l0 N M Rt l0 l0 l0 Ln l0 Rt O rn rn l0 l0 Ln l0 l0 M M l0 M M l0 l0 Ln Ln M M r-I c-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I w Z N w w U w Z p N Y z LL LU > w w Q Z LU Q Z O 2 w z w v a N a a w w z z J w C7 2 O 0 Q (7 w z 2 Q p U V H c^ Q Y vi O V w vi Q 2 O U Lai) Z Lu Z ~ Z p w 2 > w J O w ON J O U U Q (2.7 p w Z w w w U p m O p Q Qp p Q p p p p p p p p p M O M M -1 ~o ri O 00 (q r14 N N N M rV 00 O I c-I 0) O O Ol M M M M - 00 00 r- M c I O N M O 00 rn rn Ln I- rn o N CF) r- c I Lr 00 N Il O O O Lr M rn ry) ri N to i/~ N i/)- N M O I- to to r14 M M I- c I c I U N r-I CF) N O O Ln ~o Ln ~o r- to CF) c-I x 0 00 Ln N N CF) 00 Rt Ln M 00 N X ri 6 4 06 O Ln 00 l0 N l0 ri 0 O N O Ln O N M r-I I- Rt Ln 0_ N N Rt ri ri ri O O O O O O O to O N O O 00 lV O O N Rt cI O Ol O O r14 r4 r-~ 06 00 0 Ol N LfI 00 l0 M ~ N N N M 00 Ln Ln Ln r14 00 R O ~ l0 ~ ~ M ~ l0 l0 N N ~ Rt ri N ri O Ln ~ N Ln 00 ~o M Ln M ~o c-I to r14 M Ln Ln M 00 l0 00 M Ln 0 ri Ln O m c I c I O I- N M 00 m M O LfI N 0 r -I N N Ln M N M N ~o O rn O N Ln M Ln 06 Ln 6 N c-I r- c-I c-I M N M M M c-I N c-I ON N c-I N Ln Ln ri O r" O c-I c-I c-I c-I O O 0 c-I O O 0 c-I c-I c-I O O O O O O O O O O O O N O O N O O O 00 l0 00 l0 00 00 00 - 00 I- 00 00 00 O O Ln O Ln O O O O O O O O ~o O O O ~o ri rn 00 to 00 M ri O I- O r- 00 rn r- r- O Rt r- Ln l0 N Ln r14 N I- Rt O N O ri to O O Rt ri O 00 00 r- 00 r- r- 00 r- r- r- r- r- 00 ~o ~o r- r- ~o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln LL LL w U > C7 ~ c~i1 LU > z w u U Z a O w cNi1 `n 2 w Q co = a Q Y w p w V) Q Z Q J J (n D Z L Q Q w U a cn p U Z o_ Q O O X 0 O co O O O O O O O O O O O X Rt w ~ Rt Rt w LL p LL p LL LL LL LL p p LL LL a LL LL LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Ln O M Ol Ol r- Ol 00 ri Ol N O I- to M Ln 00 rn to to rn r- O O 00 Ln ~o r- ri O Rt to r- to r- Ln Rt N Ln r- ri Rt M ri Rt Rt r14 ri to r14 Rt N Ln ~o ~o ~o l0 Ln ~o Ln ~o Ln Ln Ln ~o ~o ~o Ln ~o M ri ri c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 -i ri ri ri ri ri Q p = z w w w O p w z Q m N w > w Q L/) Q Z p w w p O Z Q Q w p co > O ~ p Q c^ U O Z p Z Z 2_ p N O Q U Q 2 J O z r- Y OJ OLU O 0 w m = z O Q N Q vi N 2 m O p LU z ~ w O N Y O Q Z w V D N w w V) (D cn > Ii N OJ p Q p w w w w w N w w LQL O LL LL O l0 O M N Ln r14 O I~ O 00 l0 Ln Ol cI Ol 00 l0 O 0 O c-I 00 06 N ~o rn r-I ~o ~o r14 O r-I M Ln O O N 0) 0) ~o Ln Rt M r- M Ln LO M O Rt ON l0 CF) c I 00 O Ln r- N LnLn l0 O N V)- i/~ i/~ i/~ c-I V), i/~ V), V), V), c-I V), N V), V), V)' N i/~ c-I i/~ N 00 N N N M Ol l0 Ln Ol N N c-I 00 U ri 00 r-I Ln O Ln ri M 00 M Ln ~o ri 0 00 00 rV l0 M 00 I" C l ~ 6 N Uf UP X N 6 Rt r-I r-I r-I Ln r14 N 00 00 M rn 0 ~o 00 O rI rn l0 Ln l0 N l0 0_ N M c I r-I O R O O O O O O O O O O O N 00 l0 N N O O O Rt N Rt Rt Rt Rt Rt Ln O 00 6 6 N 4 O 06 ri O 06 N O O O Rt O O i Ol r-I N i ~0 - i/)- ri M -:I- :I- r-I r-I OO ri 00 N l0 ri 00 Ln r- l0 r-I r- r-I r-I CF) c-I c-I Ol Ol M Ol 00 N N M RZF rn l0 M M M r M Ln r14 N c-I l0 N I- l0 Ol O O l0 O Ol N Ol M M M N 10 10 I~ O 10 LfI 00 10 N 00 LfI c I l0 l0 l0 V), i/~ i/), i/), i/), i/), i/), i/) i), i/), i/) Ln Rt l0 r- r I ~o r- Rt r14 ri ~o rn ri M M O O M c-I M N c-I c-I c-I M c-I N M c-I c-I N 0) Ln Ln Ln Ln Ol Ol O cl Cl ~ cI O cI cI p O O O O O O 0 O 0 N N O O N N O O O O O O O I- r O 00 00 r O r- l0 00 r- l0 00 O 00 00 N O Q0 O O Ln Q0 O M O O O O Q0 O O O l0 I- ri N N O I- M r- N 00 r- M r- l0 00 00 N O l0 M M Rt O N N O ri O Ln O Rt r14 N r- ~o 00 00 00 r- ~o r- r- r- r- Q0 00 ~o 00 r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Z Y O Q - (7 0 0 - 0 Lu w p U Q OU DU Z Q Z Z H Z Z Y V) a w a vwi p U u p a_ Q cn N cn Q ~ LU a_ = Z = U Q z N U o_ O O O O O O O O co O 0 co co 0 O O O O X LL LL LL 0 LL LL LL 0 LL a a a LL 0 LL L Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 00 ~o Ln r- N N M Ln Ln r-I O Ol M N 00 M I- Rt Ln 00 O Ln Rt O Ln r I ri O 00 I- N M Rt M M ri M Rt M O ri M c-I Ol 00 Ol N Rt Rt Rt Rt M l0 Rt Rt M l0 Rt M M Ln Ln M ~o Ln r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J LL. U 0 Q Q 0 N N W Q p a J = Z J w Q Q Lu J J LU J Q Z 0_ Q 0 0 co = tail Q Q Y Lu c~i1 Q w Q 0 ~ 0 Q N z N Q U W LL N J z LL Q C N J J 0 Q -1 Q Z p Z:) L J 0 LL. Z (7 J Ur 0 (D Q N p Q 0 Q Q LL Q (7 cn V) 0 (D Q Q 0 z0 0 (7 (7 LL LL (D (7 (7 (7 (7 M Ln Ln LO1n Ln M m M l0 O O I- N O O M o 00 06 N M l0 N N r-I O Ln rn O 00 CF) l0 N 00 l0 Ln o c-I O M c-I O LfI c-I O v), CF) v), c-I fn v), v), Rt r- 3 ~ N ri N N 00 00 00 Ln Ln l0 Ln r- 00 Ol l0 I- N U 00 I- CF) O r-I r-I CF) CF) Rt 00 l0 Rt r- M N 0 Uf 00 Cl N Cl O l0 ~ N O M O O Lq Ol X ci M O Ol Ol N M O r-I O l0 N O I- 0 M M M M Ln Ln M N r1 r" M 0_ r-i c I N O O O O O O O O O O O O 00 O O Rt to 00 N N N 00 l0 00 00 l0 O l0 00 r-i 00 r-i c-I LfI N I~ 00 N to 0) V)- O V)- F~ V)- Ln V)- O V)- O V)- M V)- V)- M V)- Ln V)- r~ 4/? 4/? 4/? r~ 4/? 4/? r1 q/? rn q/? M t/? N r' c-I N Lr Lr M Ol M I- to c-I 0) O N r- rn Ln I" Rt r" ri ri N M Ol -:F - N Ln Ln r14 N N ~ M Ln l0 O Ln 00 l0 ri rn Ln 00 l0 Ln l0 Rt 00 l0 l0 rn Ln m j,, Rt ri j,, i 00 j,, 00 j,, j,, m j,, ri j,, fV i ri m Rt ci Rt lfl I- O r- l0 00 ri rn M Rt M l0 M O rn l0 00 Rt M c-I N c-I N N N c-I c-I c-I M c-I N Ln r-I N M Ln N c-I c-I ri c-I r1 O O O ri ri ri ri O O O O O O N O O O O O O O O O O O O O O N O r- 00 00 00 00 00 Rt 00 Rt 00 00 00 r- 00 O O O l0 O O O Ln O O O O ri O O O l0 O N l0 ri r- ri r14 ri 00 to to r14 to O ri 00 0) I" Rt O Rt to O r- Rt to r14 Ln Ln O Ln r14 l0 N l0 O ri r- 00 00 to 00 00 00 r- 00 00 r- 00 r- 00 r- 00 to r- 6 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u LULU J u U U H N > p S Q p p N V C7 C7 N w cn Z N w w w N (7 Z Y W Q 0 W Q W' W' Z Q N Q S Z Q cn co J 2 p H H H cZ ~ p p _ Q c W d d a c O_ W co u co Q > p O O X O O O O O O O O O co w Rt Rt O w w w ~ i I~i LL I a LL LL a ~ a ~ p p I~i I~i I~i I~i I~i w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q l0 O ri N O I- r- 00 r- l0 O M l0 O r- 00 l0 O O 00 l0 M Rt M r- ri O 00 Rt r- 00 N l0 M O Ln N Ln Rt Rt N Rt l0 Ln Ln l0 Ln Rt l0 Rt 00 00 l0 Ln l0 Ln Rt l0 Rt l0 110 l0 l0 Ln Ln Rt M c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J W z W LLJ c S Z J H W U Z c Q Q w Z Q Q p W co Q W Z w Q co Z p w Q S U Q cn W a CO Z Q Q S N ~ S co cS (D J ` W J N C Q J W O ~ a- J N W W Q 2 W O' H CO ~ z Q ~ W H Q ~ Z W Y z J J N Q z W Q 0 W Q W W W > J N G W ~ O 0 S z J D z z W J Q Q N W co W (D (J S Q = S = Q Q S Z w = (D S S S = S N O O1 M c I O O I- 00 00 O 00 l4 rn M ri N Ol N Ln O Ln 00 l0 I" 01 O 00 O l0 l0 c I r- c I M I" O Rt Ln O M O 06 O N 00 I- lfl N M O M Ln r14 r-I 0 I- r- N 0 Rt CF) M Ln O l0 M 0ry) 0 O O M M O rf V)' N V1. c I 00 ri N I~ i/)- w I~ r-I 00 r-I ri F, r-I Ln N I- ri M ri l0 O 00 O Ln I- rn M rn r- rn Ln U Rt M O O 00 N O O M to r14 ri O I- N O 0 CF) Rt to to 01 N Ln c I ri rV c I UP l0 UP l0 UP X 111 ri M M l0 l0 00 Ln O 00 Ln I- 0 O1 Rt r14 N Ln Ln ri O Ln M I- Rt IL M N M N O l0 N l0 O O O O O O l0 O O O O O l0 Ln M Ol Rt O 00 N O to O Ol l0 l0 00 Rt r14 ri N l0 O 06 O 4 M O M O l0 Ln (Yi l0 N 6 O lV I- lV O1 O O V)- l0 O l0 fV V)- r-I V)- w V)' Ln V)' F~ V)- N V)' rn 00 M l0 I- Ln M O I- 00 Ln Ln 00 00 rn 00 Rt lp I~ oo I~ rn oo l0 Ln O l0 l0 l0 ri ri ri I~ RZF RZF rn Ln Ln l0 l0 I- M to r14 Ln Ln M r- N c I O1 00 O l0 O1 O O1 O1 Ln N l0 r- c I 00 O1 O O oo 4j) oo m i/), Ln o r- O oo r- r- v), Ln V), N V), ri V), N V), r- V), Rt . . . . . . . . . . . . . . . . . . I- rn O Ln r14 N l0 Rt Ln Ln 00 N ri M O 00 Ln r-I N M M M M c-I M M c-I M N c-I M N Ln Ln LfI 00 CF) 00 c I c I c I O DN0 c I c I c I c I c I O O O O O O O O N O O O O O O l0 O 00 O O O O O l0 - to 00 to 00 00 R to 00 Rt l0 00 00 00 00 O Ln O O O Ln I- Ln l0 O Ln l0 O O O O O Rt O O M N 00 r- 00 r- M 00 r- M r- N r- N r-I Rt Rt Rt O N N N O N N O N O r- O r- r" r" r" 00 r" r" r" r" to r- r- to r- r- 00 r- 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 2 a_ r14 U W ~ ~ w O c~i1 Y O z U z Q z z Q z z co u cH a 2 z O_ Q a Q J LL G Z (D LU LU LL < O w Q co O co O co x O x O co O co co O O O O H H H H H v ~ H H H H LL LL LL LL O_ p LL LL LL LL LL w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q r- cI Ln O1 O1 N 00 ri O1 ri O O1 M Ln Rt M M l0 Rt rn O 00 00 O r-I O Ln O 00 Rt Ol N l0 M Ol Ln N Ln Q0 M I- Rt rn 00 M M Ln Ln Ln M l0 Ln l0 M M l0 M l0 M Ln M Ln ri c-I c-I c-I c-I ri c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 r1 Y z p' W W w Q N C7 Q U w Q S Q z J Q O Z a z D z o a LU a a o N = N Q w E a_ LU 2 N W Z J = O J LU a_ W W O W Z Z W w p Y Z w O W F- U Z N CO Q O_ C7 Z (n N 0 3: W J J Z Z z w O 7) Z O D D Q Z 0 2 Z p_ Q O 2 D 2 2 2 V) a p2 p N 2 2 2 2 ~t O O N Ol I- 00 M O I- M Ln r14 M Uf I- O Lq o l0 06 6 l0 ~ N Ln CF) O Rt Ln O 00 O O 00 l0 00 Ol O N O 00 Ln I- o 06 06 r1 Ln M r I l0 Ol M O -1 00 V rj V)- N ~ V), N V), rj i/)- N Lr j 0 M l0 I- rn Rt Ln ri 00 r-I Ol N r" N U N l0 c-I N Ln Ln M M O Ln I- Ln r-I 0 4 ri LfI l0 UP M ri ri ri 00 I~ 00 l0 I~ X Ol I- O 00 N N O Ln O 00 Ln r-I I- 00 0 N 00 N l0 Rt ri Ln Rt ri Ln rn Ln a r-I r-I r-I r-I r-I O O O O l0 Rt O O O O l0 l0 O O l0 O O Ol N Rt 00 O to Ol I- O M O O ~6 06 0 O ~ 0) l0 ~ l0 00 l0 LfI O :1- c-I M Ol Ol 0) Ol c-I c-I M M I~ N M 00 O l0 O N Rzj O l0 Ln Ln r I M l0 O M O M l0 Rt Ln M M I~ r I M M Ln M M l0 Ln Ln r- O O to M 00 r I O M N 00 O I- Ln v), r-I v), o v). O v), j), j), i R i 00 j), Ln j), m j), r i i 00 j), r14 v), r-I v), r- N r- r- Rt M M O r- Rt N Ln Rt r" rn l0 r1 N N c-I c-I c-I c-I c-I c-I N c-I c-I M N M Ln ~ c-I c-I c-I O 00 O c-I c-I O c-I Ol 00 c-I O c-I O O O O O O O O O O O O 00 O O 00 O O N O O O - 00 00 00 l0 Rt 00 00 R 00 r- l0 00 00 O O O O O O l0 O Ln l0 O Ln O O O O O Ln 00 N Ol O l0 M I- N 00 r- r- 00 r- N O M r- 00 c-I O l0 Rt Ln O O M N O O N O O Rt Rt O N r- 00 r- 00 r- Q0 00 r- to to r- r- r- r- 00 r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln LU 2 U U O U 2 = w a Y w N z - Z co w = Z Y H N ~ Z Z Q Z -j W H (7 w a_ (D u u (D -j U Q H U a 2 w U N 2 a z LU a N a 0 O O O O 0 O co O O co O O O co O O O LL LL LL p 0 LL L 0 LL L LL 0 LL W W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q N 00 O Ln 00 M 00 M Ln r-I O M M N l0 l0 M O Ln M rn 00 ri ri rn Ln ri N Ln O I- N N Ln 00 rn l0 r-I Rt r-I Rt M l0 O Rt Rt M N r- Rt O 00 M M M Rt M l0 M M l0 Ln M M l0 l0 Ln Ln Ln M l0 c-I r-I r-I ri r-I r-I r-I ri r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I C7 Q LL. W Y Z J Z N Q Q Q Z w 2 W W O Z N U J Z Z Z Q W OJ Q N U Q J J Z Z O z 2 Z co C7 W U z - Q Q Q O w Q U O N o Y z W U a o Z W O Z V Z J J O Z O N N W O Z V W W W W W a U a Y co co z z 0 z z V) N w Y (D a_ < LU U OU OU ~ 2 Z 0 O O Y Q Y Y Y z - Q Q Q 0 20 N O l0 O O O l0 M ry) 00 O l4 N N O M I" N N 00 Ol N 00 01 M c-I 01 0 Ln M l0 Ln Rt r- l0 rn Ln Ln Ln O I- M 00 rn 0 6 06 Ol I- r- r1 O M Ln Ln Rt Ol ri 00 N Rt O l0 Rt l0 00 Ln r-I Ln O O r- N N CF) ri 0 00 M qj)' c-I qj)' RZF V), c-I V), LfI N i/) N qj)' U) ri l0 l0 I- 00 ri M CF) O r 00 M U Ln Rt l0 l0 00 r- Ln ri ri N I- O ri I- M 0 Ol 00 l0 I-~ Cl 00 ri M l0 r-I O I- N 4 r-~ l0 O Ln Ln ri ri M 06 M 00 0 N Ln Ol r-I N Ol Rt Ol r-I 00 l0 0_ r-I r-I r-I r-I O O Rt O O O O Rt O O Rt O 00 N 00 O 00 00 O O O N 00 O O N N O O l0 I~ N O lfl O r-~ Gi I-~ O 06 O O t/? M t/? 00 4/? Ln t/? l0 4/? 00 t/? r- t/? M 4/? 0 ri t/? 00 t/? rn t/? Ln t/? O t/? Ln t/? 0 t/? 00 O 00 M Ln rn l0 l0 Rt l0 00 Rt M O r- N O rn O Ol M N RZF 00 N RZF N 00 O ~ M N Ln - M M Ln 00 M Ln Ln M rn ri 00 c-I l0 N O O 00 c-I 00 O O O N Ol O c-I 00 rn M Rt v), Ln l0 r- r- Ln O M N ri Ln Il M 6 6 N N Ln M N N rn Ln O M N Rt c-I c-I N c-I M c-I ON N N N N M Ln Ol Ol LfI l0 O I- cl rn r, rn Ln O O O O O O O O O O O O O N O N O O 00 O O l0 N O N N O O 00 - 00 r- Rt 00 Rt 00 Ln - 00 r r- R O O O Ln Ln Ln O O l0 O O Ln O O O l0 O Ln r- to O O 00 N Ln r- 00 r- 00 N 00 M r- O O O Ln Rt Rt N O N O r-I O N O N N O Rt r- to 00 r- r- r- r- r- to r- to r- r- r- r- to r" O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln L 2 > 2 (7 Q w > U O w w w w Z Z Z Z H Z a Z Z H H J O o_ 0_ (7 N N U a u U 0 w V) N L 2 2 2 2 O O O O 0 O 0 O O 0 O X O X O 0 00 w w U LL LL LL LL a ~ a LL LL LL LL ~ a O a_ LL w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q r- cI N M Ln N O l0 Ln M Ol Ol l0 I- N N O l0 Ln M O l0 l0 I- M Rt Ln Ln I- Rt Rt N M r-I r-I N Rt r- M to to 0) Ln l0 M l0 Rt r-I M l0 Ln l0 Rt M Rt l0 M M l0 l0 l0 M Ln M l0 c-I c-I c-I c-I c-I c-I ri ri c-I c-I r1 r1 r1 -i ri Z Q Q Q w Y w m D Q J < < < Q U 2 Q V) Z O Q Z N o Z co co z U w D L) Q co Z Q N z w O o N Q 0 m m m w Y Y z LLi Q w ui Q V) Z U w vi w Q U O w H ~he 2 Z p Z w J 2 N X z 0 w w 2 N O Q Y a (J w Y Y z Y D ~ O O Y Q Q Y Y Y Y Y Y J r14 < N N Ln to r- N Ln c-I 00 r l: UP R:j: M Ln M O - O to O CF) N O M M to CF) o Uf I M O l0 rn O 00 M N o ~ 00 N ci N ~o CF) 0000 i/~ CF) i/~ V), c-I i/~ N i/~ N N V), to M CF) CF) I- 00 N M N ci c I U O to r14 -i to c-I N O 00 N I- to to 0 N - N c-I M 00 O to O N Ol O -1 X x N Ln Ln 00 l6 r1 4 r-~ 06 O O Ln 4 0 I- Ln r1 I- Ln M Ln Rt c I Rt to 0_ c-I N N 00 O O N O O O O O O O N O 00 00 00 I- O N O to 00 to Ln O 00 N O N 00 M 00 c r, to 00 r- 00 r r- O 00 lo 0 M N 00 to 00 I- to 00 N O N r, N N cr O I~ O 00 N O l 00 00 I- N Rt to r14 00 M 00 to M N r- r- c I O rn to Ln ~o Ln Ol M O 00 Ol r- r I N O c I O r- r-I M N M N O o0 l0 O O r-I Ln oo 06 M r1 M Rt 00 Ln 00 00 Rt M Ln O M - Rt O N M c-I rn M r-I M c-I r1 M M M r1 r1 M r1 Ln Ln O 0 c I r- 0 c I c I O c I c I O c I c I c I 00 c I 0 c-I O O O N O O N O O O O O O O O O 00 O 00 O - 00 to r- 00 00 00 00 00 00 00 to 00 Rt 00 ~o O O M O O O O Ln r1 O O O O O O O O I- c-I N to c-I r- M r- O N r- r- 00 to r- M r- rn O O Rt N O O O O Rt to O O N Rt O O Rt r- ~o ~o 00 r- ~o r" r" r" r" 00 ~o r- r- 00 ~o r- 00 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln O J O w Ln Q U cn i a_ D Z w ~ Z co Z co w Z w Y Z Z w Q O J a 2 2 co G J N J Z p U 0 a a N U 2 U 2 O z p 2 - Q O O O X O O O O O O O O O O co O co O w Rt Rt O O a ~ ~ ~ ~ ~ Lj- 0 LL LL 0 LL LL L L Lj- a_ a_ w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ~o O r- r- r I Ln r14 r- r I c I to Ln M r1 O Ln Ln Ln r" rn co co Ln 0) r1 r1 N co r1 Rt r" to r" ~o r1 N ~o Rt Ln co r- r- M to r14 to r- Rt c-I Rt Rt ~o ~o Ln ~o ~o Ln Ln 110 110 110 Rt lO M lO lO lO c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 c-I c-I c-I c-I r1 c-I vi U Y p LLi w Z Q J U LU Z co Q z Q U Z w w = Q p J Q co p c LU LLA d (n w LU z LU p O Z c Q G~ W Q m LLI > Z C C7 2 U ~ z Q C7 N w >Lu z O p LU N w Q Y Z N Q p vi w w LU Z J O Z Z > H w N N J w O O J J 0 0 Q > ~ J 2 Y J J J z J O O J J Q J G N 00 00 Ln r- to O r- N 00 M Ol r, Ln Rt O M r-~ ri Lq O N 0 CF) M N c I l0 M l0 M N c I Ol 00 c I O - 0 N Ol N LfI 6 10 l0 N 00 N 00 00 M r- Rt LO N Ln r- ci Il ci ~ M N O N l0 M 0 r, i/~ r- i/~ Ol i/~ Ln i/~ Ln i/~ N V)' (N U) CF) Ln M 00 M CF) Ln rI rI Ln I- CF) Ln U r-I Rt M r- Rt 00 M Ln r14 I- Ln M I- O 0 M c-I Ln Ln rn 00 O Ln Il 00 lfl rl~ Ln 6 N r-~ 4 N Ol rI l0 M Ln 00 M M r-I 0 N Ln r-I Rt N to r- c-I N N 00 Rt 00 0_ r-I N c-I Ln rl r-I O O 00 O O O O N O O O O O N O 00 N 00 O to 00 r- O to N to to Ln Rt N Ol N O O I-~ 4 06 O M rI I~ r-~ Ln N Ln Ln 00 qj)' O r-I M 00 M O rI V)- rI V)- Ln V)- rI V)- M V)- 00 V)- 00 O - Ol l0 00 00 N I- to 00 to M Ol O 00 00 N r r i M ~ Ln ~ rn O ~ M 0 c-I 00 M I- Ln M M M I~ M Q0 rn rI O M Ln l0 rI O Ol r- r- N to M r- rI rn 00 Ln l0 00 v), Ln v), c-I v), oo v), Ln v), lfl v), rI v), lfl v), rn j), rI i Ln j), N . . . . . . . . . . . . . . . . . 6 O 4 N O Uf -:I- M Rt N N r- to M ~ 00 to Ln c-I Ln rl N N M rl N rl rl N rl M rl Ln c-I c-I c-I r, O O c-I c-I c-I c-I c l c-I O O O O O O O 00 O O Q0 O 00 O O O O O O N O O 00 Rt 00 00 Ln 00 R R O 00 00 00 00 r- 00 O O O O O O O O O O O O O O O O O N l0 N M Rt 00 N r- O Ol I- N M r- N Ln I- O Ln O Ln r-I Rt O r-I Rt to r-I O Rt O r- to r-I r- 00 r- 00 r- 00 r- r- r- 00 r- r- 00 r- 00 00 r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u V N > 2 - 2 _ 2 _ H N a_ u w N w N WW cW Z co 2 Q cQ z ~ J c c d z J N Z G W Q o_ zQ Q u W Q a o = 2 2 Z Q o_ co co co o co o 0 V V V LL a_ a_ LL LL a L p p LL LL LL LL LL L p W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q N I- Ln r- ci I- 00 r- O rn 00 Ln °rII rn l0 O 00 r- l0 rM r- 00 O O O Rt Rt l0 CF) l0 Ln M l0 Ln M M l0 Rt Rt l0 l0 l0 Ln l0 c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q W Q Z z V Q Q Q V Q O Q LU V) w O Q Q Z w u O Z Z z W J 2 J Y J W W W Q W z 2 z U co W U W z a' Z p N U N o_ Z N O 2 (D Q W Z J N O Y (J Iw J Y a Q co z O Luz N z Y Q Q LLi N J Q Z V Q W z V U Z w J Q V w J W V ~ W Q Q Q U U V V 0 r- r14 < O c I Ol O O 00 00 00 O 01 Ol Ol o 0 r- 00 M Ln r14 00 M r- l0 00 00 l0 M N r- N O N ri LfI N M M I-~ M N c-I l0 6 Lq N M l0 00 Rt LfI M I~ ~ 0) Ln r-I O M N v)- 00 ri N Ln N Ln Ln Ln N Ln V)' Ol V)' N V)' (N U) N M N l0 l0 Rt ri N Rt c I O 00 I- CF) l0 I- 00 l0 U N O N I- 00 O N r- r- r Ln r14 N r-I O I- 00 0 O l0 M ri Cl M O LfI c-I 00 Ol c-I M I" N X . . . . . . . . . . . . . c-I N N r-I 00 Ol N M 00 00 l0 Ol c-I r- c-I 00 Rt r14 r- Ol N Rt Ln r-I M Ln r14 l0 0_ r-I Rt M ri r14 O 00 O O O O O O O l0 O O O O N O O 00 00 O O O l0 l0 O Ol Q0 N O O Ol O l0 N l0 O O O Ol M Uf M O M UP O O ri N ri t/? 0) t/? N t/? l0 qj)- O V)- O q/? ri t/} OFl 4/? l0 4/? Ln 4/? O 4/? Ln 4/? 0) t/? O t/? O t/? N t/? 0) t/? l0 t/? Rt 00 Ln N Rt r-I N 00 N Ol M N l0 I- Ln M l0 Ol M 06 Lr ri Ol N l0 00 l0 RZF N Ln l0 I- r- 00 00 l0 N c-I N Ln r14 l0 Ln r14 N c-I O O O 00 I- N c-I 00 l0 O O c-I O I- m O Ln O j), Ln j), r- v), r-I v), m v), 00 v), r-I v), o v), Ol v), Ln v), Ln v), v), Rt r- v), O r-I N O N Ln 00 O Rt r14 l0 M N N 00 N N N M l0 c-I c-I c-I M r-I N c-I c-I Ln Ln c-I c-I c-I ~ c-I c-I ~ CF) LfI CF) Cl O O O 0 0 O O 0 O O O N N O O O O O O N O O O O N O O l0 00 I- r- 00 00 I- 00 00 Ln I- l0 00 l0 Rt r- 00 00 I- rn r-I l0 O O O O O O O Ln O O O O O O O I- O r- r- N r- N l0 M N 00 r- M M r- r N N N O O O O I- Rt O M N O N O O O cI O r" r" ~o r" r" r" 00 00 r- 00 r- r- r- r- Q0 r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 0 W H LL W co ~1 N > w H Z Q co Y Z 5~ U Y w J Z Z Z w Z W' N W' ` (n J W d 2 W' W' W' J W' w = 2 U Q 0_ U Q< 06 a > U 2 O O O X O mo W X O co o O W X O co o co o O O O O W LL LL LL LL L LL LL a LL LL LL LL 0_ o_ 0_ 0_ W W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q O r- c I 00 O Ol 00 O Ol N 00 c I r- c I Ol Ln Q0 Rt M M 00 O Ln ri Ol O M Ol O I- l0 N O ri M Rt Ol M I- r- 00 00 N r" r" M r- r-I l0 l0 r- Ln I- Ln M M Ln M M Ln l0 M l0 l0 M l0 l0 l0 M ri r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I Z z U ~ co tail Q W Y U J z -j LU -j 3: W W 2 V) w w V) Z W Z Q Z J W 2 Q 2 O in J J m Q W Q O U 2 z cQ Z 0 Q Q N LU Q Q W' W N G G Q ~1 V) 2 Y > ! LLi W c > O z V N z Q z z z cJ J 2 w z 0 W W nj Q 2 O O O c J J_ 0 z O O O O z Q 0 V) V) V) LU -j -j -j W W W 0 2 O 2 2 2 2 z z z z z r1 rn ri rn M N l0 Ln M N Ln rV O M 01 N Ol N N O M O o O O N 0) l0 0) O c I I" M O N 00 M c I O 00 Ln ri I- Lr r14 -1 Ol O M I, M O o 06 06 LfI O 00 O CF) l0 O O c i Ln i/~ Ln i/~ r-I-I M r-I-I Ln i/~ r-I-I r-I N CF) U) CF) CF) 00 M r- r- Ln CF) r Ln N Ln Ln CF) U l0 M rI l0 O CF) M l0 Ln l0 00 l0 00 O O 0 Uf l0 C l c-I C l O ~ 00 -i Ol X c-I I" rn Rt M rn Rt r14 N l0 M M Rt r-I rn r1 00 M M Rt l0 -i r" r- l0 0_ r-I M N M r-I O O N O O O O l0 l0 O O O O O l0 O O Cl N O l0 l0 ri UP O O O N O N Ol 00 O -1 r-I ~ O 00 00 Ln N 00 -1 O O ~ 0 00 O N l0 00 00 LfI N 00 M l0 r-I O CF) O rn 00 l0 rn 00 l0 rn r- r-I Ln M l0 Rt rn N M l0 N c-I I- O ri N 00 M Ln R:F Ln 00 R:F 00 Ln rn l0 00 Ln 00 M N N M M I- N N O O cI rn rn Ln r14 I- 00 00 Ln r- O l0 Ln rn Uf Uf r! r! lfl N lfl ~ M ~ . . . . . . . R Ln Ln O ~ ~ ~ lfl ~ N ~ ~ ~ . . . . . . . . N I- 00 Rt Rt to O Rt M r" M N r- M to to M 00 M N M M N c-I c-I c-I c-I N c-I M c-I M l0 Ol cI O cl cI cI Ol Ol cI cI O cI cI cI M O O O O O O O 00 N O O N O O N N O N O O O O O Rt r- 00 r- 00 00 r- r- 00 r- 00 00 00 00 N O O O O O O O O O O O O N O O O O I- r- r-I r-I r- r- N r- r- 00 l0 00 M l0 r-I O O Ln O O ri r I O M O O N N N O Rt O lfl lfl 00 l0 l0 r1rl~ lfl 00 Il lfl ~ ~ ~ rl~ 00 l0 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 2 N Z w U O Y Q Y Q N O_ z z z z z ~ Z U w w a z Y z LL 0 w U w N J < U U Q w 2 ? Q 2 Z co O O O O O O O O O O O O O O 0 w Rt Rt I~i LL 0 LL LL LL LL LL LL LL LL 0 LL LL LL a o_ w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q c-I c-I rn 00 ri Ln 00 N 00 ri Ln r14 N r-I O 00 00 Ln rn r M Rt r- r- Rt rn rn Rt 00 Ln l0 l0 Rt N O Ln rn rn Ln Rt N Ln Rt Rt Ln Ln Ln O l0 M l0 Rt l0 Ln M Ln M l0 l0 l0 l0 l0 Rt Ln r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q Z D Q 2 m J U (7 W c c Z J O W w Y C7 N Z L N Z O' Q ~ Q `n Q m Q Z Z~ ~ 2 Z _ cn (J w O Y U U 'n Y Z_ w U Q ? vai vUi w O Z Q Z H w J J (7 w N a w (7 Y O H w w x 0 0 O O Q Q w z Z z z z z O z z 0 0 O o_ o_ a o_ Z E 0 M Ln rn M Ln r14 00 Ol M t0 00 Ln O Lq I, UP O t0 0 00 M Ol to c-I M N N N Rt O 0) Rt 00 O N Ol to Ol Ol to c-I c-I O (Yi ~o M M O l0 l0 O Rt O 00 O M if, r, V), c-I M V), i/~ Ln i/~ i/~ ri i/~ N i/~ Ln i/~ ri i/~ i/~ ~ i/~ Ln V), V), N V), N I- Ln r14 N Ln r14 N M Rt r- M 0) M 0) ri 0 to M O - r-I N Rt Rt N Rt to M O Ln M - 00 ~ O of N f 01 ~ O 00 I" ri UP ~ O O X r1 O 00 O M Rt rn Rt r" to r- ri I- O rn O 0 r-I ~o Rt rn r-I r-I 00 Rt Ln Rt Ln Rt 00 r-I r- 0_ N cI cI N to O N O O to r14 00 N O O O O O O r- O Ol O O LfI M O r- l0 O O 00 Rt {f) N {f)- ri O 4 o6 j 00 o6 ,6 r" O N :1- Ol N qj)- O {f)- 00 {f)- Rt N CF) {f)- Rt 00 LfI r., ~ N {f)- r, r14 I- to r14 00 Ln r- to Ln r- ri I- O O I~ Ln N O ri I~ Ol r I Lr I~ N 00 M LfN Lfr- l0 l0 N LfN Lf LfN 0 I- N 00 O c-I O O rn rn ri rn ri O I- 00 Ln Ln ri rn {f), Ln j), R i j). Ln j), Ln j), r- j), 00 j), 00 j), 00 j), Ln j), 00 j), 00 j), R i m j), r" i Ln J), r- J), O N 00 I- N 00 Ln Rt ri ri rn O r- O r- r M c-I N M M M c-I M c-I N M N c-I Ln M r-I Ol Gl Ol I~ 00 O cl cl cl cl O cI cI cl cI cI O O O O O O O O O O O N O N N to N N N N O O N O O O I- 00 I- r- Ln ~o O I" r" r" r O 00 00 I- 00 lO 00 O O O O O O O O O O O O O O O O Ln O I- N r- M M O M to r- r- 00 r- Rt to r- Rt 00 Ln O Rt O N O Rt O Ln O O ri O ri Rt ri ri N O ~o 00 ~o r- r- r- r- 00 ~o ~o r- r- r- 00 r- r- r" r" O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln c~i1 Z 2 H U Y w Q 2 a_ U w cNi1 w w Q Y Q Q N U Q U N Q cn V) 0 u w `n 2 Q Q Q a N a O O O O co co O O O O O O O O O O co O u LL LL LL LL 0 R LL LL LL LL 0 LL LL LL L LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q M N Ln r- M Ol O N N c-I c-I Ln O M r- c-I M Rt O M Rt r" 00 N Ol Rt r14 M ri ri to O c-I I- M Rt to to M to r" M 0) N Ln ri N Ln 00 Rt M M r- ~o Ln ~o Ln M Rt to Ln ~o ~o ~o Ln Rt Ln ~o Ln ~o M c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 r1 ri ri ri ri ri ri W _ La W W z W 0 Z Q Q Z W_ z Z Z J C, 2 N Q Z J Q z Q z D W Q J Q O 2 W W (D 0 V) LU cQ co Q Q Z 0 N 2 D' H QQ Q Z cQ W Q ~ Z Q G G_' U W J W co c z Q c Z c Z W Y Q W W 0 W_ N 0 Q Q N O Q Y G z Q w 2 2 O Q O W ~ 2 w Q I-D w_ Q J 0 D D Z w a w w U 2 2 a ~ a a a_ C a ~ c7 I- Ln O N ri Ol Ol M O ri (O N to Ln 00 Cl I~ R~I: Ln l0 I~ ~o Ln O 00 N N M 00 M O ~ c-I - 00 N M O O to M O M r-I M M O I- r-I N 0 r" ~ r" M c-I N r- N to M M O N O 00 V), rj V), rj t/)- N Ln t/~ ri N CF) t~ 3 V)- M V)- 00 V)- V)- N V)- M t1~ N to r- Ol O r-I Ol Rt N M to M M rn U CF) Ln CF) 00 Rt M r-I r-I 00 r-I M 00 ri 0 I~ 6 ri ri Ln CF) M to 4 M N Ln 00 ~ X to N M M ri 6 ri M to M O I- M Q rn O 00 Ln N Rt Rt M Rt 0_ N N O O O O O O O O O O Rt 00 O 00 N O O 00 l0 00 Rt l0 00 00 O O Ol 06 L6 r~ 00 r- 00 0 r-I r-I r-I N O -:i- c-I O I~ -:i- LfI Ol N r~ N 00 Ol M M O N c I M M Ln r- to r- rn to rn rn N M N N l0 O ~ M r- rn O -:F N N Ln 00 r- Ln M N I- Ln Ln r- N Ln Ln ri 00 Ln l0 l0 ri 00 I- to N r- to ri Ol O ri m v), Ln v), m ri o ri v), m v), m v), Ln v), ri v), o v), m v), m v), r- oo Ln V), M V), ri . . . . . . . . . . . . . . . . . . M r-I Rt Ln O ~o O ~o Rt M O r- Ln Rt r-I N M 00 N c-I c-I N N N c-I c-I c-I N M M M c-I N Ln 00 rn 00 rn rn O cI cI cI cI cI cI cI O O O O O O O O O O O O O O O O O O O O N N N 00 00 00 to 00 00 00 00 00 l0 r- l0 r- r- 0 Ln O O Ln O O O O O O O O O O O O O 00 Ol 00 00 I- M l0 00 N O 00 O r- N r- r- N I- Rt r14 r-I Rt Rt r14 M Rt r-I N O O O O r- 00 00 r" r" 00 00 r- 00 r- r- r- ~o r- ~o ~o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln = U Q Y a H w Z Y N 2 2 Q Q w N ~ (7 Y w ~ Z Z Z U J Q d 2 Z N J U N V) v u u Z Z w 2 U H Q Q Q < < Q 2 Z o_ o_ 0 O O X O X O O O O O O O CO O CO O O U w w Rt R O O p LL LL LL a LL LL LL LL p p L L LL LL a_ a_ w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q I- Ln ~o ri Ln M ~o 00 O O 00 ~o r- rn 00 00 00 O Q0 I- 00 l0 M I- 00 O M r-I ~o ~o M ~o 00 Ln ~o Ln r-I Rt r- Ln O ~o Ln ~o rn 00 Rt r- ~o Rt ~o ~o Ln Rt ~o M ~o Rt ~o 110 Ln M Ln M ~o ~o c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J ~ U J ~ w J J N w U 2 Q w Z Q w V) Q O Q O Q Q Q Z Q U = Q U O Q Q w (n N w w O Z w ~ J O Y Q w O w 'n co co p LL Q V••I ~ J N Q W w N V O w H Q w w Q N co ~ Q Z Z (J N N 2 2 Q w H Z Q 2 V) w N a U O ~ Q p w w N Z H a ail 0 p 0 `n vi Q t N U 2 N O Ln ~o L`n to n rn O rn O M 00 Ol N M N c-I O rn Rt rn r- 00 M rn O rn r- 00 O N Ln Ln Ol Ol N Ol r-I Ol O G Lr I~ O 00 M O Rt O ll o ri r-I O -1 N Ol f17 Rt N N ~o M Rt M r- 00 M r I Ln M r I N U M I- Ln ~o 00 ~o r-I 00 Ln rn Ln M O O ri ri O LfI c-I M c-I I" c-I X c I O N 00 O I- M O N 00 0 M O O to O c I N I- O M Rt 0_ r-I Ln r-I r-I N r-I O 00 O N O O Rt O O O O 00 N N O r- O to O to to O 00 I- N O N O O I~ Ln 00 ~o r1 Rt 0 to to N N O 00 ~o r- O Ln r14 00 M N N r-I 00 Ol c I N O Ol N N Ln Ln - to M c I LfI to Ol Ol ~ M Ln M N to N ~o Ln M M ~o O ~o Ln O to O N N Ln M O C7) to N to c-I m Ln N M O N Ln N 00 M r-I Rt r-I M Rt to O O Ln N M I-~ M N N 00 4 r-I M r-I r-I M r1 Rt N Rt M ~ r-I M Rt r14 r-I r-I Ln Ln r-I 00 r, O O O l0 O Ol CF) r- CF) 00 Ln r-I r-I r-I O O O O O O O O O O O O 00 N N N O O O O N 00 to to O O O R O r- r r- to Rt 00 00 00 r- O O to O O O O N O O O O to to Ln O O O to Rt r- to M to O to r-I I- 00 r- r- r- 00 N M r- Rt r-I O Ln N Rt Rt N O O N O O O N M Ln O 00 r- ~o 00 r- 00 r- r- ~o ~o r- ~o ~o ~o r- 00 00 r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln z V) w w Q Y N w w Y z Y z U z z a w z z a N m N N J Z H _ < a = U a U Q O co O O O O co O O O X O co co O O O O U U U Rt U R LL 0 LL LL LL LL LL LL a_ 0 0 a_ 0 a_ LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ~o r I 00 O 00 ~o O r I ~o rn N rn to to M rn to to r" 00 r-I M Ol N O r-I N M Rt 00 M r-I 00 O rn rn r-I r-I Rt M Ln Ln r-I Rt Ln rn M M M r- to Rt M Ln ~o ~o Ln ~o M Ln ~o M Ln M ~o Rt to to c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I co Q Q W co Q Z O Z Q c Q W J Q J Z J w w Q = Q Q w Q w Q z O z O J Z Z O w co cn Q co U 2 w z Y O z p Z = ~ O cn 0 U w Z Z w = Q= C7 2 m Q O Z H C7 U w Q p Z Q z w w H H U U Z Q a Q = cn J _ w a a cn w N N N N Rt Ol O N O l0 R 00 0? 00 Uf M LfI LfI Ln l0 O rl lV LfI l0 M Uf O Ln O l0 M Ln r14 M I- O Ol Ol I- Ln c-I 00 O Rt r- r- Ln rn M M 00 ri l0 Lri Ln M Rj N O Ln r- 00 l0 N M Ol N Ol N 00 Ln Ln U 00 c-I N c-I Ln I- Rt c-I c-I c-I c-I r- r-I r- 0 M 0) l0 Rt O ~ Ln O 00 ~ rI rI l0 00 X O Ln N l0 rn rI rn Ln M 00 M 00 M Ln M l0 Ln 00 00 Ln M Ln 0 N rl N N N O O l0 O O O O O l0 O N O O O 01 O O LfI O R:J: O 00 LfI 00 01 00 O 00 0) l0 O l0 O O O l0 O O N 0) 00 00 O t/? j t/? O t/? -:1- t/? :1- rI t/? Co 4/? Ln rI i t/? Co N rl Ln N Ln R:J Cl 00 O rl l0 N 00 00 00 O I- Rt Rt r- 0) I- l0 N Rt l0 N 0) C Ln l0 00 l0 M N l0 M N N M I- N N N rl rl Ln O rn O r-I 00 Ln I- Ln M 0) r-I 00 l0 rn Ln rI rl V,, r- Ln r- O V,, 00 V,, M V,, N V,, 10 V,, N V,, 10 r r i M j,, oo M j,, r" . . . . . . . . . . . . . . . . . . N l0 N 00 00 Rt Rt l0 Rt l0 O Rt r- M Rt Ln Rt O M M rl rl rl M M M rl rl rl rl M rl l0 Ol LfI 00 O rl 0l Uf O rl 00 rl 00 rl O rl rl O O O O O O O N O O O O N O O O O O O O O - Rt l0 00 00 r- R 00 l0 00 l0 00 00 00 O O Ln O O O l0 O O O Ln O l0 O l0 Ln O N M O l0 I- l0 r- O r- l0 00 M r- l0 r- 00 r- I- O Rt Rt O Ln O Rt O Rt N Ln O Rt O N c-I 00 I" r" 00 l0 00 l0 r- l0 00 r- 00 l0 00 l0 r- r- 6 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Z O Lu cNi1 2 cNi1 Q = w cn O v ~ Q O Y zz Q 2 cn cn p U cn p 0_ cn 0_ U 2 Lu z 2 Lu D w O LL o O co co O O O O co O O O O co O O O O O Rt O Rt O LL L.LL. 0 L~i L~i 0 L~i L~i L~i L~i 0 L~i L~i a 0_ w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 00 00 rn 0) rl l0 00 rn l0 r- M rn O Ln O O rl Rt 00 rI Ln 00 rI Ln N O rn Ln rI r- r- O Rt rn Rt l0 00 O rn r- M M Ln Rt M rI M O l0 Rt rI M M Rt Ln Rt Ln M Ln l0 Ln l0 l0 M l0 l0 rl rl rl rl rl rl rl rI rl rl rl rl rI rl rl rI rI LLJ _ d Q w Z Q Q Q Q w Z u < co Lu (D Q Lu Z w Q z Z p Q O z Q Q Lu Z cn O Lu cn Lu Q V Q = Z Z Z w w Lu CL:, Z Lu 2 Q H 4 w Z O Y Y O U_ N Q 2 co Q Q Q C7 co Z 0 O Z w Qm 0 ~ ~ Q w H a 0 -j 0- LU N 0 Q w a z 0_ w O 2 O Z 2 `n 2 Q H Lu w w 2 = p O c2i1 ~ H ~ Lu ~ ~ ~ ~ H ~ ~ c~i1 O H l0 -1 O N Uf 06 Ln r! rn M Ol N 00 00 O Ol N Ln r-I N Ln O 00 r-I l0 Rt r- O M N Un O N O N 00 M Ln O rN-I O Rt N l 0 M l 0 M -i r" l~0 rLr~ i l 0 ~ ON U) Ln I- CF) Rt CF) r I CF) r- l0 M U 00 I- CF) Ln O I- 00 r- r- 00 N O CF) x 0 r-I l0 N CF) - r-I M Rt O r-I r- X N c-I M 6 UP N I~ M M N N ~ 0 N I~ 00 Rt N Rt Ln rn M rn 0_ r-I N N O l0 N O O N O 00 O O l0 rn 00 M r" 00 00 rn O O 00 00 Ln O N LfI -:i- O M N N r-I I~ LfI F~ Rt l0 M Ln M O l0 I- M M l0 r-I 00 M O ri RZF rn N rn O ~ R l0 Ol M N Ln N Ln M M N M N Ol c I c I Ol N c I c I l0 00 0 c I O N l0 l0 I" l0 i/)- M i/), i/), i/), i/), i/)- O i/~ r-I i/), r-, i N i r-, i 1 i C7) J), 1 i 00 Ln M Rt Rt r-I l0 M N 06 rn 00 M l0 O M M N c-I N c-I 0 N c-I c-I c-I c-I N c-I l0 c I O O cl c I c I O O cl c I 00 c I c I O c I O O O O O O 00 O O O 00 N O O O O N O O O 00 O O Rt 00 Rt r- 00 00 - 00 l0 00 00 R 00 Ln O O O O O O O l0 l0 O O O O O O O l0 O Ol N M Rt r- Rt r14 r-I I- r- N r- Ln Ln O Ln r-I Rt r- r- O r-I O r-I Rt l0 O O M r-I O N Rt O l0 r- 00 00 r- r- ~o r- 00 00 Q0 Q0 00 r- r- r- r- r- 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 0 111 N U V) 2 U 2 U H 2 J o_ H Q U Y Q O W U W N U ~ Z j N Z O w 2 2 Z O w H cn w w N Q H J w O H (7 Q H u u Q w cn V) O Q U D 0_ U > Z a U U a N > CO O O m O O O O O O O m O O m O X ~ LL O O LL LL LL 0 a LL L LL L 0 LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q O l0 M N 00 r- cI Ol N Ol I- l0 M N 0) I" rn O N Ln 00 rn Ln r-I M rn 00 r-I l0 rn r- Rt r- O 00 M l0 r-I N Rt l0 M r-I Rt N Rt r- N O r- N l0 Ln Rt M l0 l0 Ln l0 l0 l0 l0 Ln Ln l0 l0 M Rt r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I J J c~ z z Y z J N O Z N O_ J J J c 2 W W 2 Q Z J 0 w w w z O o ? J J o_ z Q J 2 Q Z Z w Y w C' Q > Z Q N Y u 0 H ui Z Z Z Q Q U N Uj O Y Z J Q z H w p 3: 2 2 J N Q W a Y -i H O Z O U D > > Y Q J Q ~ Q ! W W (D J 0 O 00 00 O r- O m ~o O Ln LfI M Ol LfI I~ 00 01 O O N 0 c-I M O l0 c-I O l0 Ol N Rt 00 M c-I c-I 0 N r-I l0 N l0 N O r-I r-I O r-I c-I O O 131 M c I 0 Ln N CF) N O CF) OYl l0 r- ri O O 0 Rt Rt N V), N V)- N I" 00 V), Lr N Ln M 00 M Ol M N Ol I- to 00 M M U Q0 I- l0 r- CF) l0 O 00 Rt 00 ri Ln I- M M 0 UP UP N ri r": 00 l0 Lq l0 LfI 01 O 00 N x X . . . . . . . . . . . . . 00 to Rt O rn Ln N Ol O O 00 Ln I- Rt 00 0 ri rn ri 00 rn l0 Rt 00 Ln rn 00 00 l0 O 0_ r-I M N ri N c-I O O O N O N N O O N N 00 O O O Rzj: to r14 Ol O M c-I 00 O c-I c-I N O O 00 00 M ri ri 00 N M O O Ol Ol Ln to 00 to Ol V)- M V)- M V)- N V)- i V)- i V)- 00 in' M V)- r~ V)- -:I- V)- 0 in' 0 in' 00 V)' N V)' ,-i i/) i i/)- N ri Ol N Ln to r14 ri Ol ri Rt Rt O M l0 l0 ri Rt 0 Ln N 00 00 to N Ln rn RZF 00 RZF l0 lfl 0 Ln r14 N 00 I- N M Ln Ln rn c-I 00 I- rn ri 0 ri O to to to Ln Ln Q0 Ln ri R i lfl J), 00 J), ri i/? O j), 00 j), 0 j), 0 j), R i lV i lV V), I- V), lV V), ri V), I- V), M V), lV V), lV O M r1 00 Rt r" Ln l0 O l0 Ln 00 M Ln r14 O to Ln N N N c-I c-I c-I N M c-I c-I M M M Cl C l to O 01 CF) c-I c-I O O 00 CF) CF) Ln O O O O O O O O O O O N O N N O O N N N 00 N O 00 00 r- 0 l0 r- r- 00 00 I- r- Ln R O r- 00 O O Ln Ln O O O O Ln O O O to O Ln O Ln M 00 O O I- Q0 N O 00 N r- N r- O O 00 O O Rt Rt Rt O Ln M N N O O O O N Rt ri Rt r- 00 r- r- Q0 00 00 r- r- r- to r- to r- r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 0 _ > 0 w Y w r14 ~ - Y a Z - w 2 2 z z z o_ Q ~ z Q z o o_ W > u -j Z J J N = U a w 2 0 w Z 0 0 0 0 0 0 o X o 0 0 0 0 0 0 O X w u w LL LL LL d 00 LL LL LL LL LL LL 00 I~i I~i w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Ln Ol 00 O 00 Ol Ol M N O Ol Ol N Ol to r- M l0 Rt M Rt ri to Ln Ln Ol Rt O N 00 Ln ri to ri Ln r14 M rn M l0 l0 r- M rn N rn rn M Ln to to M Rt Rt M l0 l0 Ln M M M Ln M Ln c-I c-I c-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I W J O_ z Q Q (n Q W J J J J 2 W Q Q W W J N J z N W 2 W Q W (D Q z W J CO W' m z J Q W' ~U D_ Q vi vi U m w U C7 LU J W Q Q 0 O 0 Z 0 ! CO J Q = J > Z >J >J J J >J O J O Q C 0 J M N 00 N I~ Ol 0 Ln r- N M O O c I O l0 0 00 CF) ON N O i/~ Ln V), M V), _ V)- V), r-I i/~ r-I (N U) M M N N Rt U O I- 00 r- r- 0 ~o Ln l0 r I x X Ol ~ ~ I~ l0 ~ M M O M 0_ N c-I M 00 to 00 r14 to 00 M 00 ~o O O I~ N N M M M M ~o c-I r- ci ~o rn r-I 00 j), Ln j), N v). M v), v), Ln Rt Rt 00 Rt Ln I- c-I c-I c-I M c-I M c-I c-I c-I O c-I 00 O O O O O O 00 00 00 00 Q0 00 l0 r14 O 00 O N Rt O N N Rt r- 00 r- r- r- r- O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln o ~ Y LU w N Y a_ LU _ a J N U 2 z = LULU 0 Q o_ O O O O O co Rt O U LL LL LL p LL a Q Q Q Q Q Q m I- 00 r1 ~o 00 00 Ln 00 I- O Q0 t ° m L n Ln L On 1 °t ~ r-I LL V) w LL z LL < z Q NLU z o w w ~ ~ w C7 (D J w ~he LU z z cD D Y 2 2 Q w N 0 0 N N Severance. See attached. PDXDOCS:2005030.6A Ashland Community. Hospital ASHLAND COMMUNITY HOSPITAL SEVERANCE PAY GUIDELINES Effective 7/1/05 Ashland Community Hospital (ACH) strives to maintains stable workforce in order to carry out the organization's mission. In the event of a layoff or reduction in force, not related to performance, affected employees will receive severance pay and benefits in accordance with schedule stated below. 1. Full-time and Part-time Employees. Medical/dental/vision benefits will be paid through the end of the month of notification. Severance will be calculated on the employee's base rate of pay and paid on the following schedule: Staff Employees Completed Continuous Weeks of Years of Service Severance o to 2 years 2 3 years 3 4 years 4 5 years 5 6 years 6 7 years 7 8 yea rs 8 9 ears 9 10 yea rs 10 11 years. 11 12 years or more 12 2. Department Managers. Medical/dental/vision benefits will be paid at the amount equal to COBRA cost plus applicable taxes for three months following the end of the month of notification. Severance will be calculated based on . the employee's base rate of pay and paid on the following schedule: Completed Continuous Weeks of Years of Service Severance o to 2 years 3 3 Years 4 4 years 5 5 years 6 6 years 7 7 years 8 8 years 9 9years 10 10 yearn 11 11 years 12 12 years or more 13 Page 1 of 2 ACH. Severance Pay Guidelines PDXDOCS:2005030.6A Administrative-Team. Medical/dental/vision benefits will be 'paid atthe amount equal 'to.COPRA cost;plus applicable taxes for three.months followingahe end of the month of notification. Severance will becalculated based on the employee's base rate of pay and paid on the following scheduler Com leted!Continuous Months of. Years of Service Severance. Through.2nd year 2 3 years:. 3. 4years 4~- 5years 5 6'Years or!Inore. "6 3., Perdiem employees anY not eligiblefor severancepay. Page 2 of '2 ACH Severance Pey Guidelines PDXDOCS:2005030.6A Schedule 32.17 Accreditation ACH was notified of a temporary hold of hospice-related payments from CMS, pursuant to a notice from Noridian Healthcare Solutions, dated June 7, 2013. On June 21, 2013, ACH received a notice from Noridian, by email, stating that the temporarily hold was terminated and payments would resume. Payments have resumed as of the date of the Closing Date. ACH is also accredited by the following: • American College of Radiology - Computed Tomography Services and Mammographic Imaging Services • U. S. Department of Health and Human Services - Certified Mammography Facility • Centers for Medicare & Medicaid Services - Clinical Laboratory Improvement Amendments • COLA Lab Accreditation through Education - Laboratory • The College of American Pathologists - Laboratory • Jackson Co. Environmental Public Health - Food Services • Oregon Board of Pharmacy - Pharmacy PDXDOCS:2009666.1 Schedule 32.18.1 Defaults • ACH has breached a financial covenant or covenants of the loan documents between ACH and Umpqua Bank (Loan No. 3068534826). Umpqua Bank has waived its rights triggered by the breach(es) until June 30, 2013. ACH has requested that Umpqua Bank extend its waiver until the Closing. Umpqua Bank has expressed its intent to extend the waiver until Closing. • ACH has breached a financial covenant or covenants of the following agreement: Facilities Lease by and between City and ACH, dated June 18, 1996. City has waived ACH's default triggered by the breach(es) until the earlier of June 30, 2014 or the Closing. PDXDOCS:2005030.7 Schedule 32.18.2 Material Contracts Contracting Party Date of Name of Agreement Notes. contract/agreement Ashland Anesthesia 7/1/2009 Anesthesiology Amended 05/20/13 Associates, LLC Service Agreement Ashland Community 1.0/18/2011 Commercial Lease 317 Maple Street Hospital Foundation Ashland, Oregon Transfers to ACH on Closing; ACH - Tenant Ashland Community 1/1/2011 Lease Agreement 530 Catalina Drive Hospital Foundation Ashland, Oregon Transfers to ACH on Closing; ACH - Tenant Ashland Community 6/29/2011 Commercial Lease 628 North Main Street Hospital Foundation Ashland, Oregon Transfers to ACH on Closing; ACH - Tenant Ashland Community 6/29/2011 Commercial Lease 49 Talent Avenue Hospital Foundation Ashland, Oregon Transfers to ACH on ' Closin ; ACH - Tenant Ashland Community 1/25/2013 Commercial Lease 209 N. Pacific Hwy Hospital Foundation Talent, Oregon Transfers to ACH on Closing; ACH - Tenant Ashland Emergency 7/1/2011 Professional Services Amended 04/01/2013 Associates, P.C. Agreement Auto-Chlor 1/19/2006 Dishwashing Machine Auto renewed in 2011. Agreement De Lage Landen 3/12/2012 Master Lease Financial Services, Agreement Inc. Diversified Clinical 6/1/2006 Clinical wound care Amended date Service, Inc. with hyperbaric 01/01/2011 oxygen therapy management and support services agreement. Celtic Leasing Corp. 8/1/2008 Master Lease HealthCo Information 3/21/2007 Sales and Software i Systems, Inc. Support Agreement PDXDOCS:2005030.7 II Contracting Party Date of Name of Agreement Notes: contract/a reement Meditech 12/4/2002 Health Care Information System Software Agreement Medford Pathologists, 9/1/2005 Agreement for Automatically renewed P.C. Provision of on one year terms starting Pathology and September 1, 2006. Medical Director Services Microsoft 6/30/2012 Volume Licensing j Philips Healthcare, a 9/3/2010 Multi-Vendor Service division of Philips Diagnostic Electronic North Management America Corporation Agreement Southern Oregon 10/1/2011 Commercial Lease j Family Practice Building, LLC i Stryker Finance, a 10/7/10 Equipment Lease division of Stryker Agreement Sales Corporation Thermo Asset 5/1/2010 Statement of Services Addendum 05/01/2013 Management for Thermo Scientific Services, Inc. Lifecycle Asset and Services Management Solution I I PDXDOCS:2005030.7 Schedule 32.19 Exclusion from Health Care Programs No exclusions. PDXDOCS:2005030.6A Schedule 32.20.1 Noncompliance with Environmental Laws No exceptions. PDXDOCS:2005030.6A Schedule 32.20.2 Written Notification of Investigations or Enforcement Actions of any Applicable Environmental Laws No exceptions. PDXDOCS:2005030.6A Schedule 32.20.3 Disclosure of Items on ACH Real Property Outlined in Section 32.20.3 of the Affiliation Agreement ACH has an underground storage tank, which ACH is licensed to operate pursuant to the State of Oregon Department of Environmental Quality ('DEQ"), Registration Certificate Number 15- 12205-2013-OPER, Tank Permit BGKCF, Tank ID No. 1, which expires June 30, 2014. PDXDOCS:2005030.6A Schedule 32.20.4 List of Environmental Reports 1. Asbestos Surveys 1995 to present. Coleman Creek Consultants and Global Pacific Environmental. 2. Mold Surveys 2007 to present. Coleman Creek Consultants. 3. Polarized Light Microscopy (PLM) 1998. EMSL Analytical and Peak Environmental Services. 4. Bulk Sample Analysis Report. ECS/Wagner Environmental. 1994 5. DEQ Site visits. 1994 6. Formaldehyde Vapor Analysis. 2012. Advanced Chemical Sensor Inc. 7. PSC Environmental Services. 2003-2012 Hazardous Waste Roundup Xylenes, Methanol Waste, Mercury thermometers, lead. PDXDOCS:2005030.6A Schedule 32.22 Employment Matters 32.22.1.2 and 32.22.1.4: Please see Schedule 32.6 for information related to these employment matters. 32.22.1.5 - Employment Agreements Employed Physicians All physicians employed by ACH have written employment agreements with ACH. The terms of their employment are set forth in their respective employment agreements. Employment Manuals and Policies Brochures: Ashland Community Hospital Foundation - taking steps to support those in our community Ashland Community Hospital - making strides in community care for you Employee Assistance Program Provided by EASE Ashland Community Hospital 403(b) Plan Ashland Community Healthcare Services Summary of Ashland Community Hospital Retirement Savings Plan January 1, 2007 Letters: Welcome letter from the Chief Executive Officer with the Mission, Vision, and Values on it CareWorks USA letter on Family Medical Leave Act and Oregon Family Leave Act Handouts: Mission, Vision, Values, and Philosophy of Care Basic Principles of Ethics and Summary Standards of Conduct Job Description Introductory Performance & Development Evaluation Employee/Volunteer Authorization and Consent to Create, Use, and Disclose Photographs for Public and Marketing Purposes Organization Chart Employee Recognition Questionnaire Recycling Flier W-4 Form Automatic Credit Authorization Form Cafeteria Deduction Consent Heart to Hand - Give a Gift from your Heart United Way Form PDXDOCS:2005030.6A Rapid Response Team Benefit Summary Benefits at a Glance for Traditional Plan Benefits at a Glance for Core Plan Vision benefit Summary Benefit Rates Benefits Portal Life and Accidental Death & Dismemberment details Term Life Insurance Personal Accident Insurance Secure Travel (CIGNA program) Long Term Disability Benefits ACH Wellness Program Employee Assistance Services Enterprises Retirement Savings Plan details ACH Benefit Discounts Form I-9 Confidential Employee Information Policies handed out: Conflict of Interest Privacy, Confidentiality and Security of Medical Records and Other Protected Health Information Confidentiality of Patient health Information Ashland Community Hospital Behavioral Expectations Per Diem Employees Social Networking and Blogging 32.22.1.6 - Compensation See attached. 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I- Ol N 00 M M M N M l0 M RZF l0 M O o0 Ln Ln O Ln oo RZF N Ln l0 N M Ln M M l0 M M Ln r I M N 00 Ol Ol c I c I O O I- O Ol 00 c I 00 O O LfI LfI M l0 l0 00 c-I O O O O 00 I- c-I r-I O O c-I I- Rt Rt R 00 r" r" rn r- Ln l0 l0 N O I-~ c-I c-I M M c-I N c-I c-I N c-I M M N c-I 0 c-I Ln O O c-I c-I c-I c-I c-I c-I O c-I O c-I c-I O O O O O O O N O 00 O O O O O O O O O O O O O Q0 r- Rt 00 00 00 00 00 00 Rt 00 R 00 00 O I- O O O O O O O O O M O O O to O O I- r- O M M M M M Ol 00 00 I- O N r to O N Rt N N Rt O O to N N N Rt c-I M O c-I Ln to r- r- r- r- 00 r- r- 00 r- r- r- r- r- 00 Q0 r- 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln (A U U z 2 (A LU (D z Q z z z vii z z a w a J J J U J w O J U U U Z U U Q p U p 2 N Q U CO O O O CO O O O O O O O co O co O O O U H U H H H H H H U 0 H 0 H H H d O LL O LL LL LL LL LL LL O LL 0_ LL LL a_ a_ w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q M Ln l0 00 M 00 I- 00 r- r I I- r- r- r- Ol Ol N I- Rt Ln r I rn r-I O 00 O rn r I r-I l0 r-I rn M 00 Ln N 00 l0 rn O Rt l0 r- Rt r-I Ln rn rn r-I rn 00 00 Rt Ln Ln Ln Ln Ln Q0 M l0 M M Ln Ln Rt M Rt c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q 2 Q Q Z Q w H w w w Z z p w U J w Q Q Q p u z J w N 2 N J p w J >w U co 2 w J w J O O LL~ co Q p co w w Z > H Q w 2 C7 LLi U J Y w 2 o .1 2 D H U Q cn O ~he w V O Y J w (D Z Z N p >J p nj z u LL > V U O z O Ov O 3: 3: v u v J U O U D O O U U U D D U O U U U U U 00 00 O M l0 00 c-I Ol N c-I la0 l0 O l0 I" lfl r! 00 Ln I~ M I, ri 00 0 00 Uf N O N Rt O Rt r- M r-I Rt N O N p 00 I" Ln Ol N Ln r- r- O r- 00 0 06 00 I~ 00 CF) l~0 0000 M N CF) 00 0 M 00 N r-I F, V), I- V), n j l0 rj r-I V)- V), N V), N N U) CF) N cI I- to to M Ln CF) Ln N Ln N l0 CF) U rn Rt O M O r-I Ln M Ln I- Rt r- 00 r-I r-I 0 l0 Cl ri Lq M UP UP rV l0 6 Cl UP I" UP Rzj: M I- Rt Ln l0 00 Rt Ln rn 00 M Ln rn l0 00 0 Rt Rt M M r-I to N r- r- Ln 0_ O O N O 00 l0 O Rt O O O O O O O O O O r-I N Ol 00 N O Rt N 00 to N O Rt O O M l0 6 6 O N O N ri 06 6 r-~ M O O l0 r-I Ol ri qj)' 00 ri Rt qj)' O N qj)' to 0) O Rt N V) 0 i/)- r-I to M N N ri O 00 Ln Ln r- 00 M 00 O Ln Ln 06 M -:F rn ri 06ri O M O -:F ri l0 O Ol Ol M LfI l0 LfI r- N 00 LfI M r-I M I~ O 00 Ol c I Ol N N l0 I- O 00 Ol c I O 00 Ln c I O O j), ri i lfl v), r- v), lfl v), Ln v), Ln v), r- v), ri v), Ln V), N V), 00 V), r-I V), r14 v), ri v), m Ln J), Ln . . . . . . . . . . . . . . . . . . I- M Rt Ln Rt r-I r-I I- N N ri 00 l0 Ln l0 r-I I- N c-I N M c-I M M N c-I M N N c-I 0) M lO O Ln 00 lO Ol 00 ri ri ri l0 Un Ln Cl O O O O O O O O O O O 00 O O 00 O N O O O 00 O O O N 00 R to to Rt 00 r- l0 00 00 00 Rt Rt 00 Rt r- Ln O O O Ln O Q0 O O O O O O O M O O 00 I- r- r- O M r-I N M l0 00 r- to to to O N N O c I O O l0 O O Rt Rt O to Ln N Rt O lfl lfl r- 00 r- r- 00 00 r- 00 00 r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u U U U C7 J ~ N w z z z z z z a_ O 2 z U w (D N J U a Z Q Q 2 z JO a 0 U 2 U N Q > 2 O a co O co co co co co co co O O O O O O O O O O O O O O O w U LL O d d LL LL LL LL LL LL L~i w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q c-I c-I Ln N Ln rn r- ri O M Ln I- Ln Q0 O l0 r- cI rn rn rn O r-I O M Ln Rt l0 r- l0 00 r- r-I l0 rn l0 l0 N M Rt l0 l0 l0 Ln l0 Rt O rn rn l0 l0 Ln l0 l0 M M l0 M M l0 l0 Ln Ln M M r-I c-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I w Z N w w U w Z p N Y z LL LU > w w Q Z LU Q Z O 2 w z w v a N a a w w z z J w C7 2 O 0 Q (7 w z 2 Q p U V H c^ Q Y vi O V w vi Q 2 O U Lai) Z Lu Z ~ Z p w 2 > w J O w ON J O U U Q (2.7 p w Z w w w U p m O p Q Qp p Q p p p p p p p p p M O M M -1 ~o ri O 00 (q r14 N N N M rV 00 O I c-I 0) O O Ol M M M M - 00 00 r- M c I O N M O 00 rn rn Ln I- rn o N CF) r- c I Lr 00 N Il O O O Lr M rn ry) ri N to i/~ N i/)- N M O I- to to r14 M M I- c I c I U N r-I CF) N O O Ln ~o Ln ~o r- to CF) c-I x 0 00 Ln N N CF) 00 Rt Ln M 00 N X ri 6 4 06 O Ln 00 l0 N l0 ri 0 O N O Ln O N M r-I I- Rt Ln 0_ N N Rt ri ri ri O O O O O O O to O N O O 00 lV O O N Rt cI O Ol O O r14 r4 r-~ 06 00 0 Ol N LfI 00 l0 M ~ N N N M 00 Ln Ln Ln r14 00 R O ~ l0 ~ ~ M ~ l0 l0 N N ~ Rt ri N ri O Ln ~ N Ln 00 ~o M Ln M ~o c-I to r14 M Ln Ln M 00 l0 00 M Ln 0 ri Ln O m c I c I O I- N M 00 m M O LfI N 0 r -I N N Ln M N M N ~o O rn O N Ln M Ln 06 Ln 6 N c-I r- c-I c-I M N M M M c-I N c-I ON N c-I N Ln Ln ri O r" O c-I c-I c-I c-I O O 0 c-I O O 0 c-I c-I c-I O O O O O O O O O O O O N O O N O O O 00 l0 00 l0 00 00 00 - 00 I- 00 00 00 O O Ln O Ln O O O O O O O O ~o O O O ~o ri rn 00 to 00 M ri O I- O r- 00 rn r- r- O Rt r- Ln l0 N Ln r14 N I- Rt O N O ri to O O Rt ri O 00 00 r- 00 r- r- 00 r- r- r- r- r- 00 ~o ~o r- r- ~o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln LL LL w U > C7 ~ c~i1 LU > z w u U Z a O w cNi1 `n 2 w Q co = a Q Y w p w V) Q Z Q J J (n D Z L Q Q w U a cn p U Z o_ Q O O X 0 O co O O O O O O O O O O O X Rt w ~ Rt Rt w LL p LL p LL LL LL LL p p LL LL a LL LL LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Ln O M Ol Ol r- Ol 00 ri Ol N O I- to M Ln 00 rn to to rn r- O O 00 Ln ~o r- ri O Rt to r- to r- Ln Rt N Ln r- ri Rt M ri Rt Rt r14 ri to r14 Rt N Ln ~o ~o ~o l0 Ln ~o Ln ~o Ln Ln Ln ~o ~o ~o Ln ~o M ri ri c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 -i ri ri ri ri ri Q p = z w w w O p w z Q m N w > w Q L/) Q Z p w w p O Z Q Q w p co > O ~ p Q c^ U O Z p Z Z 2_ p N O Q U Q 2 J O z r- Y OJ OLU O 0 w m = z O Q N Q vi N 2 m O p LU z ~ w O N Y O Q Z w V D N w w V) (D cn > Ii N OJ p Q p w w w w w N w w LQL O LL LL O l0 O M N Ln r14 O I~ O 00 l0 Ln Ol cI Ol 00 l0 O 0 O c-I 00 06 N ~o rn r-I ~o ~o r14 O r-I M Ln O O N 0) 0) ~o Ln Rt M r- M Ln LO M O Rt ON l0 CF) c I 00 O Ln r- N LnLn l0 O N V)- i/~ i/~ i/~ c-I V), i/~ V), V), V), c-I V), N V), V), V)' N i/~ c-I i/~ N 00 N N N M Ol l0 Ln Ol N N c-I 00 U ri 00 r-I Ln O Ln ri M 00 M Ln ~o ri 0 00 00 rV l0 M 00 I" C l ~ 6 N Uf UP X N 6 Rt r-I r-I r-I Ln r14 N 00 00 M rn 0 ~o 00 O rI rn l0 Ln l0 N l0 0_ N M c I r-I O R O O O O O O O O O O O N 00 l0 N N O O O Rt N Rt Rt Rt Rt Rt Ln O 00 6 6 N 4 O 06 ri O 06 N O O O Rt O O i Ol r-I N i ~0 - i/)- ri M -:I- :I- r-I r-I OO ri 00 N l0 ri 00 Ln r- l0 r-I r- r-I r-I CF) c-I c-I Ol Ol M Ol 00 N N M RZF rn l0 M M M r M Ln r14 N c-I l0 N I- l0 Ol O O l0 O Ol N Ol M M M N 10 10 I~ O 10 LfI 00 10 N 00 LfI c I l0 l0 l0 V), i/~ i/), i/), i/), i/), i/), i/) i), i/), i/) Ln Rt l0 r- r I ~o r- Rt r14 ri ~o rn ri M M O O M c-I M N c-I c-I c-I M c-I N M c-I c-I N 0) Ln Ln Ln Ln Ol Ol O cl Cl ~ cI O cI cI p O O O O O O 0 O 0 N N O O N N O O O O O O O I- r O 00 00 r O r- l0 00 r- l0 00 O 00 00 N O Q0 O O Ln Q0 O M O O O O Q0 O O O l0 I- ri N N O I- M r- N 00 r- M r- l0 00 00 N O l0 M M Rt O N N O ri O Ln O Rt r14 N r- ~o 00 00 00 r- ~o r- r- r- r- Q0 00 ~o 00 r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Z Y O Q - (7 0 0 - 0 Lu w p U Q OU DU Z Q Z Z H Z Z Y V) a w a vwi p U u p a_ Q cn N cn Q ~ LU a_ = Z = U Q z N U o_ O O O O O O O O co O 0 co co 0 O O O O X LL LL LL 0 LL LL LL 0 LL a a a LL 0 LL L Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Lu Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 00 ~o Ln r- N N M Ln Ln r-I O Ol M N 00 M I- Rt Ln 00 O Ln Rt O Ln r I ri O 00 I- N M Rt M M ri M Rt M O ri M c-I Ol 00 Ol N Rt Rt Rt Rt M l0 Rt Rt M l0 Rt M M Ln Ln M ~o Ln r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J LL. U 0 Q Q 0 N N W Q p a J = Z J w Q Q Lu J J LU J Q Z 0_ Q 0 0 co = tail Q Q Y Lu c~i1 Q w Q 0 ~ 0 Q N z N Q U W LL N J z LL Q C N J J 0 Q -1 Q Z p Z:) L J 0 LL. Z (7 J Ur 0 (D Q N p Q 0 Q Q LL Q (7 cn V) 0 (D Q Q 0 z0 0 (7 (7 LL LL (D (7 (7 (7 (7 M Ln Ln LO1n Ln M m M l0 O O I- N O O M o 00 06 N M l0 N N r-I O Ln rn O 00 CF) l0 N 00 l0 Ln o c-I O M c-I O LfI c-I O v), CF) v), c-I fn v), v), Rt r- 3 ~ N ri N N 00 00 00 Ln Ln l0 Ln r- 00 Ol l0 I- N U 00 I- CF) O r-I r-I CF) CF) Rt 00 l0 Rt r- M N 0 Uf 00 Cl N Cl O l0 ~ N O M O O Lq Ol X ci M O Ol Ol N M O r-I O l0 N O I- 0 M M M M Ln Ln M N r1 r" M 0_ r-i c I N O O O O O O O O O O O O 00 O O Rt to 00 N N N 00 l0 00 00 l0 O l0 00 r-i 00 r-i c-I LfI N I~ 00 N to 0) V)- O V)- F~ V)- Ln V)- O V)- O V)- M V)- V)- M V)- Ln V)- r~ 4/? 4/? 4/? r~ 4/? 4/? r1 q/? rn q/? M t/? N r' c-I N Lr Lr M Ol M I- to c-I 0) O N r- rn Ln I" Rt r" ri ri N M Ol -:F - N Ln Ln r14 N N ~ M Ln l0 O Ln 00 l0 ri rn Ln 00 l0 Ln l0 Rt 00 l0 l0 rn Ln m j,, Rt ri j,, i 00 j,, 00 j,, j,, m j,, ri j,, fV i ri m Rt ci Rt lfl I- O r- l0 00 ri rn M Rt M l0 M O rn l0 00 Rt M c-I N c-I N N N c-I c-I c-I M c-I N Ln r-I N M Ln N c-I c-I ri c-I r1 O O O ri ri ri ri O O O O O O N O O O O O O O O O O O O O O N O r- 00 00 00 00 00 Rt 00 Rt 00 00 00 r- 00 O O O l0 O O O Ln O O O O ri O O O l0 O N l0 ri r- ri r14 ri 00 to to r14 to O ri 00 0) I" Rt O Rt to O r- Rt to r14 Ln Ln O Ln r14 l0 N l0 O ri r- 00 00 to 00 00 00 r- 00 00 r- 00 r- 00 r- 00 to r- 6 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u LULU J u U U H N > p S Q p p N V C7 C7 N w cn Z N w w w N (7 Z Y W Q 0 W Q W' W' Z Q N Q S Z Q cn co J 2 p H H H cZ ~ p p _ Q c W d d a c O_ W co u co Q > p O O X O O O O O O O O O co w Rt Rt O w w w ~ i I~i LL I a LL LL a ~ a ~ p p I~i I~i I~i I~i I~i w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q l0 O ri N O I- r- 00 r- l0 O M l0 O r- 00 l0 O O 00 l0 M Rt M r- ri O 00 Rt r- 00 N l0 M O Ln N Ln Rt Rt N Rt l0 Ln Ln l0 Ln Rt l0 Rt 00 00 l0 Ln l0 Ln Rt l0 Rt l0 110 l0 l0 Ln Ln Rt M c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J W z W LLJ c S Z J H W U Z c Q Q w Z Q Q p W co Q W Z w Q co Z p w Q S U Q cn W a CO Z Q Q S N ~ S co cS (D J ` W J N C Q J W O ~ a- J N W W Q 2 W O' H CO ~ z Q ~ W H Q ~ Z W Y z J J N Q z W Q 0 W Q W W W > J N G W ~ O 0 S z J D z z W J Q Q N W co W (D (J S Q = S = Q Q S Z w = (D S S S = S N O O1 M c I O O I- 00 00 O 00 l4 rn M ri N Ol N Ln O Ln 00 l0 I" 01 O 00 O l0 l0 c I r- c I M I" O Rt Ln O M O 06 O N 00 I- lfl N M O M Ln r14 r-I 0 I- r- N 0 Rt CF) M Ln O l0 M 0ry) 0 O O M M O rf V)' N V1. c I 00 ri N I~ i/)- w I~ r-I 00 r-I ri F, r-I Ln N I- ri M ri l0 O 00 O Ln I- rn M rn r- rn Ln U Rt M O O 00 N O O M to r14 ri O I- N O 0 CF) Rt to to 01 N Ln c I ri rV c I UP l0 UP l0 UP X 111 ri M M l0 l0 00 Ln O 00 Ln I- 0 O1 Rt r14 N Ln Ln ri O Ln M I- Rt IL M N M N O l0 N l0 O O O O O O l0 O O O O O l0 Ln M Ol Rt O 00 N O to O Ol l0 l0 00 Rt r14 ri N l0 O 06 O 4 M O M O l0 Ln (Yi l0 N 6 O lV I- lV O1 O O V)- l0 O l0 fV V)- r-I V)- w V)' Ln V)' F~ V)- N V)' rn 00 M l0 I- Ln M O I- 00 Ln Ln 00 00 rn 00 Rt lp I~ oo I~ rn oo l0 Ln O l0 l0 l0 ri ri ri I~ RZF RZF rn Ln Ln l0 l0 I- M to r14 Ln Ln M r- N c I O1 00 O l0 O1 O O1 O1 Ln N l0 r- c I 00 O1 O O oo 4j) oo m i/), Ln o r- O oo r- r- v), Ln V), N V), ri V), N V), r- V), Rt . . . . . . . . . . . . . . . . . . I- rn O Ln r14 N l0 Rt Ln Ln 00 N ri M O 00 Ln r-I N M M M M c-I M M c-I M N c-I M N Ln Ln LfI 00 CF) 00 c I c I c I O DN0 c I c I c I c I c I O O O O O O O O N O O O O O O l0 O 00 O O O O O l0 - to 00 to 00 00 R to 00 Rt l0 00 00 00 00 O Ln O O O Ln I- Ln l0 O Ln l0 O O O O O Rt O O M N 00 r- 00 r- M 00 r- M r- N r- N r-I Rt Rt Rt O N N N O N N O N O r- O r- r" r" r" 00 r" r" r" r" to r- r- to r- r- 00 r- 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 2 a_ r14 U W ~ ~ w O c~i1 Y O z U z Q z z Q z z co u cH a 2 z O_ Q a Q J LL G Z (D LU LU LL < O w Q co O co O co x O x O co O co co O O O O H H H H H v ~ H H H H LL LL LL LL O_ p LL LL LL LL LL w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q r- cI Ln O1 O1 N 00 ri O1 ri O O1 M Ln Rt M M l0 Rt rn O 00 00 O r-I O Ln O 00 Rt Ol N l0 M Ol Ln N Ln Q0 M I- Rt rn 00 M M Ln Ln Ln M l0 Ln l0 M M l0 M l0 M Ln M Ln ri c-I c-I c-I c-I ri c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 r1 Y z p' W W w Q N C7 Q U w Q S Q z J Q O Z a z D z o a LU a a o N = N Q w E a_ LU 2 N W Z J = O J LU a_ W W O W Z Z W w p Y Z w O W F- U Z N CO Q O_ C7 Z (n N 0 3: W J J Z Z z w O 7) Z O D D Q Z 0 2 Z p_ Q O 2 D 2 2 2 V) a p2 p N 2 2 2 2 ~t O O N Ol I- 00 M O I- M Ln r14 M Uf I- O Lq o l0 06 6 l0 ~ N Ln CF) O Rt Ln O 00 O O 00 l0 00 Ol O N O 00 Ln I- o 06 06 r1 Ln M r I l0 Ol M O -1 00 V rj V)- N ~ V), N V), rj i/)- N Lr j 0 M l0 I- rn Rt Ln ri 00 r-I Ol N r" N U N l0 c-I N Ln Ln M M O Ln I- Ln r-I 0 4 ri LfI l0 UP M ri ri ri 00 I~ 00 l0 I~ X Ol I- O 00 N N O Ln O 00 Ln r-I I- 00 0 N 00 N l0 Rt ri Ln Rt ri Ln rn Ln a r-I r-I r-I r-I r-I O O O O l0 Rt O O O O l0 l0 O O l0 O O Ol N Rt 00 O to Ol I- O M O O ~6 06 0 O ~ 0) l0 ~ l0 00 l0 LfI O :1- c-I M Ol Ol 0) Ol c-I c-I M M I~ N M 00 O l0 O N Rzj O l0 Ln Ln r I M l0 O M O M l0 Rt Ln M M I~ r I M M Ln M M l0 Ln Ln r- O O to M 00 r I O M N 00 O I- Ln v), r-I v), o v). O v), j), j), i R i 00 j), Ln j), m j), r i i 00 j), r14 v), r-I v), r- N r- r- Rt M M O r- Rt N Ln Rt r" rn l0 r1 N N c-I c-I c-I c-I c-I c-I N c-I c-I M N M Ln ~ c-I c-I c-I O 00 O c-I c-I O c-I Ol 00 c-I O c-I O O O O O O O O O O O O 00 O O 00 O O N O O O - 00 00 00 l0 Rt 00 00 R 00 r- l0 00 00 O O O O O O l0 O Ln l0 O Ln O O O O O Ln 00 N Ol O l0 M I- N 00 r- r- 00 r- N O M r- 00 c-I O l0 Rt Ln O O M N O O N O O Rt Rt O N r- 00 r- 00 r- Q0 00 r- to to r- r- r- r- 00 r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln LU 2 U U O U 2 = w a Y w N z - Z co w = Z Y H N ~ Z Z Q Z -j W H (7 w a_ (D u u (D -j U Q H U a 2 w U N 2 a z LU a N a 0 O O O O 0 O co O O co O O O co O O O LL LL LL p 0 LL L 0 LL L LL 0 LL W W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q N 00 O Ln 00 M 00 M Ln r-I O M M N l0 l0 M O Ln M rn 00 ri ri rn Ln ri N Ln O I- N N Ln 00 rn l0 r-I Rt r-I Rt M l0 O Rt Rt M N r- Rt O 00 M M M Rt M l0 M M l0 Ln M M l0 l0 Ln Ln Ln M l0 c-I r-I r-I ri r-I r-I r-I ri r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I C7 Q LL. W Y Z J Z N Q Q Q Z w 2 W W O Z N U J Z Z Z Q W OJ Q N U Q J J Z Z O z 2 Z co C7 W U z - Q Q Q O w Q U O N o Y z W U a o Z W O Z V Z J J O Z O N N W O Z V W W W W W a U a Y co co z z 0 z z V) N w Y (D a_ < LU U OU OU ~ 2 Z 0 O O Y Q Y Y Y z - Q Q Q 0 20 N O l0 O O O l0 M ry) 00 O l4 N N O M I" N N 00 Ol N 00 01 M c-I 01 0 Ln M l0 Ln Rt r- l0 rn Ln Ln Ln O I- M 00 rn 0 6 06 Ol I- r- r1 O M Ln Ln Rt Ol ri 00 N Rt O l0 Rt l0 00 Ln r-I Ln O O r- N N CF) ri 0 00 M qj)' c-I qj)' RZF V), c-I V), LfI N i/) N qj)' U) ri l0 l0 I- 00 ri M CF) O r 00 M U Ln Rt l0 l0 00 r- Ln ri ri N I- O ri I- M 0 Ol 00 l0 I-~ Cl 00 ri M l0 r-I O I- N 4 r-~ l0 O Ln Ln ri ri M 06 M 00 0 N Ln Ol r-I N Ol Rt Ol r-I 00 l0 0_ r-I r-I r-I r-I O O Rt O O O O Rt O O Rt O 00 N 00 O 00 00 O O O N 00 O O N N O O l0 I~ N O lfl O r-~ Gi I-~ O 06 O O t/? M t/? 00 4/? Ln t/? l0 4/? 00 t/? r- t/? M 4/? 0 ri t/? 00 t/? rn t/? Ln t/? O t/? Ln t/? 0 t/? 00 O 00 M Ln rn l0 l0 Rt l0 00 Rt M O r- N O rn O Ol M N RZF 00 N RZF N 00 O ~ M N Ln - M M Ln 00 M Ln Ln M rn ri 00 c-I l0 N O O 00 c-I 00 O O O N Ol O c-I 00 rn M Rt v), Ln l0 r- r- Ln O M N ri Ln Il M 6 6 N N Ln M N N rn Ln O M N Rt c-I c-I N c-I M c-I ON N N N N M Ln Ol Ol LfI l0 O I- cl rn r, rn Ln O O O O O O O O O O O O O N O N O O 00 O O l0 N O N N O O 00 - 00 r- Rt 00 Rt 00 Ln - 00 r r- R O O O Ln Ln Ln O O l0 O O Ln O O O l0 O Ln r- to O O 00 N Ln r- 00 r- 00 N 00 M r- O O O Ln Rt Rt N O N O r-I O N O N N O Rt r- to 00 r- r- r- r- r- to r- to r- r- r- r- to r" O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln L 2 > 2 (7 Q w > U O w w w w Z Z Z Z H Z a Z Z H H J O o_ 0_ (7 N N U a u U 0 w V) N L 2 2 2 2 O O O O 0 O 0 O O 0 O X O X O 0 00 w w U LL LL LL LL a ~ a LL LL LL LL ~ a O a_ LL w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q r- cI N M Ln N O l0 Ln M Ol Ol l0 I- N N O l0 Ln M O l0 l0 I- M Rt Ln Ln I- Rt Rt N M r-I r-I N Rt r- M to to 0) Ln l0 M l0 Rt r-I M l0 Ln l0 Rt M Rt l0 M M l0 l0 l0 M Ln M l0 c-I c-I c-I c-I c-I c-I ri ri c-I c-I r1 r1 r1 -i ri Z Q Q Q w Y w m D Q J < < < Q U 2 Q V) Z O Q Z N o Z co co z U w D L) Q co Z Q N z w O o N Q 0 m m m w Y Y z LLi Q w ui Q V) Z U w vi w Q U O w H ~he 2 Z p Z w J 2 N X z 0 w w 2 N O Q Y a (J w Y Y z Y D ~ O O Y Q Q Y Y Y Y Y Y J r14 < N N Ln to r- N Ln c-I 00 r l: UP R:j: M Ln M O - O to O CF) N O M M to CF) o Uf I M O l0 rn O 00 M N o ~ 00 N ci N ~o CF) 0000 i/~ CF) i/~ V), c-I i/~ N i/~ N N V), to M CF) CF) I- 00 N M N ci c I U O to r14 -i to c-I N O 00 N I- to to 0 N - N c-I M 00 O to O N Ol O -1 X x N Ln Ln 00 l6 r1 4 r-~ 06 O O Ln 4 0 I- Ln r1 I- Ln M Ln Rt c I Rt to 0_ c-I N N 00 O O N O O O O O O O N O 00 00 00 I- O N O to 00 to Ln O 00 N O N 00 M 00 c r, to 00 r- 00 r r- O 00 lo 0 M N 00 to 00 I- to 00 N O N r, N N cr O I~ O 00 N O l 00 00 I- N Rt to r14 00 M 00 to M N r- r- c I O rn to Ln ~o Ln Ol M O 00 Ol r- r I N O c I O r- r-I M N M N O o0 l0 O O r-I Ln oo 06 M r1 M Rt 00 Ln 00 00 Rt M Ln O M - Rt O N M c-I rn M r-I M c-I r1 M M M r1 r1 M r1 Ln Ln O 0 c I r- 0 c I c I O c I c I O c I c I c I 00 c I 0 c-I O O O N O O N O O O O O O O O O 00 O 00 O - 00 to r- 00 00 00 00 00 00 00 to 00 Rt 00 ~o O O M O O O O Ln r1 O O O O O O O O I- c-I N to c-I r- M r- O N r- r- 00 to r- M r- rn O O Rt N O O O O Rt to O O N Rt O O Rt r- ~o ~o 00 r- ~o r" r" r" r" 00 ~o r- r- 00 ~o r- 00 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln O J O w Ln Q U cn i a_ D Z w ~ Z co Z co w Z w Y Z Z w Q O J a 2 2 co G J N J Z p U 0 a a N U 2 U 2 O z p 2 - Q O O O X O O O O O O O O O O co O co O w Rt Rt O O a ~ ~ ~ ~ ~ Lj- 0 LL LL 0 LL LL L L Lj- a_ a_ w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ~o O r- r- r I Ln r14 r- r I c I to Ln M r1 O Ln Ln Ln r" rn co co Ln 0) r1 r1 N co r1 Rt r" to r" ~o r1 N ~o Rt Ln co r- r- M to r14 to r- Rt c-I Rt Rt ~o ~o Ln ~o ~o Ln Ln 110 110 110 Rt lO M lO lO lO c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 c-I c-I c-I c-I r1 c-I vi U Y p LLi w Z Q J U LU Z co Q z Q U Z w w = Q p J Q co p c LU LLA d (n w LU z LU p O Z c Q G~ W Q m LLI > Z C C7 2 U ~ z Q C7 N w >Lu z O p LU N w Q Y Z N Q p vi w w LU Z J O Z Z > H w N N J w O O J J 0 0 Q > ~ J 2 Y J J J z J O O J J Q J G N 00 00 Ln r- to O r- N 00 M Ol r, Ln Rt O M r-~ ri Lq O N 0 CF) M N c I l0 M l0 M N c I Ol 00 c I O - 0 N Ol N LfI 6 10 l0 N 00 N 00 00 M r- Rt LO N Ln r- ci Il ci ~ M N O N l0 M 0 r, i/~ r- i/~ Ol i/~ Ln i/~ Ln i/~ N V)' (N U) CF) Ln M 00 M CF) Ln rI rI Ln I- CF) Ln U r-I Rt M r- Rt 00 M Ln r14 I- Ln M I- O 0 M c-I Ln Ln rn 00 O Ln Il 00 lfl rl~ Ln 6 N r-~ 4 N Ol rI l0 M Ln 00 M M r-I 0 N Ln r-I Rt N to r- c-I N N 00 Rt 00 0_ r-I N c-I Ln rl r-I O O 00 O O O O N O O O O O N O 00 N 00 O to 00 r- O to N to to Ln Rt N Ol N O O I-~ 4 06 O M rI I~ r-~ Ln N Ln Ln 00 qj)' O r-I M 00 M O rI V)- rI V)- Ln V)- rI V)- M V)- 00 V)- 00 O - Ol l0 00 00 N I- to 00 to M Ol O 00 00 N r r i M ~ Ln ~ rn O ~ M 0 c-I 00 M I- Ln M M M I~ M Q0 rn rI O M Ln l0 rI O Ol r- r- N to M r- rI rn 00 Ln l0 00 v), Ln v), c-I v), oo v), Ln v), lfl v), rI v), lfl v), rn j), rI i Ln j), N . . . . . . . . . . . . . . . . . 6 O 4 N O Uf -:I- M Rt N N r- to M ~ 00 to Ln c-I Ln rl N N M rl N rl rl N rl M rl Ln c-I c-I c-I r, O O c-I c-I c-I c-I c l c-I O O O O O O O 00 O O Q0 O 00 O O O O O O N O O 00 Rt 00 00 Ln 00 R R O 00 00 00 00 r- 00 O O O O O O O O O O O O O O O O O N l0 N M Rt 00 N r- O Ol I- N M r- N Ln I- O Ln O Ln r-I Rt O r-I Rt to r-I O Rt O r- to r-I r- 00 r- 00 r- 00 r- r- r- 00 r- r- 00 r- 00 00 r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln u V N > 2 - 2 _ 2 _ H N a_ u w N w N WW cW Z co 2 Q cQ z ~ J c c d z J N Z G W Q o_ zQ Q u W Q a o = 2 2 Z Q o_ co co co o co o 0 V V V LL a_ a_ LL LL a L p p LL LL LL LL LL L p W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q N I- Ln r- ci I- 00 r- O rn 00 Ln °rII rn l0 O 00 r- l0 rM r- 00 O O O Rt Rt l0 CF) l0 Ln M l0 Ln M M l0 Rt Rt l0 l0 l0 Ln l0 c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q W Q Z z V Q Q Q V Q O Q LU V) w O Q Q Z w u O Z Z z W J 2 J Y J W W W Q W z 2 z U co W U W z a' Z p N U N o_ Z N O 2 (D Q W Z J N O Y (J Iw J Y a Q co z O Luz N z Y Q Q LLi N J Q Z V Q W z V U Z w J Q V w J W V ~ W Q Q Q U U V V 0 r- r14 < O c I Ol O O 00 00 00 O 01 Ol Ol o 0 r- 00 M Ln r14 00 M r- l0 00 00 l0 M N r- N O N ri LfI N M M I-~ M N c-I l0 6 Lq N M l0 00 Rt LfI M I~ ~ 0) Ln r-I O M N v)- 00 ri N Ln N Ln Ln Ln N Ln V)' Ol V)' N V)' (N U) N M N l0 l0 Rt ri N Rt c I O 00 I- CF) l0 I- 00 l0 U N O N I- 00 O N r- r- r Ln r14 N r-I O I- 00 0 O l0 M ri Cl M O LfI c-I 00 Ol c-I M I" N X . . . . . . . . . . . . . c-I N N r-I 00 Ol N M 00 00 l0 Ol c-I r- c-I 00 Rt r14 r- Ol N Rt Ln r-I M Ln r14 l0 0_ r-I Rt M ri r14 O 00 O O O O O O O l0 O O O O N O O 00 00 O O O l0 l0 O Ol Q0 N O O Ol O l0 N l0 O O O Ol M Uf M O M UP O O ri N ri t/? 0) t/? N t/? l0 qj)- O V)- O q/? ri t/} OFl 4/? l0 4/? Ln 4/? O 4/? Ln 4/? 0) t/? O t/? O t/? N t/? 0) t/? l0 t/? Rt 00 Ln N Rt r-I N 00 N Ol M N l0 I- Ln M l0 Ol M 06 Lr ri Ol N l0 00 l0 RZF N Ln l0 I- r- 00 00 l0 N c-I N Ln r14 l0 Ln r14 N c-I O O O 00 I- N c-I 00 l0 O O c-I O I- m O Ln O j), Ln j), r- v), r-I v), m v), 00 v), r-I v), o v), Ol v), Ln v), Ln v), v), Rt r- v), O r-I N O N Ln 00 O Rt r14 l0 M N N 00 N N N M l0 c-I c-I c-I M r-I N c-I c-I Ln Ln c-I c-I c-I ~ c-I c-I ~ CF) LfI CF) Cl O O O 0 0 O O 0 O O O N N O O O O O O N O O O O N O O l0 00 I- r- 00 00 I- 00 00 Ln I- l0 00 l0 Rt r- 00 00 I- rn r-I l0 O O O O O O O Ln O O O O O O O I- O r- r- N r- N l0 M N 00 r- M M r- r N N N O O O O I- Rt O M N O N O O O cI O r" r" ~o r" r" r" 00 00 r- 00 r- r- r- r- Q0 r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 0 W H LL W co ~1 N > w H Z Q co Y Z 5~ U Y w J Z Z Z w Z W' N W' ` (n J W d 2 W' W' W' J W' w = 2 U Q 0_ U Q< 06 a > U 2 O O O X O mo W X O co o O W X O co o co o O O O O W LL LL LL LL L LL LL a LL LL LL LL 0_ o_ 0_ 0_ W W W W W W W W W W W W W W W W W W Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q O r- c I 00 O Ol 00 O Ol N 00 c I r- c I Ol Ln Q0 Rt M M 00 O Ln ri Ol O M Ol O I- l0 N O ri M Rt Ol M I- r- 00 00 N r" r" M r- r-I l0 l0 r- Ln I- Ln M M Ln M M Ln l0 M l0 l0 M l0 l0 l0 M ri r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I r-I Z z U ~ co tail Q W Y U J z -j LU -j 3: W W 2 V) w w V) Z W Z Q Z J W 2 Q 2 O in J J m Q W Q O U 2 z cQ Z 0 Q Q N LU Q Q W' W N G G Q ~1 V) 2 Y > ! LLi W c > O z V N z Q z z z cJ J 2 w z 0 W W nj Q 2 O O O c J J_ 0 z O O O O z Q 0 V) V) V) LU -j -j -j W W W 0 2 O 2 2 2 2 z z z z z r1 rn ri rn M N l0 Ln M N Ln rV O M 01 N Ol N N O M O o O O N 0) l0 0) O c I I" M O N 00 M c I O 00 Ln ri I- Lr r14 -1 Ol O M I, M O o 06 06 LfI O 00 O CF) l0 O O c i Ln i/~ Ln i/~ r-I-I M r-I-I Ln i/~ r-I-I r-I N CF) U) CF) CF) 00 M r- r- Ln CF) r Ln N Ln Ln CF) U l0 M rI l0 O CF) M l0 Ln l0 00 l0 00 O O 0 Uf l0 C l c-I C l O ~ 00 -i Ol X c-I I" rn Rt M rn Rt r14 N l0 M M Rt r-I rn r1 00 M M Rt l0 -i r" r- l0 0_ r-I M N M r-I O O N O O O O l0 l0 O O O O O l0 O O Cl N O l0 l0 ri UP O O O N O N Ol 00 O -1 r-I ~ O 00 00 Ln N 00 -1 O O ~ 0 00 O N l0 00 00 LfI N 00 M l0 r-I O CF) O rn 00 l0 rn 00 l0 rn r- r-I Ln M l0 Rt rn N M l0 N c-I I- O ri N 00 M Ln R:F Ln 00 R:F 00 Ln rn l0 00 Ln 00 M N N M M I- N N O O cI rn rn Ln r14 I- 00 00 Ln r- O l0 Ln rn Uf Uf r! r! lfl N lfl ~ M ~ . . . . . . . R Ln Ln O ~ ~ ~ lfl ~ N ~ ~ ~ . . . . . . . . N I- 00 Rt Rt to O Rt M r" M N r- M to to M 00 M N M M N c-I c-I c-I c-I N c-I M c-I M l0 Ol cI O cl cI cI Ol Ol cI cI O cI cI cI M O O O O O O O 00 N O O N O O N N O N O O O O O Rt r- 00 r- 00 00 r- r- 00 r- 00 00 00 00 N O O O O O O O O O O O O N O O O O I- r- r-I r-I r- r- N r- r- 00 l0 00 M l0 r-I O O Ln O O ri r I O M O O N N N O Rt O lfl lfl 00 l0 l0 r1rl~ lfl 00 Il lfl ~ ~ ~ rl~ 00 l0 O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 2 N Z w U O Y Q Y Q N O_ z z z z z ~ Z U w w a z Y z LL 0 w U w N J < U U Q w 2 ? Q 2 Z co O O O O O O O O O O O O O O 0 w Rt Rt I~i LL 0 LL LL LL LL LL LL LL LL 0 LL LL LL a o_ w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q c-I c-I rn 00 ri Ln 00 N 00 ri Ln r14 N r-I O 00 00 Ln rn r M Rt r- r- Rt rn rn Rt 00 Ln l0 l0 Rt N O Ln rn rn Ln Rt N Ln Rt Rt Ln Ln Ln O l0 M l0 Rt l0 Ln M Ln M l0 l0 l0 l0 l0 Rt Ln r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I Q Z D Q 2 m J U (7 W c c Z J O W w Y C7 N Z L N Z O' Q ~ Q `n Q m Q Z Z~ ~ 2 Z _ cn (J w O Y U U 'n Y Z_ w U Q ? vai vUi w O Z Q Z H w J J (7 w N a w (7 Y O H w w x 0 0 O O Q Q w z Z z z z z O z z 0 0 O o_ o_ a o_ Z E 0 M Ln rn M Ln r14 00 Ol M t0 00 Ln O Lq I, UP O t0 0 00 M Ol to c-I M N N N Rt O 0) Rt 00 O N Ol to Ol Ol to c-I c-I O (Yi ~o M M O l0 l0 O Rt O 00 O M if, r, V), c-I M V), i/~ Ln i/~ i/~ ri i/~ N i/~ Ln i/~ ri i/~ i/~ ~ i/~ Ln V), V), N V), N I- Ln r14 N Ln r14 N M Rt r- M 0) M 0) ri 0 to M O - r-I N Rt Rt N Rt to M O Ln M - 00 ~ O of N f 01 ~ O 00 I" ri UP ~ O O X r1 O 00 O M Rt rn Rt r" to r- ri I- O rn O 0 r-I ~o Rt rn r-I r-I 00 Rt Ln Rt Ln Rt 00 r-I r- 0_ N cI cI N to O N O O to r14 00 N O O O O O O r- O Ol O O LfI M O r- l0 O O 00 Rt {f) N {f)- ri O 4 o6 j 00 o6 ,6 r" O N :1- Ol N qj)- O {f)- 00 {f)- Rt N CF) {f)- Rt 00 LfI r., ~ N {f)- r, r14 I- to r14 00 Ln r- to Ln r- ri I- O O I~ Ln N O ri I~ Ol r I Lr I~ N 00 M LfN Lfr- l0 l0 N LfN Lf LfN 0 I- N 00 O c-I O O rn rn ri rn ri O I- 00 Ln Ln ri rn {f), Ln j), R i j). Ln j), Ln j), r- j), 00 j), 00 j), 00 j), Ln j), 00 j), 00 j), R i m j), r" i Ln J), r- J), O N 00 I- N 00 Ln Rt ri ri rn O r- O r- r M c-I N M M M c-I M c-I N M N c-I Ln M r-I Ol Gl Ol I~ 00 O cl cl cl cl O cI cI cl cI cI O O O O O O O O O O O N O N N to N N N N O O N O O O I- 00 I- r- Ln ~o O I" r" r" r O 00 00 I- 00 lO 00 O O O O O O O O O O O O O O O O Ln O I- N r- M M O M to r- r- 00 r- Rt to r- Rt 00 Ln O Rt O N O Rt O Ln O O ri O ri Rt ri ri N O ~o 00 ~o r- r- r- r- 00 ~o ~o r- r- r- 00 r- r- r" r" O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln c~i1 Z 2 H U Y w Q 2 a_ U w cNi1 w w Q Y Q Q N U Q U N Q cn V) 0 u w `n 2 Q Q Q a N a O O O O co co O O O O O O O O O O co O u LL LL LL LL 0 R LL LL LL LL 0 LL LL LL L LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q M N Ln r- M Ol O N N c-I c-I Ln O M r- c-I M Rt O M Rt r" 00 N Ol Rt r14 M ri ri to O c-I I- M Rt to to M to r" M 0) N Ln ri N Ln 00 Rt M M r- ~o Ln ~o Ln M Rt to Ln ~o ~o ~o Ln Rt Ln ~o Ln ~o M c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I r1 r1 ri ri ri ri ri ri W _ La W W z W 0 Z Q Q Z W_ z Z Z J C, 2 N Q Z J Q z Q z D W Q J Q O 2 W W (D 0 V) LU cQ co Q Q Z 0 N 2 D' H QQ Q Z cQ W Q ~ Z Q G G_' U W J W co c z Q c Z c Z W Y Q W W 0 W_ N 0 Q Q N O Q Y G z Q w 2 2 O Q O W ~ 2 w Q I-D w_ Q J 0 D D Z w a w w U 2 2 a ~ a a a_ C a ~ c7 I- Ln O N ri Ol Ol M O ri (O N to Ln 00 Cl I~ R~I: Ln l0 I~ ~o Ln O 00 N N M 00 M O ~ c-I - 00 N M O O to M O M r-I M M O I- r-I N 0 r" ~ r" M c-I N r- N to M M O N O 00 V), rj V), rj t/)- N Ln t/~ ri N CF) t~ 3 V)- M V)- 00 V)- V)- N V)- M t1~ N to r- Ol O r-I Ol Rt N M to M M rn U CF) Ln CF) 00 Rt M r-I r-I 00 r-I M 00 ri 0 I~ 6 ri ri Ln CF) M to 4 M N Ln 00 ~ X to N M M ri 6 ri M to M O I- M Q rn O 00 Ln N Rt Rt M Rt 0_ N N O O O O O O O O O O Rt 00 O 00 N O O 00 l0 00 Rt l0 00 00 O O Ol 06 L6 r~ 00 r- 00 0 r-I r-I r-I N O -:i- c-I O I~ -:i- LfI Ol N r~ N 00 Ol M M O N c I M M Ln r- to r- rn to rn rn N M N N l0 O ~ M r- rn O -:F N N Ln 00 r- Ln M N I- Ln Ln r- N Ln Ln ri 00 Ln l0 l0 ri 00 I- to N r- to ri Ol O ri m v), Ln v), m ri o ri v), m v), m v), Ln v), ri v), o v), m v), m v), r- oo Ln V), M V), ri . . . . . . . . . . . . . . . . . . M r-I Rt Ln O ~o O ~o Rt M O r- Ln Rt r-I N M 00 N c-I c-I N N N c-I c-I c-I N M M M c-I N Ln 00 rn 00 rn rn O cI cI cI cI cI cI cI O O O O O O O O O O O O O O O O O O O O N N N 00 00 00 to 00 00 00 00 00 l0 r- l0 r- r- 0 Ln O O Ln O O O O O O O O O O O O O 00 Ol 00 00 I- M l0 00 N O 00 O r- N r- r- N I- Rt r14 r-I Rt Rt r14 M Rt r-I N O O O O r- 00 00 r" r" 00 00 r- 00 r- r- r- ~o r- ~o ~o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln = U Q Y a H w Z Y N 2 2 Q Q w N ~ (7 Y w ~ Z Z Z U J Q d 2 Z N J U N V) v u u Z Z w 2 U H Q Q Q < < Q 2 Z o_ o_ 0 O O X O X O O O O O O O CO O CO O O U w w Rt R O O p LL LL LL a LL LL LL LL p p L L LL LL a_ a_ w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q I- Ln ~o ri Ln M ~o 00 O O 00 ~o r- rn 00 00 00 O Q0 I- 00 l0 M I- 00 O M r-I ~o ~o M ~o 00 Ln ~o Ln r-I Rt r- Ln O ~o Ln ~o rn 00 Rt r- ~o Rt ~o ~o Ln Rt ~o M ~o Rt ~o 110 Ln M Ln M ~o ~o c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I J ~ U J ~ w J J N w U 2 Q w Z Q w V) Q O Q O Q Q Q Z Q U = Q U O Q Q w (n N w w O Z w ~ J O Y Q w O w 'n co co p LL Q V••I ~ J N Q W w N V O w H Q w w Q N co ~ Q Z Z (J N N 2 2 Q w H Z Q 2 V) w N a U O ~ Q p w w N Z H a ail 0 p 0 `n vi Q t N U 2 N O Ln ~o L`n to n rn O rn O M 00 Ol N M N c-I O rn Rt rn r- 00 M rn O rn r- 00 O N Ln Ln Ol Ol N Ol r-I Ol O G Lr I~ O 00 M O Rt O ll o ri r-I O -1 N Ol f17 Rt N N ~o M Rt M r- 00 M r I Ln M r I N U M I- Ln ~o 00 ~o r-I 00 Ln rn Ln M O O ri ri O LfI c-I M c-I I" c-I X c I O N 00 O I- M O N 00 0 M O O to O c I N I- O M Rt 0_ r-I Ln r-I r-I N r-I O 00 O N O O Rt O O O O 00 N N O r- O to O to to O 00 I- N O N O O I~ Ln 00 ~o r1 Rt 0 to to N N O 00 ~o r- O Ln r14 00 M N N r-I 00 Ol c I N O Ol N N Ln Ln - to M c I LfI to Ol Ol ~ M Ln M N to N ~o Ln M M ~o O ~o Ln O to O N N Ln M O C7) to N to c-I m Ln N M O N Ln N 00 M r-I Rt r-I M Rt to O O Ln N M I-~ M N N 00 4 r-I M r-I r-I M r1 Rt N Rt M ~ r-I M Rt r14 r-I r-I Ln Ln r-I 00 r, O O O l0 O Ol CF) r- CF) 00 Ln r-I r-I r-I O O O O O O O O O O O O 00 N N N O O O O N 00 to to O O O R O r- r r- to Rt 00 00 00 r- O O to O O O O N O O O O to to Ln O O O to Rt r- to M to O to r-I I- 00 r- r- r- 00 N M r- Rt r-I O Ln N Rt Rt N O O N O O O N M Ln O 00 r- ~o 00 r- 00 r- r- ~o ~o r- ~o ~o ~o r- 00 00 r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln z V) w w Q Y N w w Y z Y z U z z a w z z a N m N N J Z H _ < a = U a U Q O co O O O O co O O O X O co co O O O O U U U Rt U R LL 0 LL LL LL LL LL LL a_ 0 0 a_ 0 a_ LL w w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ~o r I 00 O 00 ~o O r I ~o rn N rn to to M rn to to r" 00 r-I M Ol N O r-I N M Rt 00 M r-I 00 O rn rn r-I r-I Rt M Ln Ln r-I Rt Ln rn M M M r- to Rt M Ln ~o ~o Ln ~o M Ln ~o M Ln M ~o Rt to to c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I co Q Q W co Q Z O Z Q c Q W J Q J Z J w w Q = Q Q w Q w Q z O z O J Z Z O w co cn Q co U 2 w z Y O z p Z = ~ O cn 0 U w Z Z w = Q= C7 2 m Q O Z H C7 U w Q p Z Q z w w H H U U Z Q a Q = cn J _ w a a cn w N N N N Rt Ol O N O l0 R 00 0? 00 Uf M LfI LfI Ln l0 O rl lV LfI l0 M Uf O Ln O l0 M Ln r14 M I- O Ol Ol I- Ln c-I 00 O Rt r- r- Ln rn M M 00 ri l0 Lri Ln M Rj N O Ln r- 00 l0 N M Ol N Ol N 00 Ln Ln U 00 c-I N c-I Ln I- Rt c-I c-I c-I c-I r- r-I r- 0 M 0) l0 Rt O ~ Ln O 00 ~ rI rI l0 00 X O Ln N l0 rn rI rn Ln M 00 M 00 M Ln M l0 Ln 00 00 Ln M Ln 0 N rl N N N O O l0 O O O O O l0 O N O O O 01 O O LfI O R:J: O 00 LfI 00 01 00 O 00 0) l0 O l0 O O O l0 O O N 0) 00 00 O t/? j t/? O t/? -:1- t/? :1- rI t/? Co 4/? Ln rI i t/? Co N rl Ln N Ln R:J Cl 00 O rl l0 N 00 00 00 O I- Rt Rt r- 0) I- l0 N Rt l0 N 0) C Ln l0 00 l0 M N l0 M N N M I- N N N rl rl Ln O rn O r-I 00 Ln I- Ln M 0) r-I 00 l0 rn Ln rI rl V,, r- Ln r- O V,, 00 V,, M V,, N V,, 10 V,, N V,, 10 r r i M j,, oo M j,, r" . . . . . . . . . . . . . . . . . . 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O j), 00 j), 0 j), 0 j), R i lV i lV V), I- V), lV V), ri V), I- V), M V), lV V), lV O M r1 00 Rt r" Ln l0 O l0 Ln 00 M Ln r14 O to Ln N N N c-I c-I c-I N M c-I c-I M M M Cl C l to O 01 CF) c-I c-I O O 00 CF) CF) Ln O O O O O O O O O O O N O N N O O N N N 00 N O 00 00 r- 0 l0 r- r- 00 00 I- r- Ln R O r- 00 O O Ln Ln O O O O Ln O O O to O Ln O Ln M 00 O O I- Q0 N O 00 N r- N r- O O 00 O O Rt Rt Rt O Ln M N N O O O O N Rt ri Rt r- 00 r- r- Q0 00 00 r- r- r- to r- to r- r- r- r- O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln 0 _ > 0 w Y w r14 ~ - Y a Z - w 2 2 z z z o_ Q ~ z Q z o o_ W > u -j Z J J N = U a w 2 0 w Z 0 0 0 0 0 0 o X o 0 0 0 0 0 0 O X w u w LL LL LL d 00 LL LL LL LL LL LL 00 I~i I~i w w w w w w w w w w w w w w w w w Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Ln Ol 00 O 00 Ol Ol M N O Ol Ol N Ol to r- M l0 Rt M Rt ri to Ln Ln Ol Rt O N 00 Ln ri to ri Ln r14 M rn M l0 l0 r- M rn N rn rn M Ln to to M Rt Rt M l0 l0 Ln M M M Ln M Ln c-I c-I c-I r-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I c-I W J O_ z Q Q (n Q W J J J J 2 W Q Q W W J N J z N W 2 W Q W (D Q z W J CO W' m z J Q W' ~U D_ Q vi vi U m w U C7 LU J W Q Q 0 O 0 Z 0 ! CO J Q = J > Z >J >J J J >J O J O Q C 0 J M N 00 N I~ Ol 0 Ln r- N M O O c I O l0 0 00 CF) ON N O i/~ Ln V), M V), _ V)- V), r-I i/~ r-I (N U) M M N N Rt U O I- 00 r- r- 0 ~o Ln l0 r I x X Ol ~ ~ I~ l0 ~ M M O M 0_ N c-I M 00 to 00 r14 to 00 M 00 ~o O O I~ N N M M M M ~o c-I r- ci ~o rn r-I 00 j), Ln j), N v). M v), v), Ln Rt Rt 00 Rt Ln I- c-I c-I c-I M c-I M c-I c-I c-I O c-I 00 O O O O O O 00 00 00 00 Q0 00 l0 r14 O 00 O N Rt O N N Rt r- 00 r- r- r- r- O O O O O O O O O O O O Ln Ln Ln Ln Ln Ln o ~ Y LU w N Y a_ LU _ a J N U 2 z = LULU 0 Q o_ O O O O O co Rt O U LL LL LL p LL a Q Q Q Q Q Q m I- 00 r1 ~o 00 00 Ln 00 I- O Q0 t ° m L n Ln L On 1 °t ~ r-I LL V) w LL z LL < z Q NLU z o w w ~ ~ w C7 (D J w ~he LU z z cD D Y 2 2 Q w N 0 0 N N Severance. See attached. PDXDOCS:2005030.6A Ashland Community Hospital ASHLAND COMMUNITY HOSPITAL SEVERANCE PAY GUIDELINES Effective 7/1/05 Ashland Community Hospital (ACH) strives to maintain a stable workforce in order to carry out the organization's mission. In the event of a layoff or reduction in force, not related to performance, affected employees will receive severance pay and benefits in accordance with schedule stated below. 1. Full-time and Part-time Eiployees. Medical/dental/vision benefits will be paid through the end of the month of notification. Severance will be calculated on the employee's base rate of pay and paid on the following schedule: Staff Employees Completed Continuous Weeks of Years of Service Severance o to 2 years. 2 3 ears 3 4 years 4 5 years 5 6 years 6 7 years 7 8 years 8 9 years 9 10 yea rs 10 11 years 11 12 years or more 12 2. Department Managers. Medical/dental/vision benefits will be paid at the amount equal to COBRA cost plus applicable taxes for three months following the end of the month of notification. Severance will be calculated based on the employee's base rate of pay and paid on the following schedule: Completed Continuous Weeks of Years of Service Severance o to 2 years 3 3 Years 4 4 years 5 5 years 6 6 years 7 7 years 8 8 years 9 9 years 10 10 years 11 11 years 12 12 years or more 13 Page 1 oft ACH Severance Pay Guidelines PDXDOCS:2005030.6A Administrative Team. Medical/dental/vision benefits will be paid at the amount equal to COBRA cost plus applicable taxes for three.months following the end of the month ofnotification. Severance will be calculated based on the employee's base rate of pay and paid on the following schedule: Completed Continuous Months of Years of Service Severance Through 2nd year 2 3 years 3 4years 4 5 years 5 6 Years or more 6 3. Per them employees. are not eligible for severance. pay. Page 2 o( Z ACH Severance Pay Guidelines 1 , PDXDOCS:2005030.6A Schedule 40.9 EIB; Seniority ACH and Asante have agreed to credit each employee with the seniority they have earned at ACH. The PTO balance will be transferred to Asante except in those cases where the balance exceeds the Asante maximum balance, in that case the employee will be paid for the amount of excess PTO, plus 40 additional hours so they can continue to accrue PTO at the Closing Date. The excess PTO will be paid on the last check from ACH. The extended illness benefit (EIB) balance of each employee will be transferred to Asante. The provisions of this Schedule 40.9 will control over any conflicting provision of Section 14.5 of the Affiliation Agreement. PDXDOCS:2009395.2 Board Approved 4.3.12 Board Approved 12.20.12 Board Approved 7.24.13 ASANTE ASHLAND COMMUNITY HOSPITAL MEDICAL AND ALLIED HEALTHCARE STAFF BYLAWS Table of Contents PREAMBLE 7 DEFINITIONS 9 BOOK 1- MEMBERSHIP ........................................................................................................................11 ARTICLE I 11 NAME 11 ARTICLE 11 11 MEDICAL AND ALLIED HEALTHCARE MEMBERSHIP 11 2.1 NATURE OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP ..........................11 2.2 REQUIREMENTS FOR QUALIFICATIONS OF MEDICAL STAFF AND ALLIED HEALTHCARE MEMBERSHIP ...............................................................................................................11 2.2-1 GENERAL QUALIFICATIONS .................................................................................11 2.2-2 BASIC QUALIFICATIONS FOR PHYSICIANS AND LIMITED LICENSE PRACTITIONERS 11 2.2-3 BASIC QUALIFICATIONS OF ADVANCED PRACTICE NURSES AND PHYSICIAN ASSISTANTS (CRNA, CNM, NP, AND PA): 12 2.2-4 ADDITIONAL QUALIFICATIONS FOR MEMBERSHIP: 12 2.3 NONDISCRIMINATION ..................................................................................................13 2.4 BASIC RESPONSIBILITIES AND REQUIREMENTS OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP .....................................................................................................13 2.5 STANDARDS OF CONDUCT ............................................................................................14 2.5-1 GENERAL .............................................................................................................14 2.5-2 CONDUCT GUIDELINES ........................................................................................15 2.6 ADOPTION OF RULES ....................................................................................................15 ARTICLE III 16 CATEGORIES OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP 16 3.1 ACTIVE PHYSICIAN MEMBERS .......................................................................................16 3.1-1 QUALIFICATIONS FOR ACTIVE PHYSICIAN MEMBERSHIP ......................................16 3.1-2 PREROGATIVES OF ACTIVE PHYSICIAN MEMBERSHIP ..........................................16 3.1-3 OBLIGATIONS OF ACTIVE PHYSICIAN MEMBERSHIP .............................................17 3.2 COURTESY PHYSICIAN MEMBERSHIP ............................................................................17 3.2-1 QUALIFICATIONS FOR COURTESY PHYSICIAN MEMBERSHIP ................................17 3.2-2 PREROGATIVES OF COURTESY PHYSICIAN MEMBERSHIP .....................................18 3.2-3 OBLIGATIONS OF COURTESY PHYSICIAN MEMBERSHIP ........................................18 3.3 COMMUNITY PHYSICIAN MEMBERSHIP ........................................................................18 3.3-1 QUALIFICATIONS OF COMMUNITY PHYSICIAN MEMBERSHIP ..............................18 3.3-2 PREROGATIVES OF COMMUNITY PHYSICIAN MEMBERSHIP: 18 3.3-3 OBLIGATIONS OF COMMUNITY PHYSICIAN MEMBERSHIP: 19 3.4 EMERITUS PHYSICIAN MEMBERSHIP .............................................................................19 3.4-1 QUALIFICATIONS OF EMERITUS PHYSICIAN MEMBERSHIP ...................................19 3.4-2 PREROGATIVES OF EMERITUS STATUS ................................................................19 3.5 LIMITED LICENSE PRACTITIONER MEMBERSHIP ............................................................19 3.5-1 QUALIFICATIONS FOR LIMITED LICENSE PRACTITIONER ......................................19 3.5-2 PREROGATIVES OF LIMITED LICENSE PRACTITIONER MEMBERSHIP 20 3.5-3 OBLIGATIONS OF LIMITED LICENSE PRACTITIONER MEMBERSHIP .......................20 3.6 ALLIED HEALTHCARE STAFF MEMBERSHIP ....................................................................20 2 3.6-1 GENERAL .............................................................................................................20 3.6-2 QUALIFICATIONS OF ALLIED HEALTHCARE STAFF 20 3.7 EMPLOYEES OF MEDICAL STAFF MEMBERS 22 3.8 PROVISIONAL MEDICAL AND ALLIED HEALTHCARE STAFF STATUS 22 3.9 MODIFICATION OF STAFF MEMBERSHIP .......................................................................23 ARTICLE IV 23 PROCEDURES FOR MEMBERSHIP APPOINTMENTAND REAPPOINTMENT 23 4.1 GENERAL ......................................................................................................................23 4.2 DURATION OF APPOINTMENT AND REAPPOINTMENT 24 4.3 APPLICATION FOR INITIAL APPOINTMENT AND REAPPOINTMENT ...............................24 4.3-1 APPLICATION FORM ............................................................................................24 4.3-2 EFFECT OF APPLICATION 24 4.3-3 BURDEN OF PRODUCING INFORMATION .............................................................25 4.3-4 BASIS FOR APPOINTMENT 25 4.4 APPOINTMENT PROCESS ..............................................................................................26 4.4-1 SERVICE COMMITTEE ACTIONS 27 4.4-2 CREDENTIALS COMMITTEE ACTION 27 4.4-3 MEDICAL EXECUTIVE COMMITTEE ACTION 27 4.4-4 RECOMMENDATION TO DEFER THE APPLICATION ...............................................27 4.4-5 EFFECT OF MEDICAL EXECUTIVE COMMITTEE ACTION 27 4.4-6 ACTION ON THE APPLICATION 28 4.4-7 REAPPLICATION AFTER ADVERSE APPOINTMENT DECISION 28 4.5 REAPPOINTMENTS AND REQUESTS FOR MODIFICATION OF MEMBER STATUS .............28 4.5-1 APPLICATION OF REAPPOINTMENT .....................................................................28 4.5-2 STANDARDS AND PROCEDURES FOR REVIEW ......................................................29 4.6 BASIS OF RECOMMENDATIONS FOR REAPPOINTMENT 29 4.6-1 EXTENSION OF APPOINTMENT 30 4.6-2 FAILURE TO FILE REAPPOINTMENT APPLICATION ................................................30 4.7 LEAVE OF ABSENCE 30 4.7-1 LEAVE STATUS .....................................................................................................30 4.7-2 MILITARY LEAVE OF ABSENCE 31 4.7-3 TERMINATION OF LEAVE .....................................................................................31 4.7-4 FAILURE TO REQUEST REINSTATEMENT ..............................................................31 4.8 CONFIDENTIALITY; IMPARTIALITY .................................................................................31 BOOK 2 - CREDENTIALING 31 ARTICLE V 31 CLINICAL PRIVILEGES 32 5.1 EXERCISE OF PRIVILEGES ..............................................................................................32 5.2 DELINEATION OF PRIVILEGES IN GENERAL ....................................................................32 5.2-1 REQUESTS ...........................................................................................................32 5.2-2 BASIS FOR PRIVILEGES DETERMINATION .............................................................32 5.2-2.1 TELEMEDICINE PRIVILEGES 32 5.2-3 CRITERIA FOR PRIVILEGES ....................................................................................33 5.3 PROVISIONAL PERIOD 33 5.3-1 GENERAL .............................................................................................................33 5.3-2 FAILURE TO OBTAIN RECOMMENDATION ...........................................................33 5.4 TEMPORARY CLINICAL PRIVILEGES ................................................................................33 5.4-1 CONDITIONS Error! Bookmark not defined. 3 5.4-2 CIRCUMSTANCES Error! Bookmark not defined. 5.4-3 TERMINATION .....................................................................................................33 5.4-4 EMERGENCY PRIVILEGES .....................................................................................35 5.5 REQUEST FOR MODIFICATION OF PRIVILEGES ..............................................................35 ARTICLE VI 36 PERFORMANCE EVALUATION AND MONITORING 36 6.1 GENERAL OVERVIEW OF PERFORMANCE EVALUATION AND MONITORING ACTIVITIES. 36 6.2 PERFORMANCE MONITORING GENERALLY ...................................................................36 6.3 ONGOING PROFESSIONAL PERFORMANCE EVALUATIONS (OPPE) .................................37 6.4 FOCUSED PROFESSIONAL PRACTICE EVALUATION (FPPE) ..............................................37 6.5 PROCTORING ................................................................................................................38 BOOK 3 - GOVERNANCE 42 ARTICLE VII 42 OFFICERS 42 7.1 OFFICERS OF THE MEDICAL STAFF ................................................................................42 7.1-1 IDENTIFICATION 42 7.1-2 QUALIFICATIONS .................................................................................................42 7.1-3 ELECTION AND NOMINATIONS OF OFFICERS .......................................................42 7.1-4 TERM OF OFFICE .................................................................................................43 7.1-5 VACANCIES IN OFFICE .........................................................................................43 7.1-6 RECALL OF ELECTED OFFICERS .............................................................................43 7.2 DUTIES OF OFFICERS .....................................................................................................43 7.2-1 CHIEF OF STAFF ...................................................................................................43 7.2-2 CHIEF OF STAFF-ELECT ........................................................................................44 7.2-3 SECRETARY ..........................................................................................................44 7.2-4 IMMEDIATE PAST CHIEF OF STAFF .......................................................................44 ARTICLE VIII 45 CLINICAL SERVICES 45 8.1 ORGANIZATION OF SERVICES ........................................................................................45 8.2 QUALIFICATIONS, SELECTION AND TENURE OF SERVICE CHIEF .....................................45 8.3 FUNCTIONS OF SERVICE CHIEFS ....................................................................................45 ARTICLE IX 46 COMMITTEES 46 9.1 DESIGNATION ...............................................................................................................46 9.2 GENERAL PROVISIONS ..................................................................................................47 9.2-1 TERMS OF COMMITTEE MEMBERS ......................................................................47 9.2-2 REMOVAL ...........................................................................................................47 9.2-3 VACANCIES .........................................................................................................47 9.3 MEDICAL EXECUTIVE COMMITTEE ................................................................................47 9.3-1 DUTIES ................................................................................................................47 9.3-2 AUTHORITY .........................................................................................................48 9.4 CREDENTIALS COMMITTEE ...........................................................................................49 9.4-1 DUTIES ................................................................................................................49 9.5 PERFORMANCE IMPROVEMENT COMMITTEE ...............................................................50 9.5-1 COMPOSITION ....................................................................................................50 9.5-2 FUNCTIONS .........................................................................................................50 9.5-3 MEETINGS ..........................................................................................................52 9.6 PHARMACY AND THERAPEUTICS COMMITTEE/ INFECTION CONTROL ...........................52 4 9.6-1 COMPOSITION ....................................................................................................52 9.6-2 DUTIES ................................................................................................................52 9.6-3 MEETINGS ...........................................................................................................53 ARTICLE X 53 10.1 MEDICAL STAFF MEETINGS 53 10.1-1 REGULAR MEETINGS .........................................................................................53 10.1-3 ATTENDANCE REQUIREMENTS ..........................................................................54 10.2 COMMITTEE AND SERVICE MEETINGS ..........................................................................54 10.2-1 REGULAR MEETINGS .........................................................................................54 10.2-2 SPECIAL MEETINGS ...........................................................................................54 10.2-3 NOTICES OF MEETINGS .....................................................................................54 10.2-4 QUORUM ..........................................................................................................54 10.2-5 MANNER OF ACTION .........................................................................................54 10.2-6 RIGHTS OF EX-OFFICIO MEMBERS .....................................................................55 10-2-7 MINUTES ..........................................................................................................55 10.2-8 ATTENDANCE REQUIREMENTS ..........................................................................55 ARTICLE XI 55 MEDICAL STAFF AND ALLIED HEALTHCARE STAFF CREDENTIAL FILES 55 CONFIDENTIALITY, IMMUNITY AND RELEASES 55 11.1 CREDENTIALS FILES .......................................................................................................55 11.1-1 CONTENTS ........................................................................................................55 11.1-2 AUTHORIZATION AND CONSENT .......................................................................56 11.1-3 INSERTION OF ADVERSE INFORMATION ............................................................56 11.1-4 REVIEW OF ADVERSE INFORMATION AT THE TIME OF REAPPRAISAL .................57 AND REAPPOINTMENT .................................................................................................57 11.1-5 CONFIDENTIALITY .............................................................................................58 11.1-6 MEMBER'S OPPORTUNITY TO REQUEST CORRECTION/DELETION OF .................58 AND TO MAKE ADDITION TO INFORMATION IN FILE .....................................................58 11.2 IMMUNITY FOR LIABILITY .............................................................................................59 11.2-1 FOR ACTION TAKEN 59 11.2-2 FOR PROVIDING INFORMATION ........................................................................59 11.3 ACTIVITIES AND INFORMATION COVERED ....................................................................59 11.3-1 ACTIVITIES ........................................................................................................59 11.4 RELEASES ......................................................................................................................60 ARTICLE XII 60 ADOPTION AND AMENDMENT OF BYLAWS ................................................................................60 12.1 THE BYLAWS WILL BE DIVIDED UNTO 4 SECTIONS IN ADDITION TO THE RULES & REGULATIONS: 60 12.2 ALL SECTIONS WILL REQUIRE THE FOLLOWING: (TWO READINGS) ................................60 12.3 TECHNICAL AND EDITORIAL AMENDMENTS ..................................................................61 ARTICLE XII I 61 RULES & REGULATIONS 61 BOOK 4 - FAIR HEARING / CORRECTIVE ACTION 62 ARTICLE XIV 62 CORRECTIVE ACTION 62 14.1 CORRECTIVE ACTION 62 14.1-1 GROUNDS FOR CORRECTIVE ACTION 62 14.1-2 INITIATION OF CORRECTIVE ACTION .................................................................63 5 14.1-3 REQUESTS .........................................................................................................63 14.1-4 INVESTIGATION ................................................................................................63 14.1-5 ACTION BY THE MEDICAL EXECUTIVE COMMITTEE ............................................64 14.1-6 ACTION BY THE GOVERNING BODY ...................................................................64 14.1-7 VOLUNTARY SURRENDER OF MEDICAL STAFF MEMBERSHIP OR CLINICAL PRIVILEGES WHILE UNDER INVESTIGATION OR IN LIEU OF INVESTIGATION ..................65 14.2 SUMMARY RESTRICTION OR SUSPENSION ....................................................................65 14.2-1 CRITERIA FOR INITIATION ..................................................................................65 14.2-2 MEDICAL EXECUTIVE COMMITTEE ACTION .......................................................65 14.3 AUTOMATIC SUSPENSION OR LIMITATION 65 14.3-1 LICENSURE ........................................................................................................66 14.3-2 CONTROLLED SUBSTANCES ...............................................................................66 14.3-3 MEDICAL RECORDS ...........................................................................................66 ARTICLE XV 67 HEARINGS 67 15.1 INITIATION OF HEARING ...............................................................................................67 15.1-1 ADVERSE ACTION REQUIRED FOR RIGHT TO HEARING ......................................67 15.1-2 ACTIONS NOT DEEMED ADVERSE ......................................................................67 15.1-3 WHEN DEEMED ADVERSE .................................................................................68 15.1-4 NOTICE OF ADVERSE ACTION AND RIGHT TO REQUEST HEARING ......................68 15.2 HEARING PREREQUISITES .............................................................................................69 15.2-1 HEARING COMMITTEE ......................................................................................69 15.2-2 NOTICE OF TIME AND PLACE FOR HEARING ......................................................69 15.2-3 CONTENT OF HEARING NOTICE .........................................................................69 15.3 HEARING PROCEDURE ..................................................................................................70 15.3-1 PERSONAL PRESENCE ........................................................................................70 15.3-2 PRESIDING OFFICER ..........................................................................................70 15.3-3 REPRESENTATION 70 15.3-4 RIGHTS OF THE PARTIES ....................................................................................70 15.3-5 PROCEDURE AND EVIDENCE .............................................................................70 15.3-6 SCOPE OF REVIEW AND BURDEN OF PROOF ......................................................70 15.3-7 HEARING RECORD .............................................................................................71 15.3-8 POSTPONEMENT ...............................................................................................71 15.3-9 PRESENCE OF THE HEARING COMMITTEE .........................................................71 15.3-10 RECESSES AND ADJOURNMENT .......................................................................71 15.4 HEARING COMMITTEE REPORT AND FURTHER ACTION ................................................71 15.4-1 HEARING COMMITTEE REPORT .........................................................................71 15.4-2 ACTION BY GOVERNING BODY ..........................................................................72 15.4-3 JOINT REVIEW COMMITTEE ..............................................................................72 15.4-4 FINAL ACTION BY GOVERNING BODY ................................................................73 15.5 ADVERSE ACTION REPORT ............................................................................................73 15.5-1 PRIOR NOTICE TO AFFECTED PROFESSIONAL 73 15.5-2 PROFESSIONAL DISPUTE 73 15.5-3 SUBMISSION TO THE APPROPRIATE OREGON LICENSING BOARD ......................73 6 Asante Ashland Community Hospital MEDICAL AND ALLIED HEALTHCARE STAFF BYLAWS PREAMBLE Whereas, Asante Ashland Community Hospital is a 501(c)(3) healthcare organization that serves the community of Ashland and the surrounding vicinity. Whereas, our vision is to be an independent, collaborative community hospital distinguished throughout the region for highly skilled, patient-centered care. Whereas, our mission is to provide compassionate, high quality care that improves the overall health of our patients and the community. Therefore, the physicians, limited license practitioners and allied healthcare staff of Asante Ashland Community Hospital hereby organizes this Medical and Allied Healthcare Staff, in conformity with the requirements of the Oregon Revised Statutes and the bylaws of the Governing Body to be governed by the Bylaws herein established. These Bylaws are adopted in order to provide for the organization of the Medical and Allied Healthcare Staff of Asante Ashland Community Hospital and to provide a framework for self-government in order to permit these providers to discharge their responsibilities and to govern the orderly resolution of these matters. These Bylaws provide the professional and legal structure for operations, relations with the Governing Body, and relations with applicants to and members of the Medical and Allied Healthcare Staff. These Bylaws create a system of mutual rights and responsibilities between members of the Medical and Allied Healthcare Staff and, the Hospital and the governing Body. In adopting these Bylaws the Medical and Allied Healthcare Staff creates a framework to assist the Governing Body in executing the following functions: (a) To ensure that all health professionals are currently licensed, registered or certified as appropriate. (b) To ensure that Medical and Allied Healthcare Staff admitted to practice in the facility are granted privileges consistent with their individual training, experience and other qualifications. (c) To ensure that procedures for granting, restricting and terminating privileges exist and are regularly revised to assure their conformity to the bylaws of the Governing Body and to applicable laws. 7 (d) To ensure that Medical and Allied Healthcare Staff admitted to practice in the facility are organized in such a manner as to effectively review professional practices at the facility for the purposes of improving patient health and safety. (e) To provide a structure whereby issues concerning medical staff and allied healthcare staff members may be addressed by the holders of such privileges and be presented by them to the Governing Body of the hospital. Finally, notwithstanding the provisions of these Bylaws, the Medical and Allied Healthcare Staff acknowledges that the Governing Body must act to protect the quality of medical care provided and the competency of the Medical and Allied Healthcare Staff, and to ensure the responsible governance of the hospital. In adopting these Bylaws, the Medical and Allied Healthcare Staff commits to exercise its responsibilities with diligence and good faith; and in approving these Bylaws, the Governing Body commits to allowing the Medical and Allied Healthcare Staff reasonable independence in conducting their affairs. Accordingly, the Governing Body will not assume a duty or responsibility of the Medical and Allied Healthcare Staff precipitously, unreasonably, or in bad faith; and will do so only in the reasonable and good faith belief that the Medical and Allied Healthcare Staff has failed to fulfill a substantive duty or responsibility in matters pertaining to the quality of patient care. 8 DEFINITIONS (1) ALLIED HEALTHCARE STAFF means Certified Registered Nurse Anesthetists, Nurse Practitioners (including Certified Nurse Midwives) or Physician Assistants who have been granted recognition as members pursuant to these Bylaws. These practitioners exercise judgment within their areas of professional competence and the limits established by the Governing Body, the Medical Staff, and the applicable State laws, and who are qualified to render direct or indirect medical care under an appropriate level of supervision by or in coordination with the physician who has been accorded privileges to provide such care in the hospital. (2) CHIEF EXECUTIVE OFFICER means the person appointed by the Governing Body to serve in a chief administrative capacity or his or her designee. (3) CHIEF OF STAFF means the chief officer of the Medical Staff elected by the Medical Staff. (4) DAYS means calendar days unless otherwise specified. (5) EX OFFICIO means service by virtue of office or position held. An ex officio appointment is without vote unless otherwise specified. (6) GOVERNING BODY means the Board of Directors of Asante Ashland Community Hospital (7) HOSPITAL means Asante Ashland Community Hospital (8) LIMITED LICENSE PRACTITIONERS means Dentists, Podiatrists and Psychologists who have been granted recognition as members pursuant to these Bylaws. (9) MEDICAL EXECUTIVE COMMITTEE means the executive committee of the Medical Staff which is comprised of members chosen to represent and coordinate all activities and policies of the medical staff. (10) MEDICAL STAFF means the Physicians (M.D. or D.O.) and Limited License Practitioners who have been granted recognition as members pursuant to these Bylaws. (11) MEDICAL AND ALLIED HEALTHCARE STAFF means healthcare practitioners who have been granted recognition as members pursuant to these Bylaws. (12) MEDICAL STAFF YEAR means the twelve-month period commencing January 1 through December 31. (13) MEMBER means any practitioner who has been appointed to the Medical and Allied Healthcare Staff. (14) PHYSICIAN means an individual with an M.D. or D.O. degree who is currently licensed to practice medicine in the State of Oregon, pursuant to ORS Chapter 677. (15) PRACTITIONER means, unless otherwise expressly limited, any member applying for or exercising specific clinical privileges in the hospital. (16) PRIVILEGES OR CLINICAL PRIVILEGES means the permission granted to a Medical or Allied Healthcare Staff Practitioner to render specific patient services. 9 (17) RULES refer to the Medical Staff Rules & Regulations adopted in accordance with these Bylaws unless specified otherwise. (18) SERVICE means an array of clinical activities related by function and custom. Examples are medicine, radiology, surgery and obstetrics. A service is not a "department." (19) SPECIAL NOTICE means written notification by certified or registered mail, return receipt requested, dated the day of mailing and addressed to the affected professional at either the office or home address stated on his/her most recent application for staff appointment or such other address as contained in the hospital files relating to that person, or personally hand delivered written notification to the affected professional dated the day of delivery. Special notice shall be deemed to have been given as of the date appearing on the face of the notice. (20) STAFF means Medical and Allied Healthcare staff unless otherwise specified. (21) TELEMEDICINE means the practice of healthcare delivery, diagnosis, consultation, treatment, transfer or medical data, and education using interactive audio, video or data communications. 10 BOOK 1 - MEMBERSHIP ARTICLE I NAME The name of this organization shall be the Medical and Allied Healthcare Staff of Asante Ashland Community Hospital ARTICLE II MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP 2.1 NATURE OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP Medical and Allied Healthcare Staff membership may be extended to and maintained only by those healthcare practitioners who continually meet the qualifications, standards, and requirements set forth in these Bylaws and the Rules & Regulations. Appointment to the Medical and Allied Healthcare Staff does not imply privileges or credentials to practice in the Hospital. The privileging and credentialing process is delineated in Book 2 Credentialing. 2.2 REQUIREMENTS FOR QUALIFICATIONS OF MEDICAL STAFF AND ALLIED HEALTHCARE MEMBERSHIP 2.2-1 GENERAL QUALIFICATIONS Membership in the Medical and Allied Healthcare Staff shall be extended only to healthcare practitioners who are competent and continuously meet the qualifications, standards, and requirements set forth in the Medical Bylaws and Rules & Regulations. Medical and Allied Healthcare Staff membership (except Emeritus Physician Member) shall be limited to practitioners who are currently licensed or qualified to practice medicine, podiatry, dentistry or psychology in Oregon. 2.2-2 BASIC QUALIFICATIONS FOR PHYSICIANS AND LIMITED LICENSE PRACTITIONERS A healthcare practitioner must demonstrate compliance with all basic standards set forth in this Section in order to have an application for Medical and Allied Healthcare Staff membership accepted for review. The healthcare practitioners must: 11 Be currently licensed by the State of Oregon to practice his/her profession Document his/her background, experience and training, and possess demonstrated competence, including current knowledge, judgment and technique in their specialty area. Have actively practiced for an average of at least 20 hours per week in the specialty he or she will practice for 12 of the previous 24 months (or have completed a residency within the previous 18 months). Have liability insurance or equivalent coverage meeting the standards specified by the Governing Body. Pledge to provide continuous care to his or her patients while on duty. A practitioner who does not meet these basic standards is ineligible to apply for Medical Staff membership, and the application shall not be accepted for review, except that applicants for the emeritus Medical Staff do not need to comply with any of the basic standards. If it is determined during the processing that an applicant does not meet all of the basic qualifications, the review of the application shall be discontinued. An applicant who does not meet the basic standards is not entitled to the procedural rights set forth in these Bylaws. 2.2-3 BASIC QUALIFICATIONS OF ADVANCED PRACTICE NURSES AND PHYSICIAN ASSISTANTS (CRNA, CNM, NP, AND PA): (a) Be currently licensed by the State of Oregon to practice his/her profession and to exercise privileges applied or held. (b) Training: must have a registered nurse certification and certification in area of practice. (Except physician assistants) (c) Experience: must come directly (within 6 months) of training program or have actively practiced for an average of at least 20 hours per week in the specialty he or she will practice at the hospital for 12 of the previous 24 months. (d) Have liability insurance or equivalent coverage meeting the standards specified by the Governing Body. (e) Pledge to provide continuous care to his or her patients while on duty. Note: other categories of licensed personnel will be processed through Human Resources being that they are not part of the Medical and Allied Healthcare Staff. 2.2-4 ADDITIONAL QUALIFICATIONS FOR MEMBERSHIP: (a) In addition to meeting the basic standards, the practitioner must: document his or her: 1. Adequate experience, education, and training in the requested privileges and participation in continuing medical education; 2. Current professional competence; 3. Good judgment; and 12 4. Adequate physical and mental health status (subject to any necessary reasonable accommodation) to demonstrate to the satisfaction of the Medical and Allied Healthcare Staff that he or she is professionally and ethically competent so that patients can reasonably expect to receive the generally recognized professional level of quality of care for this community. (b) Be determined to: 1. Adhere to the ethics of his or her profession; 2. Be able to work cooperatively with others in the hospital setting so as not to adversely affect patient care or hospital operations; and 3. Be willing to participate in and properly discharge Medical and Allied Healthcare Staff responsibilities. 2.3 NONDISCRIMINATION Medical and Allied Healthcare Staff membership or particular privileges shall not be denied on the basis of age, sex, religion, race, creed, color, national origin, or any physical or mental impairment if, after any necessary reasonable accommodation, the applicant complies with the Bylaws and Rules & Regulations of the Medical and Allied Healthcare Staff of the hospital. 2.4 BASIC RESPONSIBILITIES AND REQUIREMENTS OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP Acceptance of staff membership shall constitute the member's agreement to continuously meet all of the following responsibilities: (a) Abide by all applicable laws and regulations of governmental agencies and comply with applicable standards of DNV Healthcare. Provide his or her patients with a professional level of care that is generally recognized as being of high quality and efficiency. Abide by the Medical and Allied Healthcare Staff Bylaws and Rules & Regulations and all other lawful standards and policies of the hospital. Accept and appropriately discharge such Medical and Allied Healthcare Staff committee and service functions for which he or she is responsible by appointment, election or otherwise. Prepare and complete, in a timely, legible and accurate manner, the medical and other required records for all patients to whom the practitioner in any way provides services in the hospital. Refrain from unlawful fee splitting or unlawful inducements relating to patient referral. 13 Refrain from delegating the responsibility for diagnosis or care of hospitalized patients to a practitioner or Allied Healthcare practitioner who is not qualified to undertake this responsibility or who is not adequately supervised. Coordinate individual patient's care, treatment and services with other practitioners and hospital personnel, including, but not limited to, seeking consultation whenever warranted by the patients' condition or when required by the Rules & Regulations of the Medical and Allied Healthcare Staff. Actively participate in and regularly cooperate with the Medical and Allied Healthcare Staff in assisting the hospital to fulfill its obligations related to patient care, including, but not limited to, continuous organization- wide quality measurement, assessment, and improvement, peer review, utilization management, quality evaluation, ongoing and focused Professional Practice Evaluations and related monitoring activities required of the Medical and Allied Healthcare Staff, and in discharging such other functions as may be required from time to time. Notify the Medical and Allied Healthcare Staff office in writing promptly, and no later than 14 calendar days, following any action taken regarding the member's license, DEA registration, privileges at other facilities, changes in liability insurance coverage, any report filed with the National Practitioner Data Bank, or any other action that could affect his/her Medical and Allied Healthcare Staff standing at the hospital. Continuously meet the qualifications for and perform the responsibilities of membership as set forth in these Bylaws. A member may be required to demonstrate continuing satisfaction of any of the requirements of these Bylaws upon the reasonable request of the Medical Executive Committee. Discharge such other staff obligations as may be lawfully established from time to time by the Medical and Allied Healthcare Staff or Medical Executive Committee. Be located close enough (office and residence) to the hospital to provide continuous care to his or her patients while on duty. The distance to the hospital may vary depending upon the privileges that are involved and may be defined in the Rules. 2.5 STANDARDS OF CONDUCT Members are expected to adhere to the Medical and Allied Healthcare Staff Standards of Conduct including, but not limited to, the following: 2.5-1 GENERAL It is the policy of the Medical and Allied Healthcare Staff to require that its members fulfill their obligations in a manner that is within generally accepted bounds of professional interaction and behavior. The Medical and Allied Healthcare Staff is committed to supporting a culture and environment that values integrity, honesty and fair dealing with each other, and to promoting a caring environment for patients, practitioners, employees and visitors. Rude, combative, obstreperous behavior, as well as willful refusal to communicate or comply with reasonable Rules & Regulations of the Medical and Allied Healthcare Staff and the hospital may be found to be disruptive behavior. (See Disruptive Practitioner Policy in hospital Policies and Procedures) It is 14 specifically recognized that patient care and hospital operations can be adversely affected whenever any of the foregoing occurs with respect to interactions at any level of the hospital, in that all personnel play an important part in the ultimate mission of delivering quality patient care. In assessing whether particular circumstances in fact are affecting quality patient care or hospital operations, the assessment need not be limited to care of specific patients, or to direct impact on patient health. Rather, it is understood that quality patient care embraces - in addition to medical outcome - matters such as timeliness of services, appropriateness of services, timely and thorough communications with patients, their families, and their insurers (or third party payors) as necessary to effect payment for care, and general patient satisfaction with the services rendered and the individuals involved in rendering those services. 2.5-2 CONDUCT GUIDELINES (a) Upon receiving Medical and Allied Healthcare Staff membership at the hospital, the member enters a common goal with all members of the organization to endeavor to maintain the quality of patient care and appropriate professional conduct. (b) Members of the Medical and Allied Healthcare Staff are expected to behave in a professional manner at all times and with all people - patients, professional peers, hospital staff, visitors, and others in and affiliated with the hospital. (c) Interactions with all persons shall be conducted with courtesy, respect, civility and dignity. Members of the Medical and Allied Healthcare Staff shall be cooperative and respectful in their dealings with other persons in and affiliated with the hospital. (d) Complaints and disagreements shall be aired constructively, in a professional manner, and through official channels. (e) Cooperation and adherence to the Policies and Procedures of the hospital and the Rules & Regulations of the Medical and Allied Healthcare Staff is required. (f) Members of the Medical and Allied Healthcare Staff shall not engage in conduct that is offensive or disruptive, whether it is written, oral or behavioral in accordance with Disruptive Practitioner Policy of the Hospital. 2.6 ADOPTION OF RULES The Medical Executive Committee may promulgate Rules & Regulations further illustrating and implementing the purposes of this Section including, but not limited to, procedures for investigating and addressing incidents of perceived misconduct, and progressive remedial measures, including, when necessary, disciplinary action. 15 ARTICLE III CATEGORIES OF MEDICAL AND ALLIED HEALTHCARE STAFF MEMBERSHIP The Physicians shall be divided into Active, Courtesy, Community and Emeritus members Limited License Practitioners shall consist of podiatrists, dentists, oral surgeons and psychologists Allied Healthcare Practitioners will be divided into 3 categories of: Certified Registered Nurse Anesthetists (CRNA); Certified Nurse Midwives (CNM); and Nurse Practitioners (NP) and Physician Assistants (PA). 3.1 ACTIVE PHYSICIAN MEMBERS 3.1-1 QUALIFICATIONS FOR ACTIVE PHYSICIAN MEMBERSHIP The active staff shall consist of members who: (a) Meet the general qualifications for membership set forth in section 2.2. (b) Are involved in at least 12 patient contacts, as demonstrated by documentation in the patient medical record, per two-year appointment term. (c) Have demonstrated a commitment to the Medical Staff and Hospital through service on Hospital or Medical Staff committees and active participation in performance/quality improvement functions. (d) Members of the Active Staff who have less than 12 patient contacts, as demonstrated by documentation in the patient medical record, during their two-year appointment term shall not be eligible to request Active Staff status at the time of their reappointment, unless they can definitely demonstrate that their practice patterns have changed and that they will satisfy the activity requirements. 3.1-2 PREROGATIVES OF ACTIVE PHYSICIAN MEMBERSHIP Except as otherwise provided, the prerogatives of an active medical staff member shall be to: (a) Admit patients and exercise such clinical privileges as are granted pursuant to Article V Credentialing. (b) Attend and vote on matters presented at general and special meetings of the Medical and Allied Healthcare Staff and of the service and committees of which he/she is a member. 16 (c) Hold staff or service office and serve as a voting member on committees to which he/she is duly appointed or elected by the medical staff or duly authorized representative thereof. 3.1-3 OBLIGATIONS OF ACTIVE PHYSICIAN MEMBERSHIP Selected obligations of this staff category may be waived for individual physicians upon petition to and approval by the Medical Executive Committee and by a 2/3rd vote of the medical staff present at the general medical staff meeting. An active staff member must: (a) Serve on appropriate Hospital Medical and Allied Healthcare Staff committees. (b) Reasonably participate as requested in the quality review, risk management and utilization review activities of the hospital, as may be required of the medical staff and allied healthcare staff. (c) Satisfy the meeting attendance and special appearance requirements as found in these Bylaws. (d) Pay all staff dues and assessments as may be set forth in these Bylaws, Rules & Regulations. (e) Serve in a reasonable rotational manner on the emergency services "call list." When on call, the active physician member must be available in a timely manner to examine a patient and provide treatment, within the scope of that physician's privileges and the capabilities of the hospital, except as otherwise delineated in the Rules & Regulations. (f) Be located in such close proximity to the hospital so as to provide timely and appropriate continuity of patient care. 3.2 COURTESY PHYSICIAN MEMBERSHIP 3.2-1 QUALIFICATIONS FOR COURTESY PHYSICIAN MEMBERSHIP The courtesy medical staff shall consist of members who: (a) Meet the general qualifications as set forth in Section 2.2. (b) Are on the active staff of another local hospital. (c) Are involved in more than 3 but fewer than 12 patient contacts, as demonstrated by documentation in the patient medical record, per two-year appointment term. (d) At each reappointment time, provide such data and other information as may be requested to assist in an appropriate assessment of current clinical competence and overall qualifications for appointment and clinical privileges (including but not limited to, information from another hospital, information from the individual's office practice, information from managed care organizations in which the individual participates, and/or receipt of confidential evaluation forms completed by referring/referred to physicians.) 17 3.2-2 PREROGATIVES OF COURTESY PHYSICIAN MEMBERSHIP A courtesy staff member may: (a) Admit patients to the hospital and exercise such clinical privileges as are granted pursuant to Article V; (b) Attend in a non-voting capacity meetings of the Medical and Allied Healthcare Staff and the service of which he/she is a member; including open committee meetings and educational programs, but shall have no right to vote at such meetings, except within committees when the right to vote is specified at the time of appointment. (c) Are excused from the emergency call roster unless the MEC finds that there are insufficient Active Staff members in a particular specialty area to perform call responsibilities (however, Courtesy Staff members must accept referrals from the Emergency Department for follow-up care of patients treated in the Emergency Department). 3.2-3 OBLIGATIONS OF COURTESY PHYSICIAN MEMBERSHIP Selected obligations of this staff category may be waived for individual physicians upon petition to and approval by the MEC and by a 2/3rd vote of the Medical Staff present at the General Medical Staff meeting. A courtesy staff member must: (a) Meet the basic obligations in Section 2.2. (b) Pay all staff dues and assessments as may be set forth in these Bylaws or Rules & Regulations. (c) Courtesy staff membership may be granted only to physicians who are on the active staff of another Oregon hospital. (d) If not on the emergency "call list" of another local hospital, fulfill the requirements of the emergency services "call list" at Asante Ashland Community Hospital. If on the emergency "call list" of another local hospital the MEC may still require call coverage pursuant to Section 3.2-2(c) above. 3.3 COMMUNITY PHYSICIAN MEMBERSHIP 3.3-1 QUALIFICATIONS OF COMMUNITY PHYSICIAN MEMBERSHIP The community medical staff shall consist of members who: Are physicians practicing in the community who do not admit and are not otherwise involved in the care of patients in the hospital and wish to be involved with the activities of the Medical and Allied Healthcare Staff and hospital. 3.3-2 PREROGATIVES OF COMMUNITY PHYSICIAN MEMBERSHIP: Except as otherwise provided, a community medical staff member: (a) May round on any of his/her patients who may have been admitted by another physician to this hospital, but may not write inpatient orders or progress notes. 18 (b) May attend and vote on matters presented at general and special meetings of the Medical and Allied Healthcare Staff and of the service and committees of which he/she is a member. (c) May be a member at large of the Medical Executive Committee but may not serve as a medical staff officer. A community physician may serve on other committees as appropriate. 3.3-3 OBLIGATIONS OF COMMUNITY PHYSICIAN MEMBERSHIP: Selected obligations of this staff category may be waived for individual physicians upon petition to and approval by the Medical Executive Committee and by a 2/3rd vote of the medical staff present at the general medical staff meeting. A community staff member must: (a) Serve on appropriate hospital Medical and Allied Healthcare Staff committees. (b) Attend and vote on matters presented at general and special meetings of the Medical and Allied Healthcare Staff and of the service and committees of which he/she is a member. (c) Pay all staff dues and assessments as may be set forth in these Bylaws, Rules & Regulations. (d) Serve in a reasonable rotational manner on the emergency services and hospitalist follow-up schedules. 3.4 EMERITUS PHYSICIAN MEMBERSHIP 3.4-1 QUALIFICATIONS OF EMERITUS PHYSICIAN MEMBERSHIP The Emeritus staff shall consist of retired physicians who wish to remain actively involved with the hospital staff and who have an Oregon emeritus or retired licensee and have been on the Medical and Allied Healthcare Staff of Asante Ashland Community Hospital for at least two years. 3.4-2 PREROGATIVES OF EMERITUS STATUS Emeritus staff members may serve upon committees with or without vote at the discretion of the Medical Executive Committee. They may attend staff and service meetings, including open committee meetings and educational programs. They are not eligible to admit patients to the hospital or to exercise clinical privileges in the hospital, or to vote or hold office in the medical staff organization. Emeritus staff members are not required to pay staff dues. 3.5 LIMITED LICENSE PRACTITIONER MEMBERSHIP 3.5-1 QUALIFICATIONS FOR LIMITED LICENSE PRACTITIONER The Limited License Practitioners shall consist of members who: (a) Are dentists, oral surgeons, podiatrists or psychologists (b) Meet the general qualifications for membership set forth in Section 2.2. 19 (c) Are regularly involved in the care of patients in the hospital facilities. 3.5-2 PREROGATIVES OF LIMITED LICENSE PRACTITIONER MEMBERSHIP Except as otherwise provided, the prerogatives of a Limited License Practitioner member shall be: (a) May consult on patients, perform procedures, and observe patients for less than 23 hours, if patient is admitted must have supervision of a physician (MD or DO), and may exercise only such clinical privileges as are granted pursuant to Article V and the Rules & Regulations. Podiatrist performing surgical procedures under general or spinal anesthesia will work in collaboration with the chief of the anesthesia service or their designee in compliance with ORS 677.805(4). (b) Attend and vote on matters presented at general and special meetings of the Medical and Allied Healthcare Staff and of the service and committees of which he/she is a member. (c) May serve as a voting member on appropriate committees to which he/she is duly appointed or elected by the staff or duly authorized representative thereof, but may not serve as an officer of the Medical and Allied Healthcare Staff. 3.5-3 OBLIGATIONS OF LIMITED LICENSE PRACTITIONER MEMBERSHIP A Limited License Practitioner member must: (a) Serve on appropriate hospital Medical and Allied Healthcare Staff committees. (b) Reasonably participate as requested in the quality review, risk management and utilization review activities of the hospital, as may be required of the Medical and Allied Healthcare Staff. (c) Satisfy the meeting attendance and special appearance requirements as found in these Bylaws. (d) Pay all staff dues and assessments as may be set forth in these Bylaws, Rules & Regulations. (e) Serve in a reasonable rotational manner on the emergency services "call list." When on call must be available in a timely manner to examine patient and provide treatment, within the scope of that practitioner's privileges and the capabilities of the hospital, except as otherwise delineated in the Rules & Regulations. (f) Be located in such close proximity to the hospital so as to provide timely and appropriate continuity of patient care. 3.6 ALLIED HEALTHCARE STAFF MEMBERSHIP 3.6-1 GENERAL Allied Healthcare Staff shall consist of members who are: Certified Registered Nurse Anesthetists (CRNA); Certified Nurse Midwives (CNM); Nurse Practitioners (NP) and Physician Assistants (PA). 3.6-2 QUALIFICATIONS OF ALLIED HEALTHCARE STAFF 20 Allied Healthcare Staff members may be granted membership if they hold a license, certificate or other credentials in a category of Allied Healthcare Staff that the Governing Body (after securing Medical Executive Committee comments) has identified as eligible to apply for membership, and only if the Allied Healthcare Staff member is professionally competent and continuously meets the qualifications, standards and requirements set forth in the Medical and Allied Healthcare Staff Bylaws and Rules & Regulations. Allied Healthcare Staff members must satisfy the basic qualifications required for Medical and Allied Healthcare Staff membership including, without limitation, professional liability insurance coverage. The Governing Body may, in consultation with the medical staff, establish additional qualifications required of members of any category of Allied Healthcare Staff. (a) Allied Healthcare Staff may provide patient care services, within the limits of their professional skills and abilities. The degree of participation of members of the Allied Healthcare Staff in patient care shall be approved by the Governing Body. (b) Each of the three categories will have the following stipulations: 1. Certified Registered Nurse Anesthetists (CRNA) may provide anesthesia services in the hospital without Physician supervision, however appropriate Physician collaboration must be available. 2. Certified Nurse Midwives (CNM) may provide perinatology services in the hospital and must have a sponsoring Physician(s) who has full privileges in perinatology Services. The Allied Healthcare Practitioner (AHP) must have a plan for oversight of care signed by his/her sponsoring physician included in the credentials file. 3. Nurse Practitioners (NP) and Physician Assistants (PA) may provide medical or surgical services in the hospital and must have a supervising physician(s) who is an Active Physician Member. The NP and PA must have a plan for oversight of care signed by the supervising physician included in his/her credentials file. (c) Application for clinical privileges as an allied healthcare practitioner shall be generally processed in accordance with the procedures set forth in these Medical and Allied Healthcare Staff Bylaws. (d) Allied Healthcare Staff may serve on appropriate committees of the Medical and Allied Healthcare Staff as appointed by the Chief of Staff. Such individuals must attend Medical and Allied Healthcare Staff meetings and may vote on Medical and Allied Healthcare Staff matters, as outlined in these by-laws (Article X) and may, as a condition of continued privileges, be required to attend meetings involving the clinical review of patient care in which they participated. Allied Healthcare Staff members may be a member at large of the Medical Executive Committee but may not serve as an officer. (e) Be located in such close proximity to the hospital so as to provide timely and appropriate continuity of patient care. (f) Removal Procedure: The hospital retains the right, either through the administrator or upon recommendation of the Credentials Committee, to suspend or terminate any or all of the privileges, prerogatives or functions of any category of allied healthcare staff in accordance with Article XIV - Corrective Actions. When an allied healthcare practitioner is to be terminated or his/her prerogatives 21 curtailed, the individual shall be notified in writing by the administrator or the Credentials Committee of the reasons for such action and be awarded an opportunity for review by the Credentials Committee. The Credentials Committee, which shall be composed of members not in direct economic competition with the practitioner, can recommend to accept, reject or modify the decision to curtail or terminate subject to review and final decision by the Governing Body. 3.7 EMPLOYEED OR CONTRACTED PRACTITIONERS OF MEDICAL STAFF MEMBERS (a) This category shall consist of employed or contracted practitioners of an active member of the medical staff, or group of practitioners, with full privileges, who perform a portion of the professional responsibilities within the hospital. They include, but are not limited to, registered nurses and licensed practical nurses working as surgical assistants. (b) The employer(s) shall apply for privileges to use such employees or contracted practitioners. The Active Staff practitioner or group shall present a written statement of the clinical duties and responsibilities and submit the Surgical Assist Scope of Practice and Evaluation form included in the credentialing application packet. Application for the privilege of using an employee or contracted practitioner shall be generally processed in accordance with the procedures set forth in these Bylaws for delineation of privileges. The application must be approved prior to utilizing said individual within the hospital. (c) The employer(s) of the healthcare practitioner shall assume full responsibility and be fully accountable for the conduct of said individual within the hospital. It is the full responsibility of the employer(s) of the healthcare practitioner to acquaint such individual with the appropriate Rules & Regulations of the Medical and Allied Healthcare Staff and the hospital, and to introduce him/her to the appropriate members of the medical staff and hospital personnel with whom said individual would have contact at the hospital. (d) The clinical duties and responsibilities of a physician's employee within the hospital shall terminate if the employee is terminated, if the medical staff appointment of the employer is terminated for any reason or if the employer's clinical privileges are curtailed to the extent that the professional services of said individual within the hospital are no longer necessary or permissible to assist the employer. The employee shall not be entitled to the procedural rights provided in Article XV of these Bylaws. 3.8 PROVISIONAL MEDICAL AND ALLIED HEALTHCARE STAFF STATUS (a) Initial appointment to the Medical and Allied Healthcare Staff shall be made for a provisional period of 12- 24 months. (b) Provisional Medical and Allied Healthcare Staff members shall be eligible to participate and vote in general staff and committee meetings. They shall not be eligible to hold office, chair committees, serve as chief of service, or serve on the Executive, Credentials or PI committees. (c) Reappointment to provisional status may not exceed 24 months from the time of first appointment, at which time the failure of an appointee to advance from provisional to active, or courtesy staff status shall be deemed a termination of his/her medical staff appointment. A provisional appointee whose membership is so 22 terminated shall have the rights accorded by these By-laws to a member of the Medical and Allied Healthcare Staff who has requested and been denied reappointment. (d) Reapplication to the staff by such provisional appointee may be made when satisfactory grounds for such reapplication can be established to the satisfaction of the Credentials Committee. 3.9 MODIFICATION OF STAFF MEMBERSHIP On its own, upon recommendation of the Credentials Committee, or pursuant to a request by a member under Section 4.5-1, the Medical Executive Committee may recommend a change in the Medical and Allied Healthcare Staff category of a member consistent with the requirements of the Bylaws. ARTICLE IV PROCEDURES FOR MEMBERSHIP APPOINTMENT AND REAPPOINTMENT 4.1 GENERAL By applying to the Medical and Allied Healthcare Staff for appointment or reappointment the applicant acknowledges responsibility to first review these Bylaws and agrees that throughout any period of membership that the applicant will comply with the responsibilities of Medical and Allied Healthcare Staff membership and with the Bylaws, Rules & Regulations of the Medical and Allied Healthcare Staff as they exist and as they may be modified from time to time. Appointment to the staff shall confer on the appointee only such membership as described in Article II and only the granting of clinical privileges as described in Article V. The Credentials Committee shall consider each application for appointment, reappointment and privileges, and each request for modification of Medical Staff category using the procedure and the criteria and standards for membership and clinical privileges set forth in the Bylaws and the Rules & Regulations. The Credentials Committee shall perform this function also for practitioners who seek temporary privileges and for the Allied Health Care Staff. The Credentials Committee shall investigate each applicant for appointment or reappointment and make an objective; evidence-based decision before recommending action to the Governing Body. The Governing Body shall ultimately be responsible for granting membership and privileges. 23 4.2 DURATION OF APPOINTMENT AND REAPPOINTMENT Appointments to the Medical and Allied Healthcare Staff shall be for a period of 24 months, including time in provisional staff status. 4.3 APPLICATION FOR INITIAL APPOINTMENT AND REAPPOINTMENT 4.3-1 APPLICATION FORM The Credentials Committee or its designee shall develop an application form, which requires detailed Information including, but not limited to: (a) The applicant's qualifications, including, but not limited to, professional training and experience, current Oregon licensure, current Drug Enforcement Agency (DEA) registration, and continuing medical education information related to the clinical privileges to be exercised by the applicant;. (b) Peer references familiar with the applicant's professional competence and ethical character; (c) Requests for membership categories, services and clinical privileges; (d) Voluntary or involuntary termination of medical staff membership or voluntary or involuntary limitation, reduction, or loss of clinical privileges at another hospital; (e) Past or pending professional corrective action, licensure limitations, or related matters; (f) Malpractice claims history, including final judgments or settlements; (g) Physical and mental health status; (h) A certificate of professional liability insurance in such amounts as may be required by the Governing Body is required; and (i) Supervising or collaborating physician, if required (podiatrist, physician assistant, nurse practitioner, certified nurse midwife) Each application for appointment to the medical staff shall be in writing, submitted on the prescribed form with all provisions completed (or accompanied by an explanation of why answers are unavailable), and signed by the applicant. Together with the application, the applicant shall be provided a copy of the Medical and Allied Healthcare Staff Bylaws, Rules & Regulations. 4.3-2 EFFECT OF APPLICATION In addition to the matters set forth in Section 4. 1, by applying for appointment to the medical staff each applicant: (a) Attests to the correctness and completeness of all information furnished; (b) Agrees to abide by these Bylaws and Rules & Regulations of the medical staff; (c) Signifies willingness to appear for interviews in connection with the application; 24 (d) Authorizes the hospital, the Credentials Committee, Medical Executive Committee and the appropriate service to consult with members of the medical staff and allied healthcare staff and with any others who may have information bearing on the applicant's professional qualifications, ethical standing, and competence; (e) Consents to inspection of records and documents that may be material to an evaluation of the applicant's qualifications and ability to carry out clinical privileges requested, and authorizes all individuals and organizations in custody of such records and documents to permit such inspection and copying as permitted by law; (f) Releases all persons and entities from any liability that might arise from their investigating and/or acting on the application; (g) Releases from any liability, to the fullest extent permitted by law, all individuals and organizations who provide information regarding the applicant, including otherwise confidential information; (h) Consents to the disclosure to appropriate licensing boards or other organizations as required by law, any information regarding the applicant's professional or ethical standing that the hospital or Medical and Allied Healthcare Staff may have, and releases the hospital and staff from liability for so doing to the fullest extent permitted by law; and (i) Agrees to cooperate openly and fully in an impartial physical or mental examination. 4.3-3 BURDEN OF PRODUCING INFORMATION In connection with all applications for appointment, reappointment, advancement or transfer, the applicant shall have the burden of producing information for an adequate evaluation of the applicant's qualifications and suitability for the clinical privileges and staff category requested, of resolving any reasonable doubts about these matters, and of satisfying requests for information. This burden may include submission to a medical or psychological examination, at the applicant's expense, if deemed appropriate by the Credentials Committee, which may select the examining physician after conferring with the applicant being reviewed. No application is complete or deemed received, until all requested information is provided. The applicant shall have 90 days to complete the applications and submit all requested information to the Credentials Committee. 4.3-4 BASIS FOR APPOINTMENT Recommendations for appointment to the Medical and Allied Healthcare Staff shall be based upon appraisal of all information provided in the application including, but not limited to, health status and written peer recommendations regarding the practitioner's current proficiency the practitioner's training, experience, and professional performance at this hospital, if applicable, and in other settings, whether the practitioner meets the qualifications and can carry out all of the responsibilities specified in these Bylaws and the Rules & Regulations, and upon the hospital's patient care needs and ability to provide adequate support services and facilities for the practitioner. Recommendations from peers in the same practitioner discipline as the practitioner, and who have personal knowledge of the applicant, are to be included in the evaluation of the practitioner's qualifications. (a) Basis for appointment of Telemedicine practitioner. 25 The initial appointment of practitioner to the Telemedicine Staff will be based upon at least one of the following methods at the discretion of the Credentials Committee: 1. The practitioner's full compliance with this hospital's credentialing and privileging standards; or 2. By using this hospital's standards but relying in whole or in part on information provided by the hospital(s) at which the practitioner routinely practices; or 3. A comprehensive report by a DNV Healthcare accredited contracting agency which provides the practitioner's qualifications, thus relying entirely on the credentialing and privileging process of the contracting agency. (b) Basis for appointment of contractual practitioners. 1. A practitioner who is or who will be providing specified practitioner services pursuant to a cc ntract/em ploy me nt with the hospital must meet the same appointment qualifications, must be evaluated for appointment, reappointment and clinical privileges in the same manner and must fulfill all of the obligations of his/her category as any other applicant or staff member. 2. Effect of contract expiration or termination 3. Upon termination or expiration of the contract, the practitioner's appointment to the staff or clinical privileges will not be affected except to the extent such issues are governed by the terms of the practitioner's contract. 4.4 APPOINTMENT PROCESS Upon receipt of the completed signed application, the Credentials Committee will seek to verify its content and collect additional information as follows: Verification of licensure or status from the Oregon Medical Board, or appropriate Oregon licensing board. All information held by the Secretary of the Department of Health and Human Services or the agency designated by the secretary, pursuant to the Health Care Quality Improvement Act of 1986; or other relevant statute. Copies of certificates or letters confirming completion of an accredited professional school, and post graduate education. Criminal background check. National Practitioner Data Bank After receipt of the completed application, verification of its contents and receipt of additional information, the medical staff office shall transmit the application and all supporting materials to the appropriate service chief for evaluation and then to the Credentials Committee. 26 4.4-1 SERVICE COMMITTEE ACTIONS After receipt of the application and documentation from the medical staff office, the service chief or appropriate committee of each service to which the application is submitted, shall review the application and documentation and complete a written report. The report may include a personal interview with the applicant. All matters relevant to a recommendation, including the professional competence, character, ethical standing and qualifications of the applicant shall be evaluated. The service chief shall make a written report within thirty (30) days after receipt of the application to the Credentials Committee, making a recommendation as to whether he/she finds or doesn't find sufficient information to document recent and adequate experience on which to base the granting of requested clinical privileges. 4.4-2 CREDENTIALS COMMITTEE ACTION The Credentials Committee shall review the application; evaluate the supporting documentation, the service chief's report and recommendations, and any other relevant information. The Credentials Committee may elect to interview the applicant and seek additional information. Within 60 days after receipt of all necessary information, the Credentials Committee shall transmit to the Medical Executive Committee a report and its recommendations as to appointment and, if appointment is recommended, as to membership category service affiliation, and any special conditions to be attached to the appointment. The committee may also recommend that the Medical Executive Committee defer action on the application. 4.4-3 MEDICAL EXECUTIVE COMMITTEE ACTION At its next regular meeting after receipt of the Credentials Committee report and recommendation, or as soon thereafter as is practicable, the Medical Executive Committee shall consider the report and any other relevant information. The Medical Executive Committee may request additional information, return the matter to the credential's committee for further investigation, and/or elect to interview the applicant. The Medical Executive Committee shall forward to the administrator, for prompt transmittal to the Governing Body, a report and recommendation as to medical staff appointment and, if appointment is recommended, as to membership category, service affiliation, and any special conditions to be attached to the appointment. The committee may also defer action on the application. The reason for each recommendation shall be stated. 4.4-4 RECOMMENDATION TO DEFER THE APPLICATION When the recommendation of the Credentials Committee, Medical Executive Committee or the appropriate service is to defer the application for further consideration it must be followed up within thirty [30] days either by a subsequent recommendation for provisional appointment with the specified clinical privileges, or a recommendation that the application for staff membership be rejected. 4.4-5 EFFECT OF MEDICAL EXECUTIVE COMMITTEE ACTION (a) Favorable Recommendation: When the recommendation of the Medical Executive Committee is favorable to the applicant, the administrator shall promptly forward it, together with supporting documentation to the Governing Body. (b) Adverse recommendation: When a recommendation of the Medical Executive Committee is adverse to the applicant, the administrator shall immediately inform the applicant by special notice and the 27 applicant shall then be entitled to the procedural rights provided in Article XV of these Bylaws. "Adverse recommendation" by the Medical Executive Committee, is defined as a recommendation to deny appointment, requested staff category, or to deny or restrict requested clinical privileges. No such adverse recommendations will be forwarded to the Governing Body until after the applicant has exercised or has been deemed to have waived his/her rights to a hearing as provided in Article XV of these Bylaws. 4.4-6 ACTION ON THE APPLICATION (a) When the recommendation of the Medical Executive Committee is favorable to the practitioner, the Governing Body shall act on it at its next scheduled meeting. If the Governing Body's decision is favorable to the applicant the administrator shall be authorized to transmit this decision to the applicant. (b) If the Governing Body's decision is adverse to the practitioner, the administrator shall notify said practitioner of the adverse decision by special notice, and such adverse decision shall be held in abeyance until the practitioner has exercised or has been deemed to have waived his/her rights under Article XV of these Bylaws. The fact that the adverse decision is held in abeyance shall not be deemed to confer privileges when none existed before. 4.4-7 REAPPLICATION AFTER ADVERSE APPOINTMENT DECISION An applicant who has received a final adverse decision regarding appointment shall not be eligible to reapply to the medical staff for a period of 24 months from the date of the final decision. Any such reapplication shall be processed as an initial application, and the applicant shall submit such additional information as may be required to demonstrate that the basis for the earlier adverse action no longer exists. The 24 month waiting period shall apply to an applicant, a member, or a former member who has received a final adverse decision regarding membership or privileges, or withdrawn the application for membership or privileges following an adverse recommendation by the Medical Executive Committee or the Governing Body. It shall also apply to a member or former member who has resigned from the Medical Staff while an investigation was pending. (a) Exceptions will be made for practitioners whose adverse action included a specified period or conditions of retraining or additional experience. (b) Similarly, the Medical Executive Committee may exercise its discretion, with approval of the Governing Body, to waive the (24month) period in other circumstances where it reasonably appears, by objective measures that changed circumstances warrant earlier consideration of an application. An action is considered adverse only if it is based on the type of occurrences which may give rise to corrective action. An action is not considered adverse if it is based upon reasons that do not pertain to medical or ethical conduct, such as actions based on a failure to maintain a practice in the area (which can be cured by a move), or to maintain professional liability insurance (which can be cured by obtaining the insurance). 4.5 REAPPOINTMENTS AND REQUESTS FOR MODIFICATION OF MEMBER STATUS 4.5-1 APPLICATION OF REAPPOINTMENT 28 (a) At least 3 months prior to the expiration date of the current staff appointment (except for temporary appointments), a reapplication form shall be mailed or delivered to the member. At least 45 days prior to the expiration date, each medical staff and allied healthcare staff member shall submit to the Credentials Committee the completed application form for renewal of appointment to the staff for the coming 2 years, and for renewal or modification of clinical privileges. (b) The member shall have furnished in writing on the application form for reappointment complete information and all documents necessary to reappraise the staff member at the time of reappointment, including current Oregon licenses, health or mental status changes that might impair the practice of medicine, professional liability insurance coverage and experience, and other institutional affiliation and status, board certification status, disciplinary actions pending or completed, continuing medical education and training during the preceding period. (c) The staff member must sign the reappointment application, and in so doing accept the same conditions as stated in Section 4.1 of this Article in connection with the initial application. (d) As with the initial application, the staff member shall bear the burden of completing the application form and producing all information in the same manner as stated in Section 4.4-3 of this Article, in connection with the initial appointment. (e) Upon receipt of the completed application, the Medical and Allied Healthcare Staff or designee will seek verification of licensure status from the Oregon Medical Board and all information held by the Secretary of the Department of Health and Human Services or the agency designated by the Secretary, pursuant to the Health Care Quality Improvement Act of 1986. (f) Telemedicine Practitioner 1. Reappointment of Telemedicine Practitioner shall follow the same process as for initial appointment. 4.5-2 STANDARDS AND PROCEDURES FOR REVIEW When a Practitioner submits the first application for reappointment, and every 24 months thereafter, or when the member submits a request for modification of staff status or clinical privileges, the member shall be subject to an in- depth review generally following the procedures set forth in Article VI, in addition to reviewing the information found in the medical staff member's credentials file. 4.6 BASIS OF RECOMMENDATIONS FOR REAPPOINTMENT Each recommendation concerning the reappointment of the Medical and Allied Healthcare Staff member and the clinical privileges to be granted upon reappointment shall be based upon: (a) Adherence to Medical and Allied Healthcare Staff membership requirements as stated in these Bylaws, the Rules & Regulations, and hospital policies. 29 (b) Previously successful or currently pending challenges to any licensure or registration (State or Drug Enforcement Administration) or the voluntary or involuntary relinquishment of such licensure or registration; Reports to the National Practitioner Data Bank; and Evaluation of any available history of criminal activity. (c) A reappraisal of the member's physical or mental health status that might impair the practice of medicine (d) Sanctions imposed or pending, voluntary or involuntary terminations of Medical and Allied Healthcare Staff memberships or voluntary or involuntary limitation, reduction, or loss of clinical privileges at this or any other hospital. (e) Reappraisal of the hospital's patient care needs and ability to provide adequate support services and facilities for the practitioner. 4.6-1 EXTENSION OF APPOINTMENT If an application for reappointment has not been fully processed by the expiration date of a member's appointment, the staff member shall maintain membership status until such time as the processing is completed unless the delay is due to the member's failure to timely complete and return the reappointment application form or provide other documentation or cooperation, in which case the appointment may, upon recommendation of the Medical Executive and Credentials Committee, be terminated by the Governing Body/administrator. Any extension of an appointment pursuant to this section does not create a vested right in the member for continued appointment through the entire next term, but only until such time as processing of the application is concluded. 4.6-2 FAILURE TO FILE REAPPOINTMENT APPLICATION Failure without good cause to timely file a completed application for reappointment shall result in the automatic suspension of the member's admitting privileges and expiration of other practice privileges and prerogatives at the end of the current staff appointment, unless otherwise extended by the Governing Body. If the member fails to submit a completed application for reappointment within 60 days past the date it was due, the member shall be deemed to have resigned membership in the Medical and Allied Healthcare Staff. Failure to submit a reappointment application because of matters related to professional conduct or competence are required to be reported to the National Practitioners' Data Bank. In the event membership terminates for the reasons set forth herein the procedures set forth in Article XV shall not apply. 4.7 LEAVE OF ABSENCE 4.7-1 LEAVE STATUS At the discretion of the Medical Executive Committee, a Medical and Allied Healthcare Staff member may obtain a voluntary leave of absence from the staff upon submitting a written request to the Medical Executive Committee stating the period of leave desired, which may not exceed 12 months. During the period of the leave, the member shall not exercise clinical privileges at the hospital, and membership rights and responsibilities shall be inactive, but the obligation to pay dues, if any, shall continue, unless waived by the Medical and Allied Healthcare Staff. 30 If the member is under investigation, the investigation shall be completed before the member is granted a leave of absence, unless the leave is for an emergency situation. 4.7-2 MILITARY LEAVE OF ABSENCE Requests for leave of absence to fulfill military service obligations shall be granted upon notice and review by the Medical Executive Committee. Reactivation of membership previously held may be granted, notwithstanding the provisions of Bylaws, Section 4.5-1, above, but may be granted subject to focused professional practice evaluation, as determined by the Medical Executive Committee. 4.7-3 TERMINATION OF LEAVE At least 30 days prior to the termination of the leave of absence, or at any earlier time, the medical staff allied healthcare staff member may request reinstatement of membership by submitting written notice to that effect to the Medical Executive Committee. The staff member shall submit a summary of relevant activities during the leave, if the Medical Executive Committee so requests. The Medical Executive Committee shall make a recommendation concerning reinstatement of membership and the procedures provided in Sections 4.1 through 4.4-12 shall be followed. 4.7-4 FAILURE TO REQUEST REINSTATEMENT Failure, without good cause, to request reinstatement shall be deemed a voluntary resignation from the medical staff and shall result in automatic termination of membership and prerogatives. A member whose membership is automatically terminated shall be entitled to the procedural hearing rights provided in Book 4 Article XV for the sole purpose of determining whether the failure to request reinstatement was unintentional or excusable. A request for Medical and Allied Healthcare Staff membership subsequently received from a member so terminated shall be submitted and processed in the manner specified for initial applications. 4.8 CONFIDENTIALITY; IMPARTIALITY To maintain confidentiality and to assure the unbiased performance of appointment and reappointment functions, participants in the credentialing process shall limit their discussion of the matters involved to the formal avenues provided in the Bylaws and Rules & Regulations for processing applications for appointment and reappointment. BOOK 2 - CREDENTIALING ARTICLE V 31 CLINICAL PRIVILEGES EXERCISE OF PRIVILEGES Except as otherwise provided in these By-laws, a professional providing clinical services at this hospital shall be entitled to exercise only those clinical privileges specifically granted. Said privileges will be hospital specific, within the scope of any license, certificate or other legal credential authorizing practice in this state and consistent with any restrictions thereon, and shall be subject to the Rules & Regulations of the clinical service and the authority of the service chief and the Medical and Allied Healthcare Staff. Medical and Allied Healthcare Staff privileges may be granted, continued or modified, only upon recommendation of the Medical Executive Committee and the Credentials Committee to the Governing Body, only for reasons directly related to quality of patient care and other provisions of the medical staff Bylaws, and only following the procedures outlined in these Bylaws. DELINEATION OF PRIVILEGES IN GENERAL 5.2-1 REQUESTS Each application by a practitioner to the Medical and Allied Healthcare Staff for specific clinical privileges, or a modification of clinical privileges, must be supported by documentation of training or experience over the prior twelve (12) months. 5.2-2 BASIS FOR PRIVILEGES DETERMINATION Requests for privileges shall be evaluated on the basis of the hospital's ability to support the requested privileges and assessment of the practitioner's general competencies with respect to the requested privileges, as evidenced by the practitioner's license, education, training, experience, demonstrated professional competence, judgment and clinical performance, (as confirmed by peers knowledgeable of the practitioner's professional performance), health status, the documented results of patient care and other quality improvement review and monitoring, performance of a sufficient number of procedures each year to develop and maintain the practitioner's skills and knowledge, and compliance with any specific criteria applicable to the privileges requested. Privilege determinations may also be based on pertinent information concerning clinical performance obtained from other sources, especially other institutions and health care settings where a practitioner exercises privileges. 5.2-2.1 Telemedicine Privileges The initial appointment of telemedicine privileges will be based upon at least one of the following methods at the discretion of the Credentials Committee: 1. The practitioner's full compliance with this hospital's credentialing and privileging standards; or 32 2. By using this hospital's standards but relying in whole or in part on information provided by the hospital(s) at which the practitioner routinely practices; or 3. A comprehensive report by a DNV Healthcare contracting agency which provides the practitioner's qualifications, thus relying entirely on the credentialing and privileging process of the contracting agency. Reappointment of a Telemedicine Staff practitioner's privileges may be based upon performance at this hospital, and, if insufficient information is available, upon information from the institution where the practitioner routinely practices. 5.2-3 CRITERIA FOR PRIVILEGES Subject to the approval of the Medical Executive Committee and Governing Body, each service will be responsible for developing criteria for granting specific privileges (including, but not limited to, identifying and developing criteria for any privileges that may be appropriately performed via telemedicine). These criteria shall address the hospital's general competencies (as described below) and assure uniform quality of patient care, treatment, and services. Insofar as feasible, affected categories of Allied Healthcare Staff shall participate in developing the criteria for privileges to be exercised by Allied Healthcare Staff. Such criteria shall be consistent with the Medical Staff Bylaws, Rules & Regulations. 5.3 PROVISIONAL PERIOD 5.3-1 GENERAL (a) Practitioners applying to the Medical and Allied Healthcare Staff for clinical privileges shall undergo a provisional period of not less than twelve (12) months' duration. A monitor from the active staff will be assigned to the practitioner by the appropriate service chief. (b) During the provisional period of twelve (12) months, or longer if deemed necessary, the monitor will submit to the Credentials Committee his/her written assessment of the practitioner's performance and his/her right to the requested privileges. If a monitor believes his/her observations are complete in less than the twelve (12) months' provisional year, he/she may submit his/her written assessment earlier, requesting that monitoring be lifted. The appropriate service chief must agree with the request. 5.3-2 FAILURE TO OBTAIN RECOMMENDATION If within the provisional period the practitioner applying for clinical privileges fails to obtain the recommendation from his/her clinical service chief that the practitioner has met all of the qualifications, the member shall be entitled to a hearing upon request, pursuant to Book 4. 5.4 TEMPORARY CLINICAL PRIVILEGES 5.4-1 CONDITIONS (a) Temporary clinical privileges may be granted only in the circumstances and under the conditions described in Section 5.4-2; only to an appropriately licensed practitioner, only when the 33 information available including information obtained from the Oregon Medical Board, or appropriate Oregon licensing board, National Practitioner Data Bank and other appropriate licensing boards substantially supports a favorable determination regarding the requesting practitioner's qualifications, ability and judgment to exercise the privileges requested, demonstration of current competence, and only after the practitioner has satisfied the professional liability insurance requirements of these Bylaws, Rules & Regulations. In addition, hospital shall verify practitioner's education (AMA/AOA Profile). In addition, hospital shall be in receipt of professional references (including current competence and database profiles from AMA, AOA, NPDB and OIG Medicare/Medicaid Exclusions. Special requirements of consultation and reporting may be imposed by the appropriate service chief responsible for supervision. Under all circumstances, the practitioner requesting temporary privileges must agree in writing to abide by these Bylaws and related manuals, Rules & Regulations of the Medical and Allied Healthcare Staff and polices of the hospital in all manners relating to his/her activities in the hospital. 5.4-2 CIRCUMSTANCES On recommendation from a member of the Medical Executive Committee, the Chief of Staff and CEO may grant temporary clinical privileges in the following circumstances: (a) Pending application: 1. To a practitioner after receipt of a completed application for Medical and Allied Healthcare Staff membership before action by the Medical and Allied Healthcare Staff or the Governing Body, including a request for specific temporary privileges, consultation with the Chief of Staff, and verification of the qualifications for membership required by these Bylaws without any negative or adverse information. (b) Care of specific patients - To a practitioner for the care of a specific patient, after receipt of a request for the specific privileges desired. Temporary privileges of this nature may be granted only twice a year. (c) Locum Tenens - To a practitioner who will be serving as a locum tenens for an Active or Courtesy Physician Medical Staff or an Allied Healthcare staff, only after receipt of a complete application for appointment as locum tenens, including a request for specific privileges. Temporary clinical privileges may be granted in circumstances (a), (b) and (c) above for a period of time not to exceed 120 days. 5.4-3 TERMINATION (a) Temporary privileges may be terminated at any time, with or without cause, by the appropriate service chief, subject to prompt review by the Medical Executive Committee on discovery of any information or occurrence of any event of a nature which raises a question about the practitioner's ability to perform the obligations of Medical or Allied Healthcare Staff membership as stated in section 2.4, professional qualifications, ability to exercise any or all the privileges granted, or the life or well-being of a patient is determined to be endangered. In the event of any such termination, the practitioner's patients that are in the hospital will be assigned to an active or courtesy Physician Member of the Medical and Allied Healthcare Staff, by the Chief of Staff. The wishes of the patient will be considered in choosing a substitute practitioner. 34 (b) Rights of the practitioner - When a practitioner's request for temporary privileges is refused or such privileges are terminated or suspended, the affected practitioner is entitled to prompt review within 30 days by the Medical Executive Committee. The personal presence of the practitioner is required at the hearing. The practitioner may submit evidence and testify on his/her own behalf. Within 10 days of completing its review, the Medical Executive Committee shall make its recommendation to the Governing Body whether the denial, termination or suspension of temporary privileges is warranted. The Governing Body shall make its decision within 30 days. The Governing Body's decision is final. 5.4-4 EMERGENCY PRIVILEGES (a) In the case of an emergency, in which serious harm or aggravation of injury or disease is imminent, or in which the life of a patient is in immediate danger and any delay in administering treatment could add to that danger, any member of the Medical or Allied Healthcare Staff is authorized to the degree permitted by his/her or her license and regardless of the service affiliation, or privileges, to do everything possible to help save the patient's life. The Medical or Allied Healthcare Staff member shall make every reasonable effort to communicate promptly with the service chief concerning the need for emergency care and assistance by the Medical and Allied Healthcare Staff with appropriate clinical privileges, and once the emergency has passed or assistance has been made available, shall defer to the service chief with respect to further care of the patient at the hospital. (b) In the event of an emergency, any person shall be permitted to do whatever is reasonably necessary to help in that emergency. Such persons shall promptly yield with the patient's consent such care to qualified members of the Medical and Allied Healthcare Staff when it becomes reasonably available. (c) In the event of a disaster, the CEO or the Chief of Staff (or designee) may grant disaster privileges upon presentation of any of the following: a current picture hospital ID card; a current license to practice and a valid picture ID issued by a state, federal or regulatory agency; identification indicating that the individual is a member of a Disaster Medical Assistance Team (DMAT); identification indicating that the individual has been granted authority to render patient care, treatment and services in disaster circumstances (such authority having been granted by a federal, state or municipal entity); or presentation by current Medical or Allied Healthcare Staff with personal knowledge regarding practitioner's identity. REQUEST FOR MODIFICATION OF PRIVILEGES (a) After the provisional period, any practitioner may request a modification of privileges, including a request to eliminate certain privileges. (b) All requests to modify privileges must be submitted in writing to the Credentials Committee, together with information supporting the basis for the modification request. (c) The appropriate service chief shall submit a report to the Credentials Committee within 30 days of the request, making a recommendation to allow or deny the request based on a reappraisal of the practitioner at the time of the request. The reappraisal may include information concerning the practitioner's current Iicensure; health 35 status; current professional practice, including any voluntary limitations to the practitioner's practice; training; experience; and demonstrated current competence. (d) Based upon the evidence specified in Section 5.5(c) above, the Credentials Committee shall make a written recommendation to the Medical Executive Committee concerning the request. If the recommendation is to deny the request, the reason for such recommendation shall be stated. (e) The Credentials and Medical Executive Committees shall review the recommendation and shall make written recommendation to the Governing Body. Where denial of the request is recommended, the reasons for such recommendation shall be stated, the practitioner shall immediately be informed by special notice, and the practitioner shall then be entitled to the rights provided in Book 4. (f) Following exercise or waiver of the practitioner's right to a hearing, if any, the Governing Body may adopt or reject in whole, or in part, a favorable or unfavorable recommendation of the Medical Executive Committee. If the action of the Governing Body is adverse, the practitioner shall be given special notice thereof. ARTICLE VI PERFORMANCE EVALUATION AND MONITORING 6.1 GENERAL OVERVIEW OF PERFORMANCE EVALUATION AND MONITORING ACTIVITIES The credentialing and privileging processes described in Bylaws, Article 4, Procedures for Appointment and Reappointment, and Article 5, Privileges, require that the Medical and Allied Healthcare Staff develop ongoing performance evaluation and monitoring activities to ensure that decisions regarding appointment to membership on the Medical Staff and granting or renewing of privileges are, among other things, detailed, current, accurate, objective and evidence-based. Additionally, performance evaluation and monitoring activities help assure timely identification of problems that may arise in the ongoing provision of services in the hospital. Problems identified through performance evaluation and monitoring activities are addressed via the appropriate performance improvement and/or remedial actions as described in Bylaws, Article XIV Corrective Action. PERFORMANCE MONITORING GENERALLY 6.2-1 Except as otherwise determined by the Medical Executive Committee and Governing Body, the Medical and Allied Healthcare Staff shall regularly monitor all members' privileges in accordance with the provisions set forth in these Bylaws and such performance monitoring policies as may be developed by the Medical and Allied Healthcare Staff and approved by the Medical Executive Committee and the Governing Body. 36 6.2-2 Performance monitoring is not viewed as a disciplinary measure, but rather is an information-gathering activity. Performance monitoring does not give rise to the procedural rights described in Bylaws, Article XV, Hearings (unless the form of monitoring is Level III proctoring and its imposition becomes a restriction of privileges because procedures cannot be done unless a proctor is present and proctors are not available after reasonable attempts to secure a proctor). 6.2-3 The staff shall clearly define how information gathered during performance monitoring shall be shared in order to effectuate change and additional action, if determined necessary. 6.2-4 Performance monitoring activities and reports shall be integrated into other quality improvement activities. 6.2-5 The results of any practitioner-specific performance monitoring shall be considered when granting, renewing, revising or revoking clinical privileges of that practitioner. ONGOING PROFESSIONAL PERFORMANCE EVALUATIONS (OPPE) 6.3-1 Each service shall recommend to the Performance Improvement Committee, the criteria to be used in the conduct of Ongoing Professional Performance Evaluations for its practitioners, which will be submitted to the Medical Executive Committee and Governing Body for Approval. 6.3-2 Methods that may be used to gather information for Ongoing Professional Performance Evaluations include, but are not limited to: (a) Periodic chart review; (b) Direct observation; (c) Monitoring of diagnostic and treatment techniques; (d) Discussion with other individuals involved in the care of each patient including consulting physicians, assistants at surgery, nursing and administrative personnel. 6.3-3 Ongoing performance reviews shall be factored into the decision to maintain, revise or revoke a practitioner's existing privilege(s). 6.4 FOCUSED PROFESSIONAL PRACTICE EVALUATION (FPPE) 6.4-1 The Medical and Allied Healthcare Staff is responsible for developing a focused professional practice evaluation process that will be used in predetermined situations to evaluate, for a time-limited period, a practitioner's competency in performing specific privilege(s). The Medical and Allied Healthcare Staff may supplement these Bylaws with policies, for approval by the Medical Executive Committee and the Governing Body, that will clearly define the circumstances when a focused evaluation will occur, what criteria and methods should be used for conducting the focused evaluation, the duration of the evaluation period, requirements for extending the evaluation period, and how the information gathered during the evaluation process will be analyzed and communicated. 37 6.4-2 1 nformation for a focused evaluation process maybe gathered through a variety of measures including, but not limited to: (a) Retrospective or concurrent chart review; (b) Monitoring clinical practice patterns; (c) Simulation; (d) External peer review; (e) Discussion with other individuals involved in the care of each patient; (f) Proctoring, as more fully described in Bylaws, Section 6.4-4, below. 6.4-3 A Focused Professional Practice Evaluation shall be used in at least the following situations: (a) All initial appointees to the Medical and Allied Healthcare Staff and all members granted new privileges shall be subject to a period of focused professional practice evaluation in accordance with these Bylaws and the rules of the service in which the applicant or member will be exercising those privileges. Such focused evaluation will generally include a period of Level I proctoring in accordance with Bylaws, Section 6.4-4(a), below, unless additional circumstances appear to warrant a higher level of proctoring, as described below. (b) In special instances, focused evaluation will be imposed as a condition of renewal of privileges (for example, when a member requests renewal of a privilege that has been performed so infrequently that it is difficult to assess the member's current competency in that area). Such evaluation will generally consist of Level I proctoring in accordance with Bylaws, Section 6.4-4(a)(1) below, unless additional circumstances appear to warrant a higher proctoring level, as described below. (c) When questions arise regarding a practitioner's competency in performing specific privilege(s) at the hospital as a result of specific concerns or circumstances, a focused evaluation may be imposed. Such evaluations may include either Level 11 or III proctoring, in accordance with these Bylaws, Sections 6.4-4(a)(1) or (2). (d) As otherwise defined in these Bylaws or applicable Focused Professional Practice Evaluation policies. (e) Nothing in the foregoing precludes the use of other Focused Professional Practice Evaluation tools, in addition to or in lieu of proctoring, as deemed warranted by the circumstances. 6.5 PROCTORING (a) Overview of Proctoring Levels 1. Level I proctoring shall be considered routine and is generally implemented as a means to review initially requested privileges in accordance with Bylaws, Section 6.4-3(a), above, and for review of infrequently used privileges in accordance with Bylaws, Section 6.4-3(b), above. 38 2. Level II proctoring is appropriate in situations where a practitioner's competency or performance is called into question, in accordance with Bylaws, Section 6.4-3(c), above, but where the circumstances do not involve a "medical disciplinary" cause or reason or where the proctoring does not constitute a restriction on the practitioner's privilege(s) (i.e., the practitioner is required to participate in proctoring, and to notify either the proctor or other designated individual(s) prior to providing services, but is permitted to proceed without the proctor if one is not available). 3. Level III proctoring is appropriate in situations where a practitioner's competency or performance is called into question due to a "medical disciplinary" cause or reason in accordance with Bylaws, Section 6.4-3(c), above, and where the form of proctoring is a restriction on the practitioner's privilege(s) (because the practitioner may not perform a procedure or provide care in the absence of the proctor). Upon imposition of Level III proctoring, that practitioner is afforded such procedural rights as provided at Bylaws, Article XV, Hearings and Appellate Reviews. (b) Overview of Proctoring Procedures 1. Whenever proctoring is imposed, the number (or duration) and types of procedures to be proctored shall be delineated. 2. During the proctoring, the practitioners must demonstrate they are qualified to exercise the privileges that were granted and are carrying out the duties of their Medical and Allied Healthcare Staff category. 3. In the event that the new applicant has privileges at a neighboring hospital where members of this hospital's Medical Staff are familiar with the member to be proctored, and familiar with that neighboring hospital's peer review standards, privileging and proctoring information from the neighboring hospital may, at the discretion of the appropriate Service Chair, be acceptable to satisfy a portion of the focused professional practice evaluation required for this hospital. (c) Proctor: Scope of Responsibility 1. All members who act as proctors of new appointees and/or members of the Medical Staff are acting at the direction of and as an agent for the service the Medical Executive Committee and the Governing Body. When possible, no business relationship shall exist between proctor and proctored. 2. The intervention of a proctor shall be governed by the following guidelines: A. A member who is serving as a proctor does not act as a supervisor of the member or practitioner he or she is observing. His or her role is to observe and record the performance of the member or practitioner being proctored, and report his or her evaluation to the service chair and/or the Credentials Committee. 39 B. A proctor is not mandated to intervene when he or she observes what could be construed as deficient performance on the part of the practitioner or member being proctored. In an emergency situation, a proctor may intervene, even though he or she has no legal obligation to do so. (d) Completion of Proctoring The member shall remain subject to such proctoring until the Medical Executive Committee has been furnished with: 1. A report signed by the chief of the service to which the member is assigned describing the types and numbers of cases observed and the evaluation of the member's performance, a statement that the member appears to meet all of the qualifications for unsupervised practice in the hospital, has discharged all of the responsibilities of Medical and Allied Healthcare Staff membership, and has not exceeded or abused the prerogatives of the category to which the appointment was made; and 2. A report signed by the service chief of any other service in which the member may exercise clinical privileges, describing the types and number of cases observed and the evaluation of the member's performance and a statement that the member has satisfactorily demonstrated the ability to exercise the clinical privileges initially granted in those services. (e) Effect of Failure to Complete Proctoring 1. Failure to Complete Necessary Volume Any practitioner or member undergoing Level I or Level II proctoring who fails to complete the required number of proctored cases within the time frame established in the Bylaws and rules shall be deemed to have voluntarily withdrawn his or her request for membership (or the relevant privileges), and he or she shall not be afforded the procedural rights provided in Bylaws, Article XV, Hearings and Appellate Reviews. However, has the discretion to extend the time for completion of proctoring in appropriate cases subject to ratification by the Medical Executive Committee. The inability to obtain such an extension shall not give rise to procedural rights described in Bylaws, Article XV Hearings and Appellate Reviews. 2. Failure to Satisfactorily Complete Proctoring If a practitioner completes the necessary volume of proctored cases but fails to perform satisfactorily during proctoring, he or she may be terminated (or the relevant privileges may be revoked), and he or she shall be afforded the procedural rights as provided in Article XV, Hearings and Appellate Reviews. In the event procedural rights are invoked, the practitioner who has not successfully completed proctoring shall be deemed an "applicant" for purposes of Bylaws, Book 4, Article XIV Hearings 3. Effect on Advancement 40 The failure to complete proctoring for any specific privilege shall not, by itself, preclude advancement from provisional status. If advancement is approved prior to completion of proctoring, the proctoring will continue for the specified privileges. The specific privileges may be voluntarily relinquished or terminated if proctoring is not completed thereafter within a reasonable time. 41 BOOK 3 - Governance ARTICLE VII OFFICERS 7.1 OFFICERS OF THE MEDICAL STAFF 7.1-1 IDENTIFICATION The officers of the Medical and Allied Healthcare Staff shall be the Chief of Staff, Chief of Staff elect, Secretary, and immediate past Chief of Staff. 7.1-2 QUALIFICATIONS Only those members of the Active Staff who satisfy the following criteria initially may serve as officers of the Medical and Allied Healthcare Staff. Officers must continue to meet these criteria throughout their term of office. They must: (a) Be appointed in good standing to the Active Staff, and have served on the Active Staff for at least two years; (b) Have no pending adverse recommendations concerning Medical and Allied Healthcare Staff appointment or clinical privileges; (c) Not presently be serving as a Medical and Allied Healthcare Staff officer, Board member or department chair/director/chief at any other hospital and shall not so serve during their term of office; (d) Be willing to faithfully discharge the duties and responsibilities of the position; (e) Have served in a Medical and Allied Healthcare Staff leadership position for at least two years; (f) Attend continuing education relating to staff leadership during his or her term of office. 7.1-3 ELECTION AND NOMINATIONS OF OFFICERS (a) Officers shall be elected biennially at the May meeting of the Medical and Allied Healthcare Staff. Full and provisional members of the Medical and Allied Healthcare Staff shall be eligible to vote. A majority vote is necessary for election. Should there be three or more candidates with no majority, the member receiving fewest votes shall have his/her name removed from each successive slate until a majority vote is obtained by one candidate. The manner of voting will be by voice, although the Chief of Staff or a majority of those attending the meeting may request a written, secret ballot. 42 (b) A slate of officers shall be presented by the Nominating Committee, which shall consist of 4 members of the Medical Executive Committee and two who are not members of the Medical Executive Committee, including one service chief and one past Chief of Staff. The nominations shall be presented at the April meeting of the Staff one month prior to the designated meeting for election of officers. (c) Nominations may also be made from the floor by members of the Active Staff. 7.1-4 TERM OF OFFICE All officers shall serve a two (2) year term, or until a successor is elected, whichever occurs sooner, and shall take office on the first day of January after election. 7.1-5 VACANCIES IN OFFICE (a) Vacancies in office, except for the Chief of Staff, shall be filled by appointment by the Medical Executive Committee. (b) If there is a vacancy in the office of Chief of Staff, the Chief of Staff-Elect shall serve out the remaining term. 7.1-6 RECALL OF ELECTED OFFICERS (a) Removal of an elected Medical and Allied Healthcare Staff officer may be based upon failure to perform the duties of the office, failure to remain a member of the Medical and Allied Healthcare Staff in good standing, or termination of Medical and Allied Healthcare Staff membership. (b) Removal may be initiated by a two-thirds majority vote of the members of the Medical and Allied Healthcare Staff eligible to vote for officers. (c) The decision on removal shall be decided by a two-thirds majority vote of the Medical and Allied Healthcare Staff. The decision is effective immediately. 7.2 DUTIES OF OFFICERS 7.2-1 CHIEF OF STAFF (a) The Chief of Staff is the chief executive officer of the Medical and Allied Healthcare Staff with these duties: (1) To act in coordination and cooperation with the CEO in all matters of mutual concern within the hospital. (2) To call, preside at and be responsible for the agenda of all general meetings of the Medical and Allied Healthcare Staff. (3) To serve as chair on the Medical Executive Committee. 43 (4) To serve as ex-officio member of all other Medical and Allied Healthcare Staff committees without vote. (5) To be responsible for the enforcement of Medical and Allied Healthcare Staff Bylaws, Rules & Regulations, for implementation of sanctions where these are indicated, and for the Medical and Allied Healthcare Staff's compliance with procedural safeguards in all instances where corrective action has been requested. (6) To appoint committee members to all standing, special and multidisciplinary Medical and Allied Healthcare Staff committees. All appointments must be approved by the Medical Executive Committee. (7) To appoint chiefs of service for medicine, surgery, anesthesia, perinatology, radiology, and emergency services. (8) To act as, or appoint a member of the staff to be, the spokesman for the Medical and Allied Healthcare Staff in its external professional and public relations. (9) To receive and interpret the policies of the hospital Governing Body to the Medical and Allied Healthcare Staff and shall report to the hospital Governing Body on the Medical and Allied Healthcare Staff's performance with respect to its delegated responsibility to provide medical care. (10) To be the AACH Medical Staff representative to the AACH Board of Directors and the Asante Board of Directors, as an ex-officio, non-voting member of the AACH Board of Directors and the Asante Board of Directors. 7.2-2 CHIEF OF STAFF-ELECT In the absence of the Chief of Staff, the chief-elect shall assume all the duties and have the authority of the Chief of Staff. He/she shall automatically succeed the Chief of Staff when the latter fails to serve for any reason. He/she shall be a member of the Medical Executive Committee of the Medical and Allied Healthcare Staff and chair of the Performance Improvement Committee. 7.2-3 SECRETARY The Secretary shall be responsible for accurate and complete minutes of all meetings, attend to all correspondence, perform such duties as ordinarily pertain to this office, and act as chairperson of Credentials Committee. 7.2-4 IMMEDIATE PAST CHIEF OF STAFF The immediate past Chief of Staff shall be a member of the Medical Executive Committee. 44 ARTICLE VIII CLINICAL SERVICES 8.1 ORGANIZATION OF SERVICES There shall be services of medicine, surgery, perinatalology, radiology, anesthesia, emergency and Trauma Review. Each service shall be headed by a Service Chief who shall be a member of the Performance Improvement Committee. The Performance Improvement Committee has the overall responsibility for assuring the implementation of a planned and systematic process for monitoring and evaluating the quality and appropriateness of the care and treatment of patients within the hospital and the clinical performance of all individuals with clinical privileges. As such, services do not constitute departments. 8.2 QUALIFICATIONS, SELECTION AND TENURE OF SERVICE CHIEF (a) The chief of service shall not be required to be a specialist. Each chief shall be a member of the active staff qualified by training, experience and demonstrated ability for the position. (b) Each chief shall be appointed by the Chief of Staff for a two-year term, such appointment to be announced at the January staff meeting. (c) A service chief may be removed during his/her term of office by a two-thirds majority vote of all Medical and Allied Healthcare Staff members with voting privileges as defined in Article III of these Bylaws. 8.3 FUNCTIONS OF SERVICE CHIEFS (a) All individuals with clinical privileges will have the quality of their care reviewed through the Performance Improvement Committee. Service chiefs as members of the Performance Improvement Committee are therefore responsible for the following within their services: 1. Being accountable for all professional administrative activities. 2. Continuing surveillance of the professional performance of all individuals with delineated clinical privileges. 3. Recommending to the Credentials Committee the criteria which will serve as a basis for granting clinical privileges. 4. Reviewing the qualifications of each professional for requested clinical privileges. 45 5. Ensuring that the quality and appropriateness of patient care provided are monitored and evaluated through the Performance Improvement Committee. 6. Participation in Medical Executive Committee on an as needed basis to facilitate adequate performance as service chief. (b) The chief of the medical service shall be responsible for the hospital general medicine and ICU services including authority over the day-to-day activities of the general patient care areas. The chief of medicine shall also review all nonsurgical deaths. (c) The chief of the surgery services shall be responsible for overall surgical activities within the hospital, including surgery suite, recovery room. He/she shall review all surgery performed in the hospital and report as to the agreement or disagreement among the preoperative, postoperative and pathological diagnoses and on whether the surgical procedures undertaken in the hospital were justified by these criteria. The study shall also include those procedures in which no tissue was removed. (d) The chief of the perinatology service shall be responsible for the obstetrical and neonatal activities including the obstetrical suite, nursery and related areas. (e) The chief of the emergency services shall be responsible for the emergency service within the hospital. His/her duties shall include disaster drills, and coordination of ancillary services such as emergency medical technicians and ambulance services. (f) The chief of radiology service shall be responsible for radiological procedures performed within the hospital with authority over the day-to-day activities of the radiology department. He/she shall be responsible for maintenance of quality control, proper utilization and adequate professional coverage of the department with the authority to assign on-call responsibilities for the department to those physicians with privileges within the department. The chief of service will also be responsible for appropriate advice and consultation to the hospital administration regarding equipment needs of the department. (g) The chief of the anesthesia services shall be responsible for anesthesia procedures performed within the hospital with authority over the day-to-day activities of the anesthesia service and post-anesthesia recovery. He/she shall be responsible for maintenance of quality control, proper utilization, adequate professional coverage of the service, and consultation to the hospital administration regarding needs of the service. ARTICLE IX COMMITTEES 9.1 DESIGNATION 46 Medical and Allied Healthcare Staff committees shall include but not be limited to, the Medical and Allied Healthcare Staff meeting as a committee of the whole, meetings of services, meetings of committees established under these Bylaws, and meetings of special or ad hoc committees created by the Medical Executive Committee (pursuant to this section). The committees described in this Article shall be the standing committees of the Medical and Allied Healthcare Staff. Special or ad hoc committees may be created by the Medical Executive Committee to perform specified tasks. Unless otherwise specified, the chairperson and members of all committees shall be appointed by the Chief of Staff. Medical and Allied Healthcare Staff committees shall be responsible to the Medical Executive Committee. 9.2 GENERAL PROVISIONS 9.2-1 TERMS OF COMMITTEE MEMBERS Unless otherwise specified, committee members shall be appointed for a term of two (2) years, and shall serve until the end of this period or until the member's successor is appointed, unless the member shall sooner resign or be removed from the committee. 9.2-2 REMOVAL If a member of a committee ceases to be a member in good standing of the Medical and Allied Healthcare Staff , or loses employment or a contract relationship with the hospital, suffers a loss or significant limitation of practice privileges, or if any other good cause exists, that member may be removed by the Medical Executive Committee. 9.2-3 VACANCIES Unless otherwise specifically provided, vacancies on any committee shall be filled in the same manner in which an original appointment to such committee is made. 9.3 MEDICAL EXECUTIVE COMMITTEE The Medical Executive Committee shall be a standing committee consisting of the Chief of Staff, Chief of Staff-elect, immediate past Chief of Staff, Secretary, and three members of the Medical and Allied Healthcare Staff, not more than one can be an allied healthcare professional. At least one must be a primary care provider appointed by the Chief of Staff for a two-year term. The chief executive officer is an ex-officio member without vote. The Chief of Staff shall chair the Medical Executive Committee. Other representatives of the administration or staff may attend on a regular or ad hoc basis by invitation of the Medical Executive Committee. 9.3-1 DUTIES The duties of the Medical Executive Committee shall include, but not be limited to: (a) Representing and acting on behalf of the Medical and Allied Healthcare Staff in the intervals between Medical and Allied Healthcare Staff meetings, subject to such limitations as may be imposed by these Bylaws; 47 (b) Coordinating and implementing the professional and organizational activities and policies of the Medical and Allied Healthcare Staff; (c) Receiving and acting upon reports and recommendations from Medical and Allied Healthcare Staff services, committees and assigned activity groups; (d) Recommending actions to the Governing Body on matters of a medical-administrative nature; (e) Evaluating the medical care rendered to patients in the hospital; (f) Participating in the development of all Medical and Allied Healthcare Staff and hospital policy, practice and planning; (g) Taking reasonable steps to promote ethical conduct and competent clinical performance on the part of all members including the initiation of and participation in Medical and Allied Healthcare Staff corrective or review measures when warranted; (h) Taking reasonable steps to develop continuing medical education activities and programs for the Medical and Allied Healthcare Staff; (i) Designating such committees as may be appropriate or necessary to assist in carrying out the duties and responsibilities of the Medical and Allied Healthcare Staff; (j) Assisting in the obtaining and maintenance of accreditation; (k) Developing and maintenance of methods for the protection and care of patients and others in the event of internal or external disaster; (1) Appointing such special or ad hoc committees as may seem necessary or appropriate to assist the Medical Executive Committee in carrying out its functions and those of the Medical and Allied Healthcare Staff; (m) Investigating, reviewing and reporting on matters referred by the Chief of Staff or the Credentials Committee regarding the qualifications, conduct, professional character or competence of any applicant, Medical and Allied Healthcare Staff; (n) Conducting periodic review of the Medical and Allied Healthcare Staff Bylaws as well as the Rules & regulations and forms promulgated by the Medical and Allied Healthcare Staff and its services; (o) Receiving and evaluating recommendations and suggestions for modification of the Bylaws, Rules & Regulations and forms. (p) Receive request for use of investigational or experimental drugs or devices in the hospital which will be forwarded to the Institutional Review Board for approval (q) Medical Executive Committee shall meet as often as necessary to complete the business of the committee but not less than quarterly. 9.3-2 AUTHORITY 48 (a) The Medical Executive Committee is accountable to the Medical and Allied Healthcare Staff, except for recommendations regarding individual memberships, privileges and corrective action. The Medical Executive Committee decisions are subject to reversal by a two-thirds (66.6%) vote of the Medical and Allied Healthcare Staff. Except for corrective actions taken, the Medical Executive Committee shall make available to the Medical and Allied Healthcare Staff a record of all actions taken. (b) The Medical Executive Committee shall reflect the wishes of the Medical and Allied Healthcare Staff. 9.4 CREDENTIALS COMMITTEE The Credentials Committee shall be a standing committee consisting of the Chief of Staff, Chief of Staff- elect, immediate past Chief of Staff, Secretary, and three members of the active staff, not more than one can be an allied healthcare professional, appointed by the Chief of Staff for a two-year term. The Chief Executive Officer is an ex-officio member without vote. The Secretary of the Medical and Allied Healthcare Staff shall chair the Credentials Committee. Other representatives of the administration or staff may attend on a regular or ad hoc basis by invitation of the Credentials Committee. 9.4-1 DUTIES The duties of the Credentials Committee shall include, but not be limited to: (a) Establishing the mechanism to review credentials and delineate individual clinical privileges; (b) Reviewing the qualifications, credentials, performance and professional competence, character of applicants and staff members, making recommendations to the Medical Executive Committee regarding staff appointments and re-appointments, and clinical privileges and corrective action; (c) Reporting to the Medical and Allied Healthcare Staff at each regular staff meeting; (d) Reviewing and evaluating the qualifications of each professional applying for initial appointment, reappointment, or modification of clinical privileges, and, in connection therewith, obtaining and considering the recommendations of the appropriate departments; (e) Submitting required reports and information on the qualifications of each professional applying for membership or particular clinical privileges including recommendations with respect to appointment, membership category, service affiliation, clinical privileges and special conditions; (f) Appointing such special or ad hoc committees as may seem necessary or appropriate to assist the Credentials Committee in carrying out its functions and those of the Medical and Allied Healthcare Staff; (g) Credentials Committee shall meet as often as necessary to complete the business of the committee but not less than quarterly. 49 9.5 PERFORMANCE IMPROVEMENT COMMITTEE 9.5-1 COMPOSITION The Performance Improvement Committee shall be composed of the Chief of Staff-elect and the seven chiefs of service (medicine, surgery, anesthesia, perinatology, emergency, radiology and trauma review) and one member at large, which may be an allied healthcare staff. The administrative members of the committee will be the administrator, the performance improvement coordinator, and the medical staff coordinator. The Chief of Staff-elect shall be the chair. 9.5-2 FUNCTIONS The Performance Improvement Committee shall be responsible for assuring the implementation of a planned and systematic process for monitoring and evaluating the quality and appropriateness of the care and treatment of patients within the hospital service areas and the clinical performance of all individuals with clinical privileges in these service areas. This shall include: (a) The routine collection of information about important aspects of patient care provided in all service areas and about the clinical performance in these areas. (b) The periodic assessment of this information to identify opportunities to improve care and to identify important problems in patient care. (c) The need to generate and utilize objective criteria that reflect current knowledge and clinical experience for the hospital performance improvement program in monitoring and evaluating patient care. When important problems in patient care and clinical performance are identified, action must be taken and effectiveness of this action must be evaluated. The findings from and conclusions of monitoring, evaluation, and problem solving activities shall be documented and reported monthly to the Medical Executive Committee. Included within the committee's responsibilities shall be attention directed to: (a) Utilization review: The committee shall review hospital admissions with respect to need for admission, length of stay, and evaluation of services to assure that all of the inpatient services given are necessary and could not be provided as effectively in the home, office, hospital outpatient department, or other available facility. Specifically, it shall analyze how under-utilization and over-utilization of each of the hospital services affects the quality of patient care provided at the hospital. The committee shall formulate a written utilization review plan for the hospital. Such plan, as approved by the Medical and Allied Healthcare Staff and Governing Body, must be in effect at all times and must include all of the elements as required under the provisions of Title XVIII and XIX of the Social Security Act. 50 The committee shall also evaluate the medical necessity for continued hospital services for particular patients, where appropriate. In making such evaluations, the committee shall be guided by the following criteria: (1) No professional shall have review responsibility for any extended cases in which he/she was professionally involved. (2) All decisions that further inpatient stay is not medically necessary shall be made by physician members of the committee and only after opportunity for consultation has been given the attending professional, by the committee and full consideration has been given to hospital facilities and services. (3) Where there is a significant divergence in opinion following such consultation regarding the medical necessity for continued in-hospital services for the patient, the judgment of the attending professional shall be given great weight. (4) Any decisions that further inpatient stay is not medically necessary shall be given by written notice to the attending professional and to the chief executive officer of the hospital for such action, if any, as may be warranted. (b) Medical Records: The committee shall be responsible for assuring that all medical records meet the standards of patient care usefulness and of historical validity. The committee shall conduct, at least quarterly, a review of currently maintained medical records and records of discharge patients to determine compliance with adopted Rules & Regulations. (c) Blood Transfusions: The committee shall be responsible for the review of all patients who have been given blood or blood products in the hospital with regard to appropriate usage. (d) Data produced by the concurrent generic screening through the performance improvement coordinator. (e) Findings under the DRG-PPS program when appropriate. (f) Review of results of survey recommendations from external agencies (e.g., TJC, OMPRO, liability insurance carriers, or other duly constituted regulatory bodies). (g) Focused studies or audits performed in perceived problem areas. (h) Recommendations of education programs of a general or specific nature to eliminate problems and improve skills. (i) Inter-service communication relating to appropriate quality assurance activities. Sources of information and identification of problems may come from, but are not limited to: (a) The Medical and Allied Healthcare Staff and its various committees. 51 (b) Nursing service. (c) Administration (d) Ancillary and hospital services. (e) Performance improvement coordinator. 9.5-3 MEETINGS The committee shall meet as often as necessary to complete business of the committee but not less than quarterly and will make a report of its findings to the Medical Executive Committee. 9.6 PHARMACY AND THERAPEUTICS COMMITTEE/ INFECTION CONTROL 9.6-1 COMPOSITION The Pharmacy and Therapeutics/Infection Control Committee shall consist of at least three (3) members of the Medical and Allied Healthcare Staff. A representative of pharmacy, nursing, performance improvement coordinator and administration shall also attend. Other service representatives shall attend as necessary. 9.6-2 DUTIES (a) Review the appropriateness of empiric and therapeutic use of drugs through the analysis of individual or aggregate patterns of drug practice (on a quarterly basis). (b) Develop or approve policies and procedures relating to the selection, distribution, handling, use, and administration of drugs and diagnostic testing materials. (c) Review all significant untoward drug reactions. (d) Develop and maintain a contemporary formulary (every two years). (e) Conduct drug evaluation as to the appropriateness, safety, and effectiveness of the prophylactic, empiric, and therapeutic use of all types of antibiotics used in all patient care areas reported at least quarterly. (f) Screening mechanisms, using clinically valid criteria, may be used to identify or more intensively evaluate problems in antibiotic use. (g) Act as in-house liaison with the consulting pathologist in reviewing and evaluating current laboratory procedures and controls. (h) Survey, review and analyze potential and actual hospital infections, promote preventative and corrective programs to minimize infection hazards; and supervise infection control in all phase of hospital activities. (i) Written reports of conclusions, recommendations actions taken and the results of actions taken are maintained. 52 (j) A decision can be made with the attendance of one physician member. 9.6-3 MEETINGS The Pharmacy and Therapeutics/Infection Control Committee shall meet as often as necessary to complete business of the committee but not less than quarterly and will make a written report to the Medical Executive Committee of the Medical and Allied Healthcare Staff. 9.7 AD HOC COMMITTEES The Chief of Staff may appoint from time to time such committees as may be required to carry out properly the duties of the Medical and Allied Healthcare Staff. Such committees shall confine their work to the purposes for which they were appointed and shall report to the full Medical and Allied Healthcare Staff or to the Medical Executive Committee as directed. They shall have no power of action, unless such is specifically granted by the motion which created the committee. ARTICLE X MEDICAL STAFF MEETINGS 10.1 MEETINGS 10.1-1 REGULAR MEETINGS (a) Medical and Allied Healthcare Staff meetings shall be held once a month if business requires but not less than quarterly at a time designated by majority vote of the active and community members. The objective of Medical and Allied Healthcare Staff meetings is improvement in the care and treatment of patients by evaluation of the medical performance of the staff. Meetings shall include acting upon recommendations by service chiefs and committees. (b) The last meeting before the end of each even calendar year shall be the biennial meeting at which retiring officers and committee chair shall make such reports as may be desirable. 10.1-2 SPECIAL MEETINGS 53 (a) Special meetings of the Medical and Allied Healthcare Staff may be called at any time by the Chief of Staff and shall be called at the request of the Governing Body, the Medical Executive Committee, or any five (5) members of the Medical and Allied Healthcare Staff. (b) At any special meetings, no business shall be transacted except that stated in the notice calling the meeting. (c) Notice by FAX, phone, email, or in writing, stating the place, day, and hour of any special meeting shall be given to each member of the Medical and Allied Healthcare Staff not less than 48 hours before the date of such meeting. 10.1-3 ATTENDANCE REQUIREMENTS (a) Each member of the active and community Medical and Allied Healthcare Staff shall be required to attend at least fifty percent (50%) of all regular Medical and Allied Healthcare Staff meetings in each year. Absence from more than one half of the meetings for the year, unless excused, may result in revocation of active staff membership when the member's application for reappointment is reviewed. (b) Reinstatement of members to the Medical and Allied Healthcare Staff may be made on application, the procedure being the same as in the case of original appointment, or at the discretion of the Credentials Committee, allowing for special circumstances. 10.2 COMMITTEE AND SERVICE MEETINGS 10.2-1 REGULAR MEETINGS Committee members shall set the time for regular committee meetings. 10.2-2 SPECIAL MEETINGS A special meeting of any committee or service may be called by or at the request of the chair or chief thereof or by the Chief of Staff. 10.2-3 NOTICES OF MEETINGS Notice stating the place, day and hour of any special meeting or of any regular meeting not held pursuant to resolution shall be given to each member of the committee or service not less than one (1) day before the time of such meeting, by person or persons calling the meeting. Such notice shall be given by FAX, phone, email, or in writing. 10.2-4 QUORUM Fifty percent (50%) of the Medical and Allied Healthcare Staff members of a committee or service shall constitute a quorum at any meeting unless otherwise specified herein. 10.2-5 MANNER OF ACTION 54 The action of a majority of the members present at a meeting at which a quorum is present shall be the action of a committee or service. Action may also be taken through email without a meeting with tally of vote verified through printed response through the Medical Staff Office. If there is less than a quorum response by eligible voters, the motion will be brought to the next regular meeting of the general Medical and Allied Healthcare Staff. 10.2-6 RIGHTS OF EX-OFFICIO MEMBERS Persons serving under these Bylaws as ex-officio members of a committee shall have all rights and privileges of regular members except they shall not be counted in determining the existence of a quorum. 10-2-7 MINUTES Minutes of each regular and special meeting of a committee or service shall be prepared and shall include a record of the attendance of members and the vote taken on each matter. The minutes shall be signed by the presiding officer and copies thereof submitted to the Medical Executive Committee. 10.2-8 ATTENDANCE REQUIREMENTS (a) Each committee member shall be required to attend not less than two thirds (66.6%) of all meetings of his/her committees in each year and member's attendance records will be considered at the time of review for reappointment to Medical and Allied Healthcare Staff . (b) Courtesy staff members accepting membership on committees shall be governed by the same attendance requirements and voting privileges as apply to active Medical and Allied Healthcare Staff. ARTICLE XI MEDICAL STAFF AND ALLIED HEALTHCARE STAFF CREDENTIAL FILES CONFIDENTIALITY, IMMUNITY AND RELEASES 11.1 CREDENTIALS FILES 11.1-1 CONTENTS (a) An individual credentials file must be maintained for each Medical and Allied Healthcare Staff member. 55 (b) The credentials file shall contain the following information: (1) The completed and verified application for Medical and Allied Healthcare Staff membership, including information on training, experience, references, current licensure and Drug Enforcement Administration registration and request for clinical privileges; (2) Evidence that the Medical and Allied Healthcare Staff evaluated and acted upon the above information; (3) Evidence of proctoring membership and additional privileges; (4) Specific and current clinical privileges recommended by the Medical and Allied Healthcare Staff and approved by the Governing Body; (5) Data pertinent to reappraisal and reappointment, including current licensure, Drug Enforcement Administration registration, continuing medical education, attendance at required meetings, and health status; (6) Evidence that the Medical and Allied Healthcare Staff critically evaluated the above information and assessed the current clinical competence for privileges requested, as well as evidence that appropriate action was taken on reappointment and renewal of privileges; (c) Peer review files will contain information generated through the Performance Improvement Committee. 11.1-2 AUTHORIZATION AND CONSENT By applying for exercising clinical privileges within this hospital, an applicant: (a) Authorizes representatives of the hospital and the Medical and Allied Healthcare Staff to solicit, provide, and act upon information bearing upon, or reasonable believed to bear upon, the applicant's professional ability and qualifications; (b) Authorizes persons and organizations to provide information concerning such professional to the Medical and Allied Healthcare Staff; (c) Agrees to be bound by the provisions of this Article and to waive all legal claims against any representative of Medical and Allied Healthcare Staff or the hospital who acts in accordance with the provisions of this Article; and (d) Acknowledges that the provisions of this Article are express conditions to an application for Medical and Allied Healthcare Staff membership, the continuation of such membership, and to the exercise of clinical privileges at this hospital. 11.1-3 INSERTION OF ADVERSE INFORMATION The following applies to actions relating to requests for insertion of adverse information into the Medical and Allied Healthcare Staff member's credentials file: (a) As stated previously, in Section 6.1-1, any person may provide information to the Medical and Allied Healthcare Staff about the conduct, performance or competence of its members. 56 (b) When a request is made for insertion of adverse information into the Medical and Allied Healthcare Staff member's credentials file, the respective service chief and Chief of Staff shall review such a request. (c) After such a review a decision will be made by the respective service chief and Chief of Staff to: 1. Not insert the information; 2. Notify the member of the adverse information by a written summary and offer him/her the opportunity to rebut this assertion before it is entered into his/her file; or 3. Insert the information along with a notation that a request has been made to the Medical Executive Committee for an investigation as outlined in Section 6.1-2 of these Bylaws. (d) This decision shall be reported to the Medical Executive Committee. The Medical Executive Committee, when so informed, may either ratify or initiate contrary actions to this decision by a majority vote. 11.1-4 REVIEW OF ADVERSE INFORMATION AT THE TIME OF REAPPRAISAL AND REAPPOINTMENT The following applies to the review of adverse information in the Medical and Allied Healthcare Staff member's credentials file at the time of reappraisal and reappointment. (a) Prior to recommendation on reappointment, the Credentials Committee shall review any adverse information in the member's credentials file. (b) The Credentials Committee shall determine whether adverse information in the member's credentials file warrants further action. (c) The Credentials Committee shall inform the Medical Executive Committee of its decision. (d) Within 60 days of Medical Executive Committee review, the Medical Executive Committee shall do one or more of the following: 1. Decide that no further action on the adverse information is warranted; 2. Initiate a request for corrective action, based on such adverse information; 3. Cause the substance of such adverse information to be summarized and disclosed to the member, 4. Decide that the adverse information shall not be utilized as the basis for a request for corrective action and it shall be removed from the file and discarded, unless the Medical Executive Committee, by a majority vote, determines that such information is required for continuing evaluation of the member's; (e) Character (f) Competence (g) Professional Performance 57 11.1-5 CONFIDENTIALITY The following applies to records of the Medical and Allied Healthcare Staff and its committees responsible for the evaluation and improvement of patient care: (a) The records of the Medical and Allied Healthcare Staff and its committees responsible for the evaluation and improvement of the quality of patient care rendered in the hospital shall be maintained as confidential. (b) Access to such records shall be limited to duly appointed officers and committees of the Medical and Allied Healthcare Staff for the sole purpose of discharging Medical and Allied Healthcare Staff responsibilities and subject to the requirement that confidentiality be maintained. (c) Information which is disclosed to the Governing Body of the hospital or its appointed representatives, in order that the Governing Body may discharge its lawful obligations and responsibilities, shall be maintained by that body as confidential. (d) Information contained in the credentials file of any member may be disclosed with the member's consent to any Medical and Allied Healthcare Staff committee or professional licensing board, or as required by law. However, any disclosure outside of the Medical and Allied Healthcare Staff shall require the authorization of the Chief of Staff and the concerned service chief and notice to the member. (e) A Medical and Allied Healthcare Staff member shall be granted access to his/her own credentials file, subject to the following provisions: 1. Timely notice of such shall be made by the member to the Chief of Staff or his/her designee; 2. The member may review, and receive a copy of, only those documents provided by or addressed personally to the member. A summary of all other information (including Performance Improvement Committee findings, letters of reference, proctoring reports, complaints, etc.) shall be provided to the member, in writing, by a designated officer of the Medical and Allied Healthcare Staff as determined by the Medical Executive Committee. Such summary shall disclose the substance, but not the source, of the information summarized; 3. The review by the member shall take place in the Medical and Allied Healthcare Staff office, during normal work hours, with an officer or designee of the Medical and Allied Healthcare Staff present. 11.1-6 MEMBER'S OPPORTUNITY TO REQUEST CORRECTION/DELETION OF AND TO MAKE ADDITION TO INFORMATION IN FILE (a) When a member has reviewed his/her file as provided under Section 12.1-5 (e) he/she may address to the Chief of Staff a written request for correction or deletion of information in his/her credentials file. Such request shall include a statement of the basis for the action requested. (b) The Chief of Staff shall review such a request and shall recommend to the Medical Executive Committee whether or not to make the correction or deletion requested. The Medical Executive Committee shall either ratify or initiate action contrary to this recommendation, by a majority vote. 58 (c) The member shall be notified promptly, in writing, of the decision of the Medical Executive Committee. (d) In any case, upon written request to the Medical Executive Committee, a member shall have the right to add to his/her own credentials file, a statement responding to any information contained in the file. 11.2 IMMUNITY FOR LIABILITY 11.2-1 FOR ACTION TAKEN Each representative of the Medical and Allied Healthcare Staff and hospital shall be exempt, to the fullest extent permitted by law, from liability to an applicant or member for damages or other relief for any action taken or statements or recommendations made within the scope of duties exercised as a representative of the Medical and Allied Healthcare Staff or hospital. 11.2-2 FOR PROVIDING INFORMATION Each representative of the Medical and Allied Healthcare Staff and hospital and all third parties shall be exempt, to the fullest extent permitted by law, from liability to an applicant or member for damages or other relief by reason of providing information to a representative of the Medical and Allied Healthcare Staff or hospital concerning such person who is, or has been, an applicant to or member of the Medical and Allied Healthcare Staff or who did, or does, exercise clinical privileges or provide services at this hospital. 11.3 ACTIVITIES AND INFORMATION COVERED 11.3-1 ACTIVITIES The confidentiality and immunity provided by this Article shall apply to all acts, communications, reports, recommendations or disclosures performed or made in connection with this or any other health care facility's or organization's activities concerning, but not limited to: (a) Application for appointment, reappointment, or clinical privileges. (b) Corrective action; (c) Hearings and appellate reviews; (d) Utilization reviews; (e) Other service, committee, or Medical and Allied Healthcare Staff activities related to monitoring and maintaining quality patient care and appropriate professional conduct; (f) Peer review organizations, Oregon Medical Board (OMB) and National Practitioner Data Bank (NPDB) or similar reports. 59 11.4 RELEASES Each applicant or member shall, upon request of the Medical and Allied Healthcare Staff or hospital, execute general and specific releases in accordance with the express provisions and general intent of this Article. Execution of such releases shall not be deemed a prerequisite to the effectiveness of this Article. ARTICLE XII ADOPTION AND AMENDMENT OF BYLAWS Any proposed repeal, amendment or adoption of these Bylaws shall be accomplished through a cooperative process involving both the Medical and Allied Healthcare Staff and the Governing Body. 12.1 THE BYLAWS WILL BE DIVIDED UNTO 4 SECTIONS IN ADDITION TO THE RULES & REGULATIONS: Book 1 Membership Book 2 Credentialing Book 3 Governance Book 4 Fair Hearings/Corrective Actions Each Section can be amended independent of the other sections. Any proposed repeal, amendment or adoption of these Bylaws shall be in accordance with the following: 12.2 ALL SECTIONS WILL REQUIRE THE FOLLOWING: (TWO READINGS) (a) Any proposal shall be read or presented in writing at any regular Medical and Allied Healthcare Staff meeting without special notice or at a special meeting on notice; (b) A second presentation shall occur at a regular Medical and Allied Healthcare Staff meeting without special notice, or at a special staff meeting on notice, at least 3 weeks after the first reading or presentation; (c) Approval of such proposal by the Medical and Allied Healthcare Staff shall require a vote of two thirds of those present who are eligible to vote Any proposed repeal, amendment or adoption of these Bylaws shall become effective only after such action is approved by the Medical and Allied Healthcare Staff and the Governing Body. Approval shall not be unreasonably 60 withheld by either or unduly delayed. Neither the Medical and Allied Healthcare Staff nor the Governing Body shall withhold approval if such repeal, amendment or adoption is mandated by law, statute or regulation, or is necessary to obtain or maintain accreditation, or to comply with fiduciary responsibilities or if failure to approve would subvert the stated moral or ethical purposes of the hospital. 12.3 TECHNICAL AND EDITORIAL AMENDMENTS The Medical Executive Committee shall have the power to adopt such amendments to the Bylaws that are, in its judgment, technical modifications or clarifications, reorganization or renumbering of the Bylaws, or amendments made necessary because of punctuation, spelling or other errors of grammar or expression or inaccurate cross- references. The action to amend may be taken by motion and acted upon in the same manner as any other motion before the Medical Executive Committee. After approval, such amendments shall be communicated in writing to the Medical and Allied Healthcare Staff and to the Governing Body. Such amendments would be effective upon adoption by the Medical Executive Committee; provided however, they may be rescinded by vote of the Medical and Allied Healthcare Staff or the Board of Directors. ARTICLE XIII RULES & REGULATIONS The Medical and Allied Healthcare Staff shall adopt such Rules & Regulations as may be necessary to implement more specifically the general principles found within these Bylaws, subject to the approval of the Governing Body. These shall relate to the proper conduct of Medical and Allied Healthcare Staff organizational activities as well as embody the level of practice that is to be required of each professional in the hospital. Such Rules & Regulations shall be a part of these Bylaws, except that they may be amended or repealed at any regular meeting at which a quorum is present and without previous notices or at any special meeting on notice, by a two-thirds (2/3) vote of those present of the Medical and Allied Healthcare Staff . Such changes shall become effective when approved by the Governing Body. 61 BOOK 4 - Fair Hearing / Corrective Action ARTICLE XIV CORRECTIVE ACTION 14.1 CORRECTIVE ACTION 14.1-1 GROUNDS FOR CORRECTIVE ACTION For the purposes of Article XIV, any corrective action must be taken (1) in the reasonable belief that the action is in the furtherance of quality health care and optimal functioning of the medical staff; (2) after a reasonable effort to obtain the facts of the matter as outlined in Article XIV; (3) after the notice and hearing procedures set forth in this Article XIV and Article XV; and (4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the notice and hearing procedures. Any person may provide information to the Medical and Allied Healthcare Staff or the Governing Body about the conduct, performance, or competence of a staff member. Grounds for corrective action include, but are not limited to, a reasonable belief that one or more of the following has occurred: (a) Acts, behavior, or conduct below applicable professional standards; (b) Conduct detrimental to patients' safety or the delivery of substandard quality patient care within the hospital; (c) Unethical practice; (d) Conduct which is reasonably likely to be disruptive to the orderly operation of the hospital or its Medical and Allied Healthcare Staff, including the inability of the member to work harmoniously with others; (e) Conviction of a felony; (f) Violation of these Bylaws or Rules & Regulations of the Medical and Allied Healthcare Staff; (g) Personal abuse of drugs or alcohol; (h) Notification by an appropriate agency of the revocation or suspension of a member's license, or of being placed on probation; (i) Failure to maintain professional liability insurance in amounts as may be required by the Governing Body. 62 14.1-2 INITIATION OF CORRECTIVE ACTION Investigation and consideration of corrective action against any member of the Medical and Allied Healthcare Staff may be requested by any one of the following: any member of the Governing Body, administrator, Chief of Staff, any of the chiefs of service or chairperson of the Performance Improvement Committee. 14.1-3 REQUESTS When the corrective action requested constitutes modification, suspension or expulsion from Medical and Allied Healthcare Staff membership, or modification or suspension of Medical and Allied Healthcare Staff privileges, such requests shall be made in writing to the Medical Executive Committee, and shall document in substantial detail the activities or conduct which constitutes the grounds for the request that corrective action be taken. 14.1-4 INVESTIGATION (a) The Medical Executive Committee or the Chief of Staff, upon receipt of a request for corrective action, may conduct the investigation, or may assign the task to an appropriate Medical and Allied Healthcare Staff officer, Medical and Allied Healthcare Staff service, standing or ad-hoc committee of the medical staff. (b) The following may request that the Oregon Medical Board appoint the person or persons to investigate the matter. (Pursuant to ORS 441.055) (1) the professional whose practice is being reviewed, (2) the Medical Executive Committee, and (3) the Governing Body,. (c) The committee appointed to investigate the request for corrective action shall give special notice to the affected member that a complaint which could result in corrective action has been made. The notice shall describe the specific allegation(s) contained in the complaint and shall inform the member of his/her rights under this article. (d) The affected member shall be permitted to meet with the investigating committee to make a statement in his/her own behalf. This appearance shall not constitute a hearing, shall be informal in nature and none of the procedural rules, hereinafter set forth with respect to hearings shall apply. Information obtained from the affected member while making a statement to the investigating committee may be used in subsequent hearing proceedings. 63 (e) If the investigation is delegated to an officer or committee, such officer or committee shall proceed with the investigation in a prompt manner and shall forward a written report of the investigation to the Medical Executive Committee within 60 days or within a reasonable time frame determined by the quantity of data requiring review and the availability of participants to attend the required meeting(s) after receipt of the request for investigation and consideration of corrective action. If the investigation is conducted by the Medical Executive Committee, it shall conclude its investigation within 60 days or within a reasonable time frame determined by the quantity of data requiring review and the availability of participants to attend the required meeting(s) after the receipt of the request for investigation and consideration of corrective action. The Medical Executive Committee will meet within 14 days of the conclusion of the investigation and shall take action at that time upon the request for corrective action. (f) As part of the investigation, the Medical Executive Committee may require the member to procure an impartial physical or mental examination. Failure to do so without good cause shall result in immediate suspension of staff appointment and clinical privileges until such time as the examination is obtained. The professional who will conduct the examination shall be named by the investigating committee and fees for the examination shall be paid by the hospital. 14.1-5 ACTION BY THE MEDICAL EXECUTIVE COMMITTEE (a) The action of the Medical Executive Committee may include (1) a recommendation that no corrective action be taken, with dismissal of the complaint; (2) issuance of a warning or a letter of admonition, censure or reprimand; (3) or a recommendation to the Governing Body acting through the administrator that the member's clinical privileges be suspended, reduced, or made subject to requirement of consultation or that his/her staff membership be suspended or revoked. Special notice of the Medical Executive Committee's action shall be given to the affected member. (b) If the action is a recommendation for reduction or suspension of clinical privileges, for a requirement for consultation except as provided in Section 15.1-2(g), or for revocation or suspension of Staff membership, the notice shall advise the affected member of his/her right to a hearing and shall be accompanied by a copy of Article XV of these Bylaws. If the member submits to the Medical Executive Committee a timely written request for a hearing, the recommendation shall not be effective, nor final unless and until the procedures set forth in Article XV of these Bylaws have been fully complied with and final action taken by the Governing Body. 14.1-6 ACTION BY THE GOVERNING BODY Within 14 days after receipt of the recommendation of the Medical Executive Committee, the Governing Body shall act thereon. Such action may be to (1) affirm, (2) to modify by increasing or reducing the corrective action recommended, (3) or to reject the recommendation. If the Governing Body finds that the information provided by the Medical Executive Committee is not sufficiently complete to make an informed recommendation/decision, it shall request additional information from the Medical Executive Committee. The administrator shall notify in writing the Medical Executive Committee and by special notice, the member of the action and the basis for the Governing Body's decision. If the action of the Governing Body is an action for which an adverse action report form must be submitted to the appropriate Oregon licensing agency, as appropriate, pursuant to the Health Care Quality Improvement Act, the procedure set forth in Article XVI, Section 15.5, shall apply. -64- 14.1-7 VOLUNTARY SURRENDER OF MEDICAL STAFF MEMBERSHIP OR CLINICAL PRIVILEGES WHILE UNDER INVESTIGATION OR IN LIEU OF INVESTIGATION If a professional voluntarily surrenders clinical privileges while under investigation for possible incompetence or improper professional conduct or in lieu of such an investigation, the hospital shall, pursuant to the Health Care Quality Improvement Act of 1986, submit an adverse action report form to the appropriate Oregon licensing board in the manner prescribed in Article XV, Section 15-5. Notification of the National Practitioner Data Bank as required by Federal Statutes if necessary will be done. 14.2 SUMMARY RESTRICTION OR SUSPENSION 14.2-1 CRITERIA FOR INITIATION Whenever a member's conduct appears to require that immediate action be taken to protect the life or well-being of patient(s) or to reduce a substantial and imminent likelihood of significant impairment of the life, health, safety of any patient, prospective patient, or other person, the Chief of Staff, the Medical Executive Committee, or the service chief or designee in which the member holds privileges, may summarily restrict or suspend the Medical and Allied Healthcare Staff membership or clinical privileges of such member. Unless otherwise stated, such summary restriction or suspension shall become effective immediately upon imposition, and the person or body responsible shall promptly give notice to the member, the Governing Body, the Medical Executive Committee, and the administrator. The summary restriction or suspension may be limited in duration and shall remain in effect for the period stated or, if none, until resolved as set forth herein. Unless otherwise indicated by the terms of the summary restriction or suspension, the member's patients, with their consent, shall be promptly assigned to another member by the service chief or by the Chief of Staff. The wishes of the patient will be considered in choosing a substitute professional. 14.2-2 MEDICAL EXECUTIVE COMMITTEE ACTION No later than 10 days after such summary restriction or suspension has been imposed and upon the request of the affected professional, a meeting of the Medical Executive Committee shall be convened to review and consider the action. Upon request, affected professional may attend and make a statement concerning the issue under investigation, on such terms and conditions as the Medical Executive Committee may impose, although in no event shall any meeting of the Medical Executive Committee, with or without the member, constitute a "hearing" within the meaning of Article XV, nor shall any procedural rules apply. The Medical Executive Committee shall issue its decision within 7 days of the meeting. The Medical Executive Committee may also modify, continue, or terminate the summary restriction, subject to review by the Governing Body, but in any event it shall furnish special notice to the affected member of its decision. If the Medical Executive Committee does not terminate the summary restriction or suspension, Article XV shall apply. 14.3 AUTOMATIC SUSPENSION OR LIMITATION In the following instances, the member's privileges or membership may be suspended or limited as described, which action shall be final without a right to hearing or further review, except where a bona fide dispute exists as to whether the circumstances have occurred: -65- 14.3-1 LICENSURE (a) Revocation and Suspension: Whenever a member's license or other legal credential authorizing practice in this state is revoked or suspended, Medical and Allied Healthcare Staff membership and clinical privileges shall be automatically revoked or suspended as of the date such action becomes effective. (b) Restriction: Whenever a member's license or other legal credential authorizing practice in this state is limited or restricted by the applicable licensing or certifying authority, any clinical privileges which the member has been granted at the hospital which are within the scope of said limitation or restriction shall be automatically limited or restricted in a similar manner, as of the date such action becomes effective and throughout its term. (c) Probation: Whenever a member is placed on probation by the applicable licensing or certifying authority, his/her or her membership status and clinical privileges shall automatically become subject to the same terms and conditions of the probation as of the date such action becomes effective and throughout its terms. (d) It is the duty and obligation of the member to inform the Medical Executive Committee any change in status by a licensing or certifying Governing Body or agency. Failure to do so may result in immediate suspension of clinical privileges. 14.3-2 CONTROLLED SUBSTANCES (a) Whenever a member's IDEA certificate is revoked, limited, or suspended, the member shall automatically and correspondingly be divested of the right to prescribe medications covered by the certificate, as of the date such action becomes effective and throughout its term. (b) Probation: Whenever a member's IDEA certificate is subject to probation, the member's right to prescribe such medications shall automatically become subject to the same terms of the probation, as of the date such action becomes effective and throughout its term. (c) It is the duty and obligation of the member to inform the Medical Executive Committee any change in status by a licensing or certifying board or agency. Failure to do so may result in immediate suspension of clinical privileges. 14.3-3 MEDICAL RECORDS Members of the Medical and Allied Healthcare Staff are required to complete medical records in a timely fashion as defined by the Bylaws or Rules & Regulations and in accordance with all state and federal regulations. Failure to complete medical records within the prescribed period will result in suspension of clinical privileges. Failure to reverse the suspension within 60 days of initiation of suspension will result in corrective action as defined in Section 14. 1.1 of these by-laws. Three medical records suspensions occurring in a twelve (12) month period will be referred to the MEC for consideration of corrective action as defined in Section 14.1.1 of these by-laws. -66- ARTICLE XV HEARINGS 15.1 INITIATION OF HEARING 15.1-1 ADVERSE ACTION REQUIRED FOR RIGHT TO HEARING The following actions or recommendations shall, if made or proposed to be made by the Medical Executive Committee, be deemed actual or potential adverse action and shall constitute grounds for a hearing upon timely and proper request by the affected professional except as stated in 142 (a) Denial of initial staff appointment; (b) Denial of reappointment; (c) Suspension of Medical and Allied Healthcare Staff membership; (d) Revocation of Medical and Allied Healthcare Staff membership; (e) Denial of requested appointment in staff classification or denial of requested advancement in staff membership status, or category; (f) Reduction in staff classification; (g) Suspension or limitation of the right to admit patients; (h) Denial or restriction of requested clinical privileges; (i) Involuntary reduction of current clinical privileges; (j) Suspension of clinical privileges; (k) Revocation of clinical privileges; (1) Application of or increased scope of mandatory consultation requirement after completion of the provisional period. (m) Denial of request for modification of privileges 15.1-2 ACTIONS NOT DEEMED ADVERSE Any one or more of the following actions or recommended actions shall not be deemed "adverse" and shall not constitute grounds for a hearing: (a) Temporary suspension or limitation of admitting or clinical privileges pending proof of compliance with records, insurance, employment, sponsor, or collaborating physician requirements. -67- (b) Denial, revocation, suspension, or modification of temporary or limited privileges; (c) Termination of clinical privileges in conjunction with termination of a professional's contract with the Hospital, if such termination of privileges is in accord with the contract. (d) Lapse of a prior appointment or prior grant of privileges in accordance with its terms; (e) Decision by the Governing Body not to accept any application by professionals for the type of privileges requested, or decision by the Governing Body not to accept applications in conflict with any existing hospital contract, which provides for exclusive services; (f) Any otherwise "adverse" action that is based on the applicant or professional's voluntary resignation or agreement; (g) Official admonition, warning, reprimand or imposition of a counseling or consultation requirement that does not mandate acceptance of the consultant or counselor's recommendation or require the consultant's or counselor's recommendation or require the consultant's or counselor's prior approval for exercise of specified privileges; (h) Return or rejection of an incomplete or altered application. (i) Decision by the Credentials Committee or the Medical Executive Committee that an applicant for membership does not meet the requisite or criteria for Medical or Allied Healthcare Staff members. 15.1-3 WHEN DEEMED ADVERSE A recommendation or action listed in part 15.1-1 above is adverse only when it has been: (a) recommended or approved by the Medical Executive Committee for forwarding to the Governing Body as provided in the appointment, reappointment, corrective action and hearing provisions of these Bylaws; or (b) taken by the Governing Body under circumstances in which no prior right to request a hearing existed. 15.1-4 NOTICE OF ADVERSE ACTION AND RIGHT TO REQUEST HEARING In all cases in which the Medical Executive Committee has or may recommend, or the Governing Body may take, those actions constituting grounds for hearing, the affected professional shall be given special notice of his/her right to request a hearing within 30 days of delivery of that special notice to that affected professional. This special notice shall: (a) Advise the professional of the adverse recommendation or action and inform him/her of the basis for the action including the acts or omissions with which the professional is charged, and his/her right to request a hearing pursuant to these Bylaws; (b) Summarize the rights of the professional in the hearing pursuant to Section 15.2-3, and by providing the professional with a copy of medical staff and allied healthcare by-laws; (c) Specify that the professional has 30 days after receiving the notice within which to submit a written request for a hearing to the administrator who will promptly deliver the request to the chairperson of the Governing Body; -68- (d) State that failure to request a hearing within the specified time period and in the proper manner will result in loss of all rights to a hearing on the matter that is the subject of the notice and that the professional will be deemed to have accepted the action taken; (e) State that any higher authority required or permitted under these Bylaws to act on the matter will not be bound by its recommendation or action, but may take any action whether more or less severe where it deems warranted by the circumstances; and (f) State that upon the receipt of the professional's written request, the chairperson of the Governing Body will notify the professional of the date, time and place of the hearing. The hearing request must be in writing and delivered in person or by registered or certified mail to the administrator of the hospital. 15.2 HEARING PREREQUISITES 15.2-1 HEARING COMMITTEE When a proper request for hearing is received, the administrator of the Hospital shall promptly deliver the request to the chairperson of the Governing Body. Upon receipt of the hearing request, the chairperson of the Governing Body after conferring with the Chief of Staff, shall appoint a hearing committee composed of not less than three (3) members of the Medical and Allied Healthcare Staff, each of whom shall not have previously actively participated in the consideration of the matter, and shall not be in direct economic competition with the professional, one of whom shall be appointed as chairperson. Knowledge of the matter involved shall not preclude a professional on the medical staff from serving as a member of the hearing committee. Pursuant to ORS 441.055(6), upon request by all of the following: (1) the professional whose practice is being reviewed (2) the Medical Executive Committee (3) and the Governing Body, the Oregon Medical Board shall appoint a hearing committee from a list of physicians consisting of representatives of the Oregon Medical Board. 15.2-2 NOTICE OF TIME AND PLACE FOR HEARING The chairperson of the Governing Body shall within 14 days after appointment of the hearing committee, schedule a hearing and notify the affected professional of the time, place and date. A hearing shall be scheduled on a date not less than 30 days or more than 60 days from the date appearing on the face of the notice. 15.2-3 CONTENT OF HEARING NOTICE The notice of hearing shall be prepared by the chair of the Governing Body and shall state in concise language, (1) the basis for the adverse action and the criteria, Bylaws or other requirements relied on in the adverse recommendation, decision or act; (2) the composition of the hearing committee; (3) the time, place and date of the hearing; (4) notification that the right to the hearing may be forfeited if the professional fails without good cause to appear; (5) notification that in the hearing, the affected professional has the right to representation by an attorney or other person of the professional's choice at the professional's expense; (6) notification that the professional has the right to have a record made of the proceedings, copies of which may be obtained by the professional upon payment of any reasonable charges associated with the preparation thereof; (7) notification that the professional has the right to call, examine and cross-examine witnesses; (8) notification that the professional has the right to present evidence determined to be relevant by the presiding officer, regardless of its admissibility in a court of law; (9) notification that the professional has the right to submit a written statement at the close of the hearing; (10) -69- notification that upon completion of the hearing the professional involved has the right to receive the written recommendation of the hearing committee, including a statement of the basis of the recommendations, and shall receive a written decision of the hospital, including a statement of the basis of the decision; (11) the name of the person to contact for access to the record on which the adverse event was based; (12) the names of witnesses then contemplated; and (13) the name of the person appointed to present the evidence of the proponents of the adverse action, if any. 15.3 HEARING PROCEDURE 15.3-1 PERSONAL PRESENCE Failure of the professional to appear at the hearing without good cause shall constitute a waiver of the right to a hearing and a voluntary acceptance of the recommendations or actions involved. 15.3-2 PRESIDING OFFICER The chairperson of the hearing committee shall preside over the hearing. He/she shall act to insure that decorum is maintained and that all persons who participate in the hearing have a reasonable opportunity to be heard, and to present oral and documentary evidence. 15.3-3 REPRESENTATION The affected professional shall be entitled to have an attorney or another person of his/her choice present to advise him/her at his/her own expense. The Governing Body shall appoint a representative(s), which may include an attorney, to represent the interests of the Governing Body and the Medical and Allied Healthcare Staff, to present evidence and to examine witnesses. The name of such representative(s) shall be given to the affected professional. 15.3-4 RIGHTS OF THE PARTIES The parties to the hearing shall have the right to: (a) call and examine witnesses, (b) present evidence determined to be relevant by the presiding officer, (c) cross-examine on any matter determined to be relevant by the presiding officer, and (d) obtain a copy of the hearing record upon payment of any reasonable charges associated with its preparation. If the professional does not testify in his/her own behalf, he/she may be called and examined as if under cross-examination. 15.3-5 PROCEDURE AND EVIDENCE The hearing need not be conducted according to the rules of law relating to the examination of witnesses or presentation of evidence. Any relevant matter upon which responsible persons might customarily rely on in the conduct of serious affairs may be considered, regardless of the admissibility of such evidence in a court of law. The hearing committee is also entitled to consider all other relevant information that can be considered under these Bylaws in connection with credential matters. Each party shall be entitled prior to or during the hearing to submit memoranda concerning any issue of law or fact and those memoranda shall be part of the hearing record. Oral evidence shall be taken only on oath or affirmation. 15.3-6 SCOPE OF REVIEW AND BURDEN OF PROOF -70- When a hearing relates to an application for membership under Article IV of these Bylaws, the applicant has the burden of proving by the more convincing evidence that he/she is qualified for or entitled to staff membership. In all other matters, the body whose action occasioned the hearing has the burden of proving by the more convincing evidence that the recommended action should be implemented. 15.3-7 HEARING RECORD An accurate record of the hearing must be kept. The hearing committee may select a method to be used for making a record, such as a court reporter, electronic recording unit, detailed transcription or minutes of the proceedings. If the hearing committee does not elect to use a court reporter, the professional may arrange for a public court reporter at his/her own expense, but shall consent to the hospital's right of access to any such transcription with the hospital to bear one-half the cost of producing the record and the entire cost for the hospital's copy. The hearing record shall also contain all exhibits or other documentation considered, written statements or memoranda submitted by the parties a correspondence between the parties or between the hearing committee and the parties if any during the hearing process. 15.3-8 POSTPONEMENT Request for postponement of a hearing may be granted by the chairperson of the hearing committee only upon showing of good cause, and only if the request is made as soon as is reasonably practical. 15.3-9 PRESENCE OF THE HEARING COMMITTEE The entire hearing committee must be present throughout the hearing and deliberations. 15.3-10 RECESSES AND ADJOURNMENT The chairperson of the hearing committee may recess and reconvene the hearing for the convenience of the participants or for the purpose of obtaining new or additional evidence or consultation. The hearing committee must reconvene in a timely manner and in any event the recess must not exceed 10 days except by written consent of the affected professional. Upon conclusion of the presentation of oral and written evidence and argument, the hearings shall be closed. The hearing committee shall, at a time convenient for itself, conduct its deliberations outside the presence of the parties. Upon conclusion of its deliberations, the hearing shall be adjourned. The adjournment shall be not later than 10 days after the hearing is closed. 15.4 HEARING COMMITTEE REPORT AND FURTHER ACTION 15.4-1 HEARING COMMITTEE REPORT Within 15 days after adjournment of the hearing, the hearing committee shall make its written report and recommendations and shall assemble the report along with the record and any other documentation in the matter. The report shall be based on the evidence introduced at the hearing, including all logical and reasonable inferences from the evidence and the testimony. The report shall include pertinent findings of fact, findings concerning the claims of bias or disqualification of officials acting prior to the hearing (if such an issue is raised and properly preserved for consideration), findings as to whether there was inappropriate conduct, care or non-conformance with a designated bylaw, procedure, criteria or other basis of decision, findings of fact as to whether any prejudicial procedural error occurred and the committee's recommendations which may concur with the prior action or -71- recommended modification or rejection of the original adverse recommendation or decision and the steps, if any, deemed necessary to remedy any identified procedural error. If the committee recommends reprocessing the matter due to prejudicial procedural error, the material shall be sent to the Medical Executive Committee or Governing Body, which ever made the recommendation or took the action which was challenged in the hearing with a copy of the report and a recommendation to the professional by special notice. Otherwise, the materials shall be sent to the Governing Body with a copy of the report and recommendations to the professional by special notice and an informational copy to the Medical Executive Committee. 15.4-2 ACTION BY GOVERNING BODY Within 15 days after receipt of the hearing committee report, the Governing Body shall act upon the recommendation(s) of the hearing committee. They may affirm, modify, or reject the decision of the hearing committee. If the decision of the Governing Body is in accord with the last recommendation of the hearing committee, it shall be approved by the administrator in writing within five days after the decision has been provided to the professional by special notice. If the action of the Governing Body has the effect of changing the hearing committee's last recommendation, the matter shall be referred to a joint review committee as provided in part 15.4- 3 below. The Governing Body shall inform the parties of its decision and the basis therefore, by special notice. 15.4-3 JOINT REVIEW COMMITTEE In the event the decision of the Governing Body differs from that of the hearing committee, the Governing Body decision shall not be final until the matter shall be referred to the joint review committee for consideration. The joint review committee shall consist of six members, the chairperson of the Governing Body shall appoint three board members and the Chief of Staff shall appoint three members not in direct economic competition with the professional from the Medical and Allied Healthcare Staff exclusive of previously named hearing board officers. Within 30 days after receiving the matter referred to it under this article, the joint review committee will consider the matter. Within 15 days after the joint review committee has considered the matter it shall prepare and submit its recommendations to the Governing Body with a copy to the affected professional. (a) Matter to be considered by the joint review committee. The affected professional may submit written statements covering any matters raised at any step in the hearing process. The statement shall be submitted to the joint review committee and other parties by the administrator within 20 days after the matter is sent to the joint review committee, except if the time limit is waived by the joint review committee. The proponents of the challenged action may also submit a written statement covering any matters raised at any step in the hearing process within 20 days after the matter is sent to the joint review committee. (b) Oral statements. The joint review committee at its sole discretion may allow the parties or their representatives to personally appear and make oral statements in favor of their positions. Any such appearances and statements shall not constitute a hearing under the procedural rules provided for hearings under these Bylaws. Any party appearing may be required to answer questions by any member of the joint review committee. (c) Consideration of new or additional matters. -72- New or additional evidence not raised in the original hearing or otherwise reflected in the record may be introduced during the joint review committee only under unusual circumstances and only at the sole discretion of the joint review committee, if the party requesting consideration of the new or additional evidence could not have produced such evidence at an earlier point in the proceedings. The requesting party shall submit to the chairperson of the Governing Body for his/her submission to the joint review committee, a written description of the new or additional evidence, as soon as the party becomes aware of the evidence. 15.4-4 FINAL ACTION BY GOVERNING BODY Within 45 days after receipt of the joint review committee's recommendations, the Governing Body shall make its final decision in the matter and send special notice thereof to the Medical Executive Committee and to the affected professional. The decision of the Governing Body shall be effective 5 days after a decision is mailed to the affected professional unless specified otherwise in such notice. No professional shall be entitled to more than one hearing pursuant to Article XV of these Bylaws. 15.5 ADVERSE ACTION REPORT 15.5-1 PRIOR NOTICE TO AFFECTED PROFESSIONAL If the final action of the Governing Body is an action for which an Adverse Action Report form must be submitted to the appropriate licensing agencies pursuant to the Health Care Quality Improvement Act, the administrator shall provide the professional with an exact copy of the Adverse Action Report which the hospital intends to submit, Privacy Act Notification and an explanation of all codes used in completing the form at least ten days prior to submission to allow resolution of any dispute. 15.5-2 PROFESSIONAL DISPUTE If a professional disputes the content of the report, the professional shall immediately, in writing, inform the administrator, or designee who, after conferring with the Chief of Staff regarding the report's contents, shall within 48 hours ultimately decide upon the final content of the report. When the administrator or Chief of Staff will be absent from the hospital, or otherwise unavailable to act on the disputed contents of an Adverse Action Report, they shall appoint designees to act during their unavailability. If the Adverse Action Report is revised following this procedure, a new Adverse Action Report shall be prepared and an exact copy provided to the professional by special notice prior to sending the Adverse Action Report to the appropriate Oregon licensing board. 15.5-3 SUBMISSION TO THE APPROPRIATE OREGON LICENSING BOARD Regardless of whether a dispute regarding an Adverse Action Report has been resolved, the administrator, or designee shall submit the Adverse Action Report to the National Practitioner Data Bank and the appropriate Oregon licensing board within 15 days from the date the decision is approved by the administrator in writing. -73- Schedule 35.3 ACF Foundation Violations of Agreements and List of Necessary Approvals and Consents The mortgage encumbering the real property at 209 North Pacific Highway, Talent, Oregon, with a balance of approximately $82,000 can be accelerated if the property is transferred to Asante without the consent of the holder of the mortgage. PDXDOCS:2009335.1 Schedule 35.4 ACF Foundation Financial Statements The ACF Foundation Financial Statements attached hereto are complete and present fairly in all material respects the financial position of ACH Foundation, and the results of its operations at the dates and for the periods indicated, in conformity with generally accepted accounting princples (except as otherwise disclosed on the attached Financial Statements), applied consistently for the periods specified, including the consistent us of assumptions, practices, procedures and terminology, except that any interim financial statements do not contain any of the footnotes and other items required to comply with generally accepted accounting principles. PDXDOCS:2009336.1 ASHLAND COMMUNITY HOSPITAL FOUNDATION FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2012 AND 2011 WITH INDEPENDENT AUDITORS' REPORT ASHLAND COMMUNITY HOSPITAL FOUNDATION Ashland, Oregon BOARD OF DIRECTORS AS OF DECEMBER 31, 2012 Pat Acklin, Ashland, Oregon 97520 Director John Alexander, Ashland, Oregon 97520 Director Brian Almquist, Ashland, Oregon 97520 Director Charles Butler, Ashland, Oregon 97520 Director Ed Colson, Ashland, Oregon 97520 Vice President Brandt Cullen, Ashland, Oregon 97520 Director Jack Davis, Ashland, Oregon 97520 Director Jonathan Eldridge, Ashland, Oregon 97520 Director Tom Grimland, Medford, Oregon 97504 .........................................................................President Thomas B. Kennedy, Ashland, Oregon 97520 Director Marjorie Lininger, Ashland, Oregon 97520 Director Elizabeth A. Murphy, Ashland, Oregon 97520. Secretary Paul Rostykus, Ashland, Oregon 97520 Director Barton Rupert, Ashland, Oregon 97520 Director Sandra Slattery, Ashland, Oregon 97520 Director Alan Steed, Ashland, Oregon 97520 Treasurer Garrison F. Turner, Medford, Oregon 97504 Director ASHLAND COMMUNITY HOSPITAL FOUNDATION Years ended December 31, 2012 and 2011 Contents Independent auditors' report 1 -2 Financial statements: Statements of financial position 3-4 Statements of activities 5-6 Statements of cash flows 7 Notes to financial statements 8-19 Supplemental information 20 Certified Public Accountants and Business Advisors i I INDEPENDENT AUDITORS' REPORT i i To the Board of Directors Ashland Community Hospital Foundation We have audited the accompanying financial statements of Ashland Community Hospital Foundation (a nonprofit organization), which comprise the statements of financial position as of December 31, 2012 and 2011, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements I Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. t An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. s We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. i Opinion i In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ashland Community Hospital Foundation as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. X3.39 ALDER CREEK DRIVE m MEDFOD, On` PHONE (541) FAX (5411) 73 800-1 WV J.Com Other !batter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental information on page 20 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information, except for that portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. Isler Medford, LLC Medford, Oregon May 23, 2013 _2_ ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Financial Position December 31, 2012 and 2011 ASSETS 2012 2011 Current assets: Cash and cash equivalents $ 340,053 $ 288,947 Contributions and bequests receivable 9,430 24,964 Other receivables 6,054 1,970 Commercial property reserves 32,718 26,525 Deposits 1,716 - Prepaid expenses 15,129 16,335 Total current assets 405,100 358,741 Property and equipment: Land 1,503,172 1,503,172 Buildings 3,280,492 3,280,492 Equipment 23,288 27,558 Total property and equipment 4,806,952 4,811,222 Less accumulated depreciation (1,223,208) (1,136,883) Net property and equipment 3,583,744 3,674,339 Other assets: Interfund loan receivable 170,000 170,000 Long-term investments 1,043,054 1,501,061 Total other assets 1,213,054 1,671,061 Total assets $ 5,201,898 $ 5,704,141 (Continued on next page) _2~m ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Financial Position (continued) December 31, 2012 and 2011 LIABILITIES AND NET ASSETS 2012 2011 Current liabilities: Accounts payable $ 26,632 $ 3,669 Grants payable - 3,266 Deferred revenue - rent - 10,298 Refundable security deposits 5,250 5,250 Current portion - Unitrust obligation 12,593 12,524 Current portion - mortgages payable 91,678 73,765 Total current liabilities 136,153 108,772 InterFund loan payable 170,000 170,000 Long-term Unitrust obligation, net of current portion 124,053 125,639 Long-term mortgages payable, net of current portion 1,275,755 1,911,965 Total long-term liabilities 1,569,808 2,207,604 Total liabilities 1,705,961 2,316,376 Net assets: Unrestricted: Undesignated 2,193,265 1,755,145 Board designated endowment 197,910 493,228 Total unrestricted 2,391,175 2,248,373 Temporarily restricted 391,229 444,008 Permanently restricted 713,533 695,384 Total net assets 3,495,937 3,387,765 Total liabilitites and net assets $ 5,201,898 $ 5,704,141 See accompanying notes to financial statements. -4- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statement of Activities Year ended December 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, gains and other support: Contributions $ 46,418 $ 211,486 $ 50 $ 257,954 In kind contributions 252,213 - - 252,213 Interest and dividend income 20,397 30,042 7,196 57,635 Rental income 514,202 - - 514,202 Fundraising activities and other income 145 - 145 Change in split interest agreement - 2,503 - 2,503 Unrealized and realized gain on investments 25,937 - 10,903 36,840 Total revenues, gains and other support 859,312 244,031 18,149 1,121,492 Net assets released from restrictions Satisfaction of program restrictions 279,590 (279,590) - - Satisfaction of scholarship restrictions 12,000 (12,000) - - Total net assets released from restrictions 291,590 (291,590) - - Total revenue and support 1,150,902 (47,559) 18,149 1,121,492 Expenses: Grants to hospital and others 332,784 - - 332,784 Management and general 128,193 5,220 - 133,413 In kind expenses 252,213 - - 252,213 Rental expenses 169,016 - 169,016 Interest expense 125,894 - - 125,894 Total expenses 1,008,100 5,220 - 1,013,320 Increase (decrease) in net assets 142,802 (52,779) 18,149 108,172 Net assets at beginning of year 2,248,373 444,008 695,384 3,387,765 Net assets at end of year $ 2,391,175 $ 391,229 $ 713,533 $ 3,495,937 See accompanying notes to financial statements. -5- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statement of Activities Year ended December 31, 2011 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, gains and other support: Contributions $ 69,770 $ 242,476 $ 44,426 $ 356,672 In kind contributions 189,574 - - 189,574 Interest and dividend income 24,921 27,350 4,121 56,392 Rental income 495,939 - - 495,939 Fundraising activities and other income 2,925 - - 2,925 Change in split interest agreement - 459 - 459 Gain on sale of building 32,741 - - 32,741 Unrealized and realized loss on investments (42,820) - (28,863) (71,683) Total revenues, gains and other support 773,050 270,285 19,684 1,063,019 Net assets released from restrictions Satisfaction of program restrictions 244,922 (244,922) - - Satisfaction of scholarship restrictions 10,667 (10,667) - - Total net assets released from restriction 255,589 (255,589) - - Total revenue and support 1,028,639 14,696 19,684 1,063,019 Expenses: Grants to hospital and others 433,979 - - 433,979 Management and general 114,118 4,659 - 118,777 In kind expenses 189,574 - - 189,574 Fundraising 2,757 - - 2,757 Rental expenses 203,456 - - 203,456 Interest expense 140,120 - - 140,120 Total expenses 1,084,004 4,659 - 1,088,663 (Decrease) increase in net assets (55,365) 10,037 19,684 (25,644) Net assets at beginning of year 2,303,738 433,971 675,700 3,413,409 Net assets at end of year $ 2,248,373 $ 444,008 $ 695,384 $ 3,387,765 See accompanying notes to financial statements. -6- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Cash Flows Years ended December 31, 2012 and 2011 2012 2011 Cash flows from operating activities: Change in net assets $ 108,172 $ (25,644) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 90,595 93,132 Change in value of split interest agreement 986 (8,668) (Gain) on sale of building - (32,741) Net realized and unrealized (gains) losses on investments (36,840) 71,683 (Increase) decrease in: Contributions and bequests 15,534 (12,484) Other receivables (4,084) (313) Commercial property reserves (6,193) (14,441) Deposits (1,716) - Prepaid expenses 1,206 14,641 (Decrease) increase in: Accounts payable 22,964 1,956 Grants payable (3,266) (21,734) Deferred income - rent and security deposits (10,298) 6,658 Net cash provided by operating activities 177,060 72,045 Cash flows from investing activities: Proceeds from sale of building - 175,000 Expense from sale of building - (9,963) Proceeds from sale of long-term investments 1,131,925 906,330 Purchase of investments (637,078) (1,026,505) Change in value of split interest agreement (2,503) (459) Purchase of property & equipment - (16,900) Net cash provided by investing activities 492,344 27,503 Cash flows from financing activities: Payment of long-term debt (618,298) (172,231) Net cash used by financing activities (618,298) (172,231) Net increase (decrease) in cash and cash equivalents 51,106 (72,683) Cash and cash equivalents at beginning of year 288,947 361,630 Cash and cash equivalents at end of year $ 340,053 $ 288,947 Supplemental disclosures: Interest paid $ 125,894 $ 140,120 Non-cash investing activities: Unrealized (gain) loss on investments $ (20,682) $ 76,647 See accompanying notes to financial statements. -7- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies Nature of Operations The Ashland Community Hospital Foundation (the Foundation) is a not-for-profit corporation established to support and promote the activities of Ashland Community Hospital (the Hospital). The Foundation's exempt purposes are: To assist, encourage, promote and advance the quality of care, treatment, and rehabilitation of the sick, afflicted, infirm, and injured patients of Ashland Community Hospital, Ashland, Oregon. To further the charitable, scientific, educational, and service activities of the Hospital. To support the Hospital, and its objectives and projects by appropriate representations to the public with respect to the Hospital's needs, mission, and requirements and to solicit funds for its use in providing the medical and hospital facilities needed in the general community served by Ashland Community Hospital. To accept donations, grants, bequests, and devises from any sources, and to accept property of all kinds appropriate to Foundation purposes. To facilitate, assist, encourage, support, promote, and advance the physical, mental, and emotional health of persons within the geographic area served by Ashland Community Hospital through any lawful activities which are authorized under the laws applicable to Oregon nonprofit corporations which are not prohibited under Article III of the organization's Articles of Incorporation. To do and perform such other acts as may be necessary or appropriate for carrying out the foregoing purposes of the corporation, and in connection therewith to engage in any lawful activity authorized by the Oregon nonprofit corporation law and not prohibited by Article III of the organization's Articles of Incorporation. Basis of Accounting The financial statements of the Foundation are presented on the accrual basis of accounting. Basis of Presentation Financial statement presentation follows the requirements of the Financial Accounting Standards Board Accounting Standards Codification 958-205, Not-for-Profit Entities - Presentation of Financial Statements. Under FASB ASC 958-205, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -8- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies (continued) Contributions In accordance with FASB ASC 958-605, Not-for-Profit Entities - Revenue Recognition, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions. All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. When restrictions are fulfilled in the same year in which the contribution is received, the contribution is reported as unrestricted. Promises to Give Unconditional promises to give are recognized as revenues in the period the promise is made and as assets or expenses depending on the form of the benefits received. All unconditional promises to give as of December 31, 2012 and 2011 are classified as temporarily restricted. Management believes that all unconditional promises to give are fully collectible and will be received within one year. Contributions of Land, Buildings and Equipment The Foundation reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Contributed Services and Facilities Ashland Community Hospital provides the Foundation with personnel, administrative services and office space at no cost to the Foundation. The contributions are recorded as revenue and expense in the financial statements. For the years ended December 31, 2012 and 2011, the Foundation recorded $221,276 and $166,725, respectively for the value of the Ashland Community Hospital in-kind donations. Other services contributed to the Foundation are recorded in the financial statements if the services create or enhance non-financial assets or if the services require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the years ended December 31, 2012 and 2011, the Foundation recorded $30,937 and $22,849, respectively for the value of in-kind contributed services. Various fundraising and consulting services provided by board members do not meet the criteria for recording. Property and Equipment Property and equipment are recorded at cost if purchased or at fair market value at the date of donation if contributed. Property and equipment are depreciated using the straight-line method over the estimated useful life of the asset. The Foundation capitalizes expenditures in excess of $1,000 for property and equipment with a useful life of three years or more. -9- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents The Foundation considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Concentrations The Foundation maintains cash balances at a single financial institution. The Federal Deposit Insurance Corporation (FDIC) insures account balances for amounts up to $250,000. During the year, the Foundation had deposits that exceeded the FDIC insured limit. The Foundation maintains accounts with a stock brokerage firm. The accounts contain cash and securities. The Securities Investor Protection Corporation (SIPC) insures account balances for amounts up to $500,000 with a limit of $100,000 for cash. SIPC insurance coverage does not protect accounts against market fluctuations. Most of the Foundation's contributions are from donors within the local area. As of December 31, 2012 and 2011 contributions receivable were $9,430 and $24,964, respectively. Subsequent Events The Foundation has adopted the provisions of FASB ASC 855, Subsequent Events. FASB ASC 855 establishes new accounting and disclosure requirements for subsequent events. Management has evaluated subsequent events through May 23, 2013, the date upon which the financial statements were available for issue. No subsequent events were identified for disclosure. Note 2 - Property and Equipment Property and equipment consists of the following at December 31: 2012 2011 Land $ 1,503,172 $ 1,503,172 Buildings 3,240,037 3,240,037 Loan acquisition costs 14,364 14,364 Equipment 23,288 27,558 Planning costs for land development 26,091 26,091 Total 4,806,952 4,811,222 Less accumulated depreciation and amortization <1,223,208> <1,136,883> Net Property and Equipment $ 3,583,744 $ 3,674,339 Various properties have been pledged as collateral for long-term debt incurred in acquisition and development of the property. Land and buildings are generally held for rental purposes. Costs relating to acquisition of mortgage debt are capitalized and amortized over the term of the related debt using the straight-line method. Accumulated amortization at December 31, 2012 and 2011 was $5,775 and $5,201, respectively. Amortization expense for the years 2012 and 2011 was $574 and $581, respectively. _10- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 3 - Long-Term Investments Long-term investments at December 31 consist of the following: 2012 2011 Mutual funds, at market value $ 91,196 $ 266,693 Board designated quasi-endowment fund 180,406 481,299 Donor endowment fund 81,632 78,410 Cora Nixon fund 142,182 137,702 Evans endowment fund 356,729 344,155 Evans scholarship fund 11,010 13,891 Assets invested under charitable remainder unitrust agreement, at market value 179,898 178,911 Total $ 1,043 053 $ 1,501,061 Note 4 - Other Receivables As of December 31, 2012 and 2011 real property tax and insurance reimbursements receivable from tenants were due in the amounts of $6,054 and $1,970, respectively. Note 5 - Interfund Loan There is an interfund loan of $170,000 from the endowment fund to the real estate fund that arose from the purchase of real estate. The long-term note bears interest at 6.52 percent with interest only payments of $924 per month. The payments are recorded as interest expense in the real estate fund and interest income in the endowment fund. Note 6 - Obligation Under Standard Unitrust In December 1993 the Foundation received assets in the amount of $300,000 to fund the Grimes Charitable Remainder Unitrust. Under the terms of the trust, annual distributions of the trust's income up to seven percent of the value of the trust's assets must be distributed to the donors for their lives and for the lives of their named beneficiaries. The liability to the income beneficiaries is recorded at the estimated present value of future payments to be distributed over the beneficiaries' lives. The estimated net value of the standard unitrust at December 31, 2012 and 2011 is summarized as follows: 2012 2011 Investments at fair value $ 179,898 $ 178,911 Obligation under standard unitrust <136,645> <138,163> Net estimated value of standard unitrust $ 43,253 $ 40.748 Upon the death of the last surviving beneficiary, the assets are available for unrestricted purposes of the Foundation. Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 7 - Mortgages Payable The Foundation has four mortgages payable to Umpqua Bank that are secured by rental property as of December 31, 2012. The balances as of December 31 are as follows: 2012 2011 Mortgage secured by 205 N. Pacific Hwy, Talent, Oregon. Payable in monthly installments of $465 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. $ 54,382 $ 56,671 Mortgage secured by 209 N. Pacific Hwy, Talent, Oregon. Payable in monthly installments of $693 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 80,996 84,406 Mortgage secured by 499 Chestnut Street, Ashland, Oregon. Payable in monthly installments of $1,448 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 167,350 174,721 Mortgage secured by 595 N. Main Street, Ashland, Oregon. Payable in monthly installments of $9,105 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 1,064,705 1,109,532 Mortgage secured by 628 N. Main Street, Ashland, Oregon. Payable in monthly installments of $4,645 including interest at 6.52 percent per annum. The mortgage was paid off in September 2012. 0 560,400 Total mortgages payable 1,367,433 1,985,730 Less portion due within one year <91,678> <73,765> Mortgages payable, net of current portion $ 1,275 755 1,911,965 Principal payments due in the next five years are estimated as follows: Year Amount 2013 $ 91,678 2014 95,114 2015 98,679 2016 102,266 2017 106,211 Thereafter 873,485 $1,367 433 Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 8 - Net Assets Released from Restriction Net assets were released from donor restrictions by incurring expenses satisfying the purpose or time restrictions specified by donors as of December 31 as follows: 2012 2011 Various program restrictions met 279,590 244,922 Nurse scholarships awarded 12,000 10,667 Total restricted assets released $ 291,590 $ 255 589 Note 9 - Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes as of December 31: 2012 2011 Birth center $ 4,677 $ 4,327 Capital equipment 14,829 200 Community medication assistance program 3,840 5,440 Emergency services 675 174,403 Employee assistance fund 4,147 7,648 Endoscopy 130,145 0 Evans nursing scholarship 22,857 26,314 General education 8,884 8,407 Greatest needs 20,561 16,364 Hospice 76,678 77,979 ICU/CCU 14,197 14,724 Lights for Life 0 15,186 Radiology 12,261 12,261 Rodden education fund 31,327 33,105 Grimes Trust net asset value 43,252 40,748 Miscellaneous 2,899 6,902 Total $ 391,229 $ 444,M Note 10 - Rental Property Leases 49 Talent Avenue, Talent, Oregon The Foundation leases a medical facility to Ashland Community Hospital. A new lease was negotiated in June 2011. The lease expires on July 31, 2021 and includes two five-year renewal options. The initial monthly base rent is $3,766 which will increase annually in August by three percent of the base rent. Income on this lease and the preceding lease for the years ended December 31, 2012 and 2011 was $45,754 and $37,856, respectively. 205 N. Pacific Highway, Talent, Oregon The Foundation rents a commercial building under a lease that renews annually in March with a February 2016 expiration date. The base rent increases by three percent at each renewal date. Lease income is $2,320 per month until March 1, 2012 then $2,390 per month until March 1, 2013. Income for the years ended December 31, 2012 and 2011 was $28,538 and $27,707, respectively. -13- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 10 - Rental Property Leases (continued) 209 N. Pacific Highway, Talent, Oregon The Foundation entered into an agreement to lease a commercial building to an unrelated party for $2,050 per month effective April 15, 2009. The five year lease includes one five year renewal option and is subject to an increase of $100 per month every April 15. Lease income for the years ended December 31, 2012 and 2011 was $26,600 and $25,400, respectively. 317 Maple Street, Ashland, Oregon The Foundation rented a single family residence on a month to month basis through July 2011 at which time the Foundation made the decision to terminate its use as a residential rental. The Foundation entered into a lease agreement with Ashland Community Hospital at $1 per year allowing the Hospital to use the building as a storage facility. The lease expires December 31, 2015. Rental income for the year ended December 31, 2011 was $6,950. 499 Chestnut Street, Ashland, Oregon The Foundation purchased a single family residence and converted it into a medical office building in December 2000. The property is rented under a one year lease which expires June 30, 2013. The monthly rental rate is $2,595. Rental income for each of the years ended December 31, 2012 and 2011 was $31,140. 530 Catalina Drive, Ashland, Oregon The Foundation entered into a lease of unimproved land with Ashland Community Hospital to be used as a parking lot. The lease expires December 31, 2016. The base rent is $441 per month. Rental income for each of the years ended December 31, 2012 and 2011 was $5,292. 548 N. Main Street, Ashland, Ashland, Oregon The Foundation entered into an agreement to lease land to an unrelated party, commencing January 1, 1994, and expiring December 31, 2054. The lease is based on 14 percent of an initial appraised value at January 1, 2000 of $600,000. The lease provides for a reappraisal of value every five years. In 2010, a January 1, 2009 retrospective appraisal of the property established a value of $1,200,000. Income for each of the years ended December 31, 2012 and 2011 was $168,000. 595 N. Main Street, Ashland, Oregon The Foundation leases a medical professional building completed in 1999. Various tenants occupy the building and lease terms and payments vary between tenants. The leases expire July 31, 2013. Base rent for four new leases negotiated in February 2009 was $1,679 per month. Annual rent increases are based on the Consumer Price Index, with a minimum of two percent and an annual cap of five percent. Total rents collected during 2012 and 2011 were $144,239 and $139,096, respectively. 628 N. Main Street, Ashland, Oregon The Foundation leases medical facilities to Ashland Community Hospital. A new lease was negotiated in June 2011 which expires on July 31, 2021 and includes two five-year renewal options. The monthly base rent is $5,320 which will increase annually in August by three percent of the base rent. Income from the current and preceding leases and month-to- month agreements for the years ended December 31, 2012 and 2011 was $64,638 and $48,719, respectively. Future minimum lease payments to be received for the next five years are estimated as follows: Year Amount 2013 $ 425,512 2014 320,686 2015 325,108 2016 302,765 2017 301,268 Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 11 - Income Taxes - Uncertain Tax Positions The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Foundation is required to report net income derived from unrelated business activities generated by the rental of certain debt-financed property. At December 31, 2012 and 2011, the rental activity reported net income of $3,773 and $27,072 respectively. Unused net operating loss carryforwards from prior years may be applied against future taxable income. The deferred tax asset created by this activity has not been recorded in the financial statements due to the undeterminable timing of events which would allow the Foundation to utilize the loss carryforwards. The net operating loss carryforwards expire after 20 years. The Foundation's Federal Exempt Organization Business Income Tax Returns (Form 990-T) for 2009, 2010, and 2011 are subject to examination by the IRS, generally for three years after they were filed. Management believes it has appropriate support for any tax positions taken. The 20 year net operating loss carryforwards expire as follows: Year Amount 2017 $ 9,004 2018 2,418 2019 6,938 2020 3,239 2021 1,438 Thereafter to 2029 504,586 Total net operating loss carryforward 15 7623 Note 12 - Trustee of Charitable Lead Annuity Trust On December 31, 1999, the Foundation was made Trustee of a Charitable Lead Annuity Trust. The term of the trust is for 15 years. At termination the remaining principal reverts back to the grantor. Annual payouts of $8,010 equaling 10.68 percent of the original fair market value of $75,000 of the Annuity Trust are received by the Foundation. The Foundation does not own the assets of the Annuity Trust. Therefore, the value of the trust is not reported in the Foundation's financial statements. Note 13 - Trustee of Memorial Trust On February 3, 2003, the Foundation was made Trustee of a perpetual Family Memorial Trust established to provide floral arrangements for the family's crypts located at the Ashland Memorial Mausoleum. The Foundation has not taken ownership of the Trust's assets. Therefore, the value of the trust is not reported in the Foundation financial statements. Note 14 - Approval to Issue Annuity Agreements Ashland Community Hospital Foundation has been approved to hold a certificate of authority to transact annuity business in the State of Oregon. For the years ending December 31, 2012 and December 31, 2011 there was no activity to report with regard to this endeavor. -15_ Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 15 - Fair Value Measurements The Foundation follows the requirements of the FASB ASC 820, Fair Value Measurements and Disclosures. Accordingly, investments in debt and equity securities with readily determinable values are required to be presented in the financial statements at their fair value (current market value) on December 31, 2012 and 2011. In addition, the liability for the Foundation's estimated obligation under the standard unitrust is presented at fair value. The fair value of the long-term mortgage debt approximates the carrying value of the obligation because stated rates are similar to rates currently available to the Foundation for debt with similar terms and maturities. FASB ASC 820 describes three levels of measurement inputs that may be used to determine fair value: Level 1 - Quoted prices in active financial markets for identical assets or liabilities. Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A table of fair values determined and methods used as of December 31, 2012 follows: Quoted Prices Significant in Active Markets Other Significant for Identical Observable Unobservable Fair Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Financial assets Long-term investments $ 863,155 $ 863,155 $ - $ - Charitable remainder unitrust 179,898 - 179,898 - Total assets L1,043 ,053 $ 863,155 $ 179 898 $ - Financial liabilities Unitrust obligation $ 136,646 $ - $ 136,646 $ - Interfund loan payable 170,000 170,000 - - Long-term debt - mortgages 1,367,432 1,367,432 - - Total liabilities a1,674 078 $ 1,537 432 $ 136,646 $ - A table of fair values determined and methods used as of December 31, 2011 follows: Quoted Prices Significant in Active Markets Other Significant for Identical Observable Unobservable Fair Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Financial assets Long-term investments $ 1,322,150 $ 1,322,150 $ - $ - Charitable remainder unitrust 178,911 - 178,911 - Total assets $ 1 501 061 $ 1,322,150 $ 178 911 $ Financial liabilities Unitrust obligation $ 138,163 $ - $ 138,163 $ - Interfund loan payable 170,000 170,000 - - Long-term debt - mortgages 1,985,730 1,985,730 - - Total liabilities $ 2 293 893 $ 2,155,730 $ 138,163 $ -16- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds During 2007, an enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) became effective in the state of Oregon (SPMIFA). The Board of Directors has interpreted the new law as requiring the preservation of the fair value of the original gift as of the gift date of the donor- restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. The duration and preservation of the fund 2. The purposes of the Foundation and the donor-restricted endowment fund 3. General economic conditions 4. The possible effect of inflation and deflation 5. The expected total return from income and the appreciation of investments 6. Other resources of the Foundation 7. Investment policies of the Foundation Return Objectives The Foundation has adopted investment and spending policies for endowment assets that are designed to offer preservation of value with potential for both capital appreciation and current income. To preserve the value of its assets, the Endowment will not pay out more than the return it earns from its investment portfolio. A total return objective is recommended to meet the objective. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor- specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested based upon an investment horizon of greater than ten years (or in perpetuity). As such, the asset allocation should be based upon the appropriate long-term time horizon. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation utilizes diversification within the full spectrum of traditional sectors of the domestic and foreign stock and fixed income markets, as well as other asset classes such as commodities, real estate, Treasury Inflation Protected Securities (TIPS), and cash to achieve its long-term return objectives within prudent risk constraints. Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds (continued) Spending Policy The Foundation has a spending target based on the current interest rate of the 10-year Treasury and 100% of the net earnings will be available for appropriation each year to fulfill the mission of the Foundation or the donor specified purpose. Board-Designated Quasi Endowment The board-restricted quasi endowment consists of donations that were directed by the Foundation's Board of Directors to a quasi endowment. The quasi endowment fund is an unrestricted fund and any portion of the fund may be used with the approval of the Board of Directors. Earnings remain in the account until the Board of Directors authorizes their use. Each year, up to 100% of all dollars in this fund may be transferred to any Hospital or Foundation fund at the Board's discretion. This board-restricted quasi endowment, which resulted from an internal designation, is not donor restricted and is classified as unrestricted net assets and reported as designated on the Statement of Financial Position. Donor-Designated Endowment - Cora Nixon Fund In 2002, the Foundation received a gift from Cora Nixon to establish a permanently restricted endowment in which the principal is invested in perpetuity and earnings from interest and dividends net of account fees are gifted annually to the Foundation to support the Lights for Life Campaign. The Foundation established a separate investment account to segregate these funds from other Foundation funds. The principal has been invested to maximize income as prescribed by the Foundation's "Endowment Fund Management and Investment Guideline". In the event the Lights for Life Campaign ends, proceeds from the trust will be used for charitable purposes as directed by the Foundation Board of Directors. The donor-designated endowment is reported as permanently restricted net assets. Donor-Designated - Evans Nursing Scholarship The Evans Nursing Scholarship funds are held in the Evans Scholarship Endowment and its accompanying Evans Scholarship Fund. The endowment is a permanently restricted fund where the principal is held in perpetuity. The Evans Scholarship Fund is a temporarily restricted fund that is used to annually award scholarships to students who are pursuing nursing degrees from Oregon Health Sciences University (OHSU) at Southern Oregon University (SOU) or Rogue Community College (RCC), who intend to work in the Rogue Valley. Students who meet the award criteria are selected by the Evans Scholarship Committee and the Foundation's Board of Directors. Evans Endowment fund earnings, consisting of interest and dividends, net of account fees may be transferred to the Evans Scholarship fund annually, at the donor's discretion. One hundred percent of earnings, consisting of interest and dividends, net of account fees, capital gain dividends and unrealized and realized capital gains and losses in the Evans Scholarship fund will be used to annually award nursing scholarships as described above. The donor reserves the right to change the distribution of earnings between the scholarship fund and endowment fund at each annual review. _~g_ Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds (continued) The changes in net assets of the endowment funds are as follows for the years ended December 31: 2012 2011 Contributions Donor designated funds $ 50 $ 2,475 Evans endowment fund - 41,951 Nixon endowment fund - - Total contributions 50 44,426 Interest and dividends Donor designated funds 2,510 1,948 Evans endowment fund 11,852 10,339 Nixon endowment fund 15,680 15,064 Total interest and dividends 30,042 27,351 Capital gains dividends and net realized and unrealized appreciation Donor designated funds 2,635 <3,676> Evans endowment fund 11,587 <14,160> Nixon endowment fund 3,877 <6,906> Total net appreciation <depreciation> 18,099 <24,742> Advisory fees Donor designated funds <739> <715> Evans endowment fund <3,226> <2,701> Nixon endowment fund <1,255> <1,243> Total advisory fees <5,220> <4,659> Change in net assets 42,971 42,376 Appropriated for expenditure <24,822> <22,692> Increase in endowment net assets 18,149 19,684 Donor-restricted endowments at beginning of year 695,384 675,700 Donor-restricted endowments at end of year $ 713,533 $ 695,384 _2g_ SUPPLEMENTAL INFORMATION ASHLAND COMMUNITY HOSPITAL FOUNDATION Property Value Comparison Book Value versus Assessed I Appraised Value December 31, 2012 UNAUDITED County Buildings and RMV or Acquisition Improvements Appraised Change in Property Location Date Land Net of Depreciation Total Value Value 548 N. Main Street Ashland, Oregon 1992 $ 397,892 $ - $ 397,892 $ 1,200,000 $ 802;108 209 N. Pacific Highway Talent, Oregon 1993 71,248 134,537 205,785 423,270 217,485 205 N. Pacific Highway Talent, Oregon 1993 13,580 94,553 108,133 165,320 57,187 49 Talent Ave & Tax lot 1200 Talent, Oregon 1993 56,420 256,652 313,072 994,320 681,248 317 Maple Street Ashland, Oregon 1995 58,800 25,360 84,160 196,980 112,820 588 N. Main Street Ashland, Oregon 1997 74,000 83,879 157,879 303,760 145,881 595 N. Main Street Ashland, Oregon 1998 266,000 842,204 1,108,204 1,608,370 500,166 499 Chestnut Avenue Ashland, Oregon 1999 99,972 93,788 193,760 373,340 179,580 628 N. Main Street Ashland, Oregon 2003 189,874 513,976 703,850 982,440 278,590 530 Catalina Street Ashland, Oregon 2005 275,386 - 275,386 190,740 (84,646) Total $ 1,503,172 $ 2,044,949 $ 3,548,121 $ 6,438,540 $ 2,890,419 -20- ASHLAND COMMUNITY HOSPITAL FOUNDATION FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2012 AND 2011 WITH INDEPENDENT AUDITORS' REPORT ASHLAND COMMUNITY HOSPITAL FOUNDATION Ashland, Oregon BOARD OF DIRECTORS AS OF DECEMBER 31, 2012 Pat Acklin, Ashland, Oregon 97520 Director John Alexander, Ashland, Oregon 97520 Director Brian Almquist, Ashland, Oregon 97520 Director Charles Butler, Ashland, Oregon 97520 Director Ed Colson, Ashland, Oregon 97520 Vice President Brandt Cullen, Ashland, Oregon 97520 Director Jack Davis, Ashland, Oregon 97520 Director Jonathan Eldridge, Ashland, Oregon 97520 Director Tom Grimland, Medford, Oregon 97504 .........................................................................President Thomas B. Kennedy, Ashland, Oregon 97520 Director Marjorie Lininger, Ashland, Oregon 97520 Director Elizabeth A. Murphy, Ashland, Oregon 97520. Secretary Paul Rostykus, Ashland, Oregon 97520 Director Barton Rupert, Ashland, Oregon 97520 Director Sandra Slattery, Ashland, Oregon 97520 Director Alan Steed, Ashland, Oregon 97520 Treasurer Garrison F. Turner, Medford, Oregon 97504 Director ASHLAND COMMUNITY HOSPITAL FOUNDATION Years ended December 31, 2012 and 2011 Contents Independent auditors' report 1 -2 Financial statements: Statements of financial position 3-4 Statements of activities 5-6 Statements of cash flows 7 Notes to financial statements 8-19 Supplemental information 20 Certified Public Accountants and Business Advisors i I INDEPENDENT AUDITORS' REPORT i i To the Board of Directors Ashland Community Hospital Foundation We have audited the accompanying financial statements of Ashland Community Hospital Foundation (a nonprofit organization), which comprise the statements of financial position as of December 31, 2012 and 2011, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements I Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. t An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. s We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. i Opinion i In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ashland Community Hospital Foundation as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. X3.39 ALDER CREEK DRIVE m MEDFOD, On` PHONE (541) FAX (5411) 73 800-1 WV J.Com Other !batter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental information on page 20 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information, except for that portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. Isler Medford, LLC Medford, Oregon May 23, 2013 _2_ ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Financial Position December 31, 2012 and 2011 ASSETS 2012 2011 Current assets: Cash and cash equivalents $ 340,053 $ 288,947 Contributions and bequests receivable 9,430 24,964 Other receivables 6,054 1,970 Commercial property reserves 32,718 26,525 Deposits 1,716 - Prepaid expenses 15,129 16,335 Total current assets 405,100 358,741 Property and equipment: Land 1,503,172 1,503,172 Buildings 3,280,492 3,280,492 Equipment 23,288 27,558 Total property and equipment 4,806,952 4,811,222 Less accumulated depreciation (1,223,208) (1,136,883) Net property and equipment 3,583,744 3,674,339 Other assets: Interfund loan receivable 170,000 170,000 Long-term investments 1,043,054 1,501,061 Total other assets 1,213,054 1,671,061 Total assets $ 5,201,898 $ 5,704,141 (Continued on next page) _2~m ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Financial Position (continued) December 31, 2012 and 2011 LIABILITIES AND NET ASSETS 2012 2011 Current liabilities: Accounts payable $ 26,632 $ 3,669 Grants payable - 3,266 Deferred revenue - rent - 10,298 Refundable security deposits 5,250 5,250 Current portion - Unitrust obligation 12,593 12,524 Current portion - mortgages payable 91,678 73,765 Total current liabilities 136,153 108,772 InterFund loan payable 170,000 170,000 Long-term Unitrust obligation, net of current portion 124,053 125,639 Long-term mortgages payable, net of current portion 1,275,755 1,911,965 Total long-term liabilities 1,569,808 2,207,604 Total liabilities 1,705,961 2,316,376 Net assets: Unrestricted: Undesignated 2,193,265 1,755,145 Board designated endowment 197,910 493,228 Total unrestricted 2,391,175 2,248,373 Temporarily restricted 391,229 444,008 Permanently restricted 713,533 695,384 Total net assets 3,495,937 3,387,765 Total liabilitites and net assets $ 5,201,898 $ 5,704,141 See accompanying notes to financial statements. -4- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statement of Activities Year ended December 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, gains and other support: Contributions $ 46,418 $ 211,486 $ 50 $ 257,954 In kind contributions 252,213 - - 252,213 Interest and dividend income 20,397 30,042 7,196 57,635 Rental income 514,202 - - 514,202 Fundraising activities and other income 145 - 145 Change in split interest agreement - 2,503 - 2,503 Unrealized and realized gain on investments 25,937 - 10,903 36,840 Total revenues, gains and other support 859,312 244,031 18,149 1,121,492 Net assets released from restrictions Satisfaction of program restrictions 279,590 (279,590) - - Satisfaction of scholarship restrictions 12,000 (12,000) - - Total net assets released from restrictions 291,590 (291,590) - - Total revenue and support 1,150,902 (47,559) 18,149 1,121,492 Expenses: Grants to hospital and others 332,784 - - 332,784 Management and general 128,193 5,220 - 133,413 In kind expenses 252,213 - - 252,213 Rental expenses 169,016 - 169,016 Interest expense 125,894 - - 125,894 Total expenses 1,008,100 5,220 - 1,013,320 Increase (decrease) in net assets 142,802 (52,779) 18,149 108,172 Net assets at beginning of year 2,248,373 444,008 695,384 3,387,765 Net assets at end of year $ 2,391,175 $ 391,229 $ 713,533 $ 3,495,937 See accompanying notes to financial statements. -5- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statement of Activities Year ended December 31, 2011 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, gains and other support: Contributions $ 69,770 $ 242,476 $ 44,426 $ 356,672 In kind contributions 189,574 - - 189,574 Interest and dividend income 24,921 27,350 4,121 56,392 Rental income 495,939 - - 495,939 Fundraising activities and other income 2,925 - - 2,925 Change in split interest agreement - 459 - 459 Gain on sale of building 32,741 - - 32,741 Unrealized and realized loss on investments (42,820) - (28,863) (71,683) Total revenues, gains and other support 773,050 270,285 19,684 1,063,019 Net assets released from restrictions Satisfaction of program restrictions 244,922 (244,922) - - Satisfaction of scholarship restrictions 10,667 (10,667) - - Total net assets released from restriction 255,589 (255,589) - - Total revenue and support 1,028,639 14,696 19,684 1,063,019 Expenses: Grants to hospital and others 433,979 - - 433,979 Management and general 114,118 4,659 - 118,777 In kind expenses 189,574 - - 189,574 Fundraising 2,757 - - 2,757 Rental expenses 203,456 - - 203,456 Interest expense 140,120 - - 140,120 Total expenses 1,084,004 4,659 - 1,088,663 (Decrease) increase in net assets (55,365) 10,037 19,684 (25,644) Net assets at beginning of year 2,303,738 433,971 675,700 3,413,409 Net assets at end of year $ 2,248,373 $ 444,008 $ 695,384 $ 3,387,765 See accompanying notes to financial statements. -6- ASHLAND COMMUNITY HOSPITAL FOUNDATION Statements of Cash Flows Years ended December 31, 2012 and 2011 2012 2011 Cash flows from operating activities: Change in net assets $ 108,172 $ (25,644) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 90,595 93,132 Change in value of split interest agreement 986 (8,668) (Gain) on sale of building - (32,741) Net realized and unrealized (gains) losses on investments (36,840) 71,683 (Increase) decrease in: Contributions and bequests 15,534 (12,484) Other receivables (4,084) (313) Commercial property reserves (6,193) (14,441) Deposits (1,716) - Prepaid expenses 1,206 14,641 (Decrease) increase in: Accounts payable 22,964 1,956 Grants payable (3,266) (21,734) Deferred income - rent and security deposits (10,298) 6,658 Net cash provided by operating activities 177,060 72,045 Cash flows from investing activities: Proceeds from sale of building - 175,000 Expense from sale of building - (9,963) Proceeds from sale of long-term investments 1,131,925 906,330 Purchase of investments (637,078) (1,026,505) Change in value of split interest agreement (2,503) (459) Purchase of property & equipment - (16,900) Net cash provided by investing activities 492,344 27,503 Cash flows from financing activities: Payment of long-term debt (618,298) (172,231) Net cash used by financing activities (618,298) (172,231) Net increase (decrease) in cash and cash equivalents 51,106 (72,683) Cash and cash equivalents at beginning of year 288,947 361,630 Cash and cash equivalents at end of year $ 340,053 $ 288,947 Supplemental disclosures: Interest paid $ 125,894 $ 140,120 Non-cash investing activities: Unrealized (gain) loss on investments $ (20,682) $ 76,647 See accompanying notes to financial statements. -7- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies Nature of Operations The Ashland Community Hospital Foundation (the Foundation) is a not-for-profit corporation established to support and promote the activities of Ashland Community Hospital (the Hospital). The Foundation's exempt purposes are: To assist, encourage, promote and advance the quality of care, treatment, and rehabilitation of the sick, afflicted, infirm, and injured patients of Ashland Community Hospital, Ashland, Oregon. To further the charitable, scientific, educational, and service activities of the Hospital. To support the Hospital, and its objectives and projects by appropriate representations to the public with respect to the Hospital's needs, mission, and requirements and to solicit funds for its use in providing the medical and hospital facilities needed in the general community served by Ashland Community Hospital. To accept donations, grants, bequests, and devises from any sources, and to accept property of all kinds appropriate to Foundation purposes. To facilitate, assist, encourage, support, promote, and advance the physical, mental, and emotional health of persons within the geographic area served by Ashland Community Hospital through any lawful activities which are authorized under the laws applicable to Oregon nonprofit corporations which are not prohibited under Article III of the organization's Articles of Incorporation. To do and perform such other acts as may be necessary or appropriate for carrying out the foregoing purposes of the corporation, and in connection therewith to engage in any lawful activity authorized by the Oregon nonprofit corporation law and not prohibited by Article III of the organization's Articles of Incorporation. Basis of Accounting The financial statements of the Foundation are presented on the accrual basis of accounting. Basis of Presentation Financial statement presentation follows the requirements of the Financial Accounting Standards Board Accounting Standards Codification 958-205, Not-for-Profit Entities - Presentation of Financial Statements. Under FASB ASC 958-205, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -8- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies (continued) Contributions In accordance with FASB ASC 958-605, Not-for-Profit Entities - Revenue Recognition, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions. All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. When restrictions are fulfilled in the same year in which the contribution is received, the contribution is reported as unrestricted. Promises to Give Unconditional promises to give are recognized as revenues in the period the promise is made and as assets or expenses depending on the form of the benefits received. All unconditional promises to give as of December 31, 2012 and 2011 are classified as temporarily restricted. Management believes that all unconditional promises to give are fully collectible and will be received within one year. Contributions of Land, Buildings and Equipment The Foundation reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Contributed Services and Facilities Ashland Community Hospital provides the Foundation with personnel, administrative services and office space at no cost to the Foundation. The contributions are recorded as revenue and expense in the financial statements. For the years ended December 31, 2012 and 2011, the Foundation recorded $221,276 and $166,725, respectively for the value of the Ashland Community Hospital in-kind donations. Other services contributed to the Foundation are recorded in the financial statements if the services create or enhance non-financial assets or if the services require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the years ended December 31, 2012 and 2011, the Foundation recorded $30,937 and $22,849, respectively for the value of in-kind contributed services. Various fundraising and consulting services provided by board members do not meet the criteria for recording. Property and Equipment Property and equipment are recorded at cost if purchased or at fair market value at the date of donation if contributed. Property and equipment are depreciated using the straight-line method over the estimated useful life of the asset. The Foundation capitalizes expenditures in excess of $1,000 for property and equipment with a useful life of three years or more. -9- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents The Foundation considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Concentrations The Foundation maintains cash balances at a single financial institution. The Federal Deposit Insurance Corporation (FDIC) insures account balances for amounts up to $250,000. During the year, the Foundation had deposits that exceeded the FDIC insured limit. The Foundation maintains accounts with a stock brokerage firm. The accounts contain cash and securities. The Securities Investor Protection Corporation (SIPC) insures account balances for amounts up to $500,000 with a limit of $100,000 for cash. SIPC insurance coverage does not protect accounts against market fluctuations. Most of the Foundation's contributions are from donors within the local area. As of December 31, 2012 and 2011 contributions receivable were $9,430 and $24,964, respectively. Subsequent Events The Foundation has adopted the provisions of FASB ASC 855, Subsequent Events. FASB ASC 855 establishes new accounting and disclosure requirements for subsequent events. Management has evaluated subsequent events through May 23, 2013, the date upon which the financial statements were available for issue. No subsequent events were identified for disclosure. Note 2 - Property and Equipment Property and equipment consists of the following at December 31: 2012 2011 Land $ 1,503,172 $ 1,503,172 Buildings 3,240,037 3,240,037 Loan acquisition costs 14,364 14,364 Equipment 23,288 27,558 Planning costs for land development 26,091 26,091 Total 4,806,952 4,811,222 Less accumulated depreciation and amortization <1,223,208> <1,136,883> Net Property and Equipment $ 3,583,744 $ 3,674,339 Various properties have been pledged as collateral for long-term debt incurred in acquisition and development of the property. Land and buildings are generally held for rental purposes. Costs relating to acquisition of mortgage debt are capitalized and amortized over the term of the related debt using the straight-line method. Accumulated amortization at December 31, 2012 and 2011 was $5,775 and $5,201, respectively. Amortization expense for the years 2012 and 2011 was $574 and $581, respectively. _10- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 3 - Long-Term Investments Long-term investments at December 31 consist of the following: 2012 2011 Mutual funds, at market value $ 91,196 $ 266,693 Board designated quasi-endowment fund 180,406 481,299 Donor endowment fund 81,632 78,410 Cora Nixon fund 142,182 137,702 Evans endowment fund 356,729 344,155 Evans scholarship fund 11,010 13,891 Assets invested under charitable remainder unitrust agreement, at market value 179,898 178,911 Total $ 1,043 053 $ 1,501,061 Note 4 - Other Receivables As of December 31, 2012 and 2011 real property tax and insurance reimbursements receivable from tenants were due in the amounts of $6,054 and $1,970, respectively. Note 5 - Interfund Loan There is an interfund loan of $170,000 from the endowment fund to the real estate fund that arose from the purchase of real estate. The long-term note bears interest at 6.52 percent with interest only payments of $924 per month. The payments are recorded as interest expense in the real estate fund and interest income in the endowment fund. Note 6 - Obligation Under Standard Unitrust In December 1993 the Foundation received assets in the amount of $300,000 to fund the Grimes Charitable Remainder Unitrust. Under the terms of the trust, annual distributions of the trust's income up to seven percent of the value of the trust's assets must be distributed to the donors for their lives and for the lives of their named beneficiaries. The liability to the income beneficiaries is recorded at the estimated present value of future payments to be distributed over the beneficiaries' lives. The estimated net value of the standard unitrust at December 31, 2012 and 2011 is summarized as follows: 2012 2011 Investments at fair value $ 179,898 $ 178,911 Obligation under standard unitrust <136,645> <138,163> Net estimated value of standard unitrust $ 43,253 $ 40.748 Upon the death of the last surviving beneficiary, the assets are available for unrestricted purposes of the Foundation. Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 7 - Mortgages Payable The Foundation has four mortgages payable to Umpqua Bank that are secured by rental property as of December 31, 2012. The balances as of December 31 are as follows: 2012 2011 Mortgage secured by 205 N. Pacific Hwy, Talent, Oregon. Payable in monthly installments of $465 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. $ 54,382 $ 56,671 Mortgage secured by 209 N. Pacific Hwy, Talent, Oregon. Payable in monthly installments of $693 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 80,996 84,406 Mortgage secured by 499 Chestnut Street, Ashland, Oregon. Payable in monthly installments of $1,448 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 167,350 174,721 Mortgage secured by 595 N. Main Street, Ashland, Oregon. Payable in monthly installments of $9,105 including interest at six percent per annum through November 15, 2012 and at 3.68 percent thereafter. Matures November 2027. 1,064,705 1,109,532 Mortgage secured by 628 N. Main Street, Ashland, Oregon. Payable in monthly installments of $4,645 including interest at 6.52 percent per annum. The mortgage was paid off in September 2012. 0 560,400 Total mortgages payable 1,367,433 1,985,730 Less portion due within one year <91,678> <73,765> Mortgages payable, net of current portion $ 1,275 755 1,911,965 Principal payments due in the next five years are estimated as follows: Year Amount 2013 $ 91,678 2014 95,114 2015 98,679 2016 102,266 2017 106,211 Thereafter 873,485 $1,367 433 Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 8 - Net Assets Released from Restriction Net assets were released from donor restrictions by incurring expenses satisfying the purpose or time restrictions specified by donors as of December 31 as follows: 2012 2011 Various program restrictions met 279,590 244,922 Nurse scholarships awarded 12,000 10,667 Total restricted assets released $ 291,590 $ 255 589 Note 9 - Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes as of December 31: 2012 2011 Birth center $ 4,677 $ 4,327 Capital equipment 14,829 200 Community medication assistance program 3,840 5,440 Emergency services 675 174,403 Employee assistance fund 4,147 7,648 Endoscopy 130,145 0 Evans nursing scholarship 22,857 26,314 General education 8,884 8,407 Greatest needs 20,561 16,364 Hospice 76,678 77,979 ICU/CCU 14,197 14,724 Lights for Life 0 15,186 Radiology 12,261 12,261 Rodden education fund 31,327 33,105 Grimes Trust net asset value 43,252 40,748 Miscellaneous 2,899 6,902 Total $ 391,229 $ 444,M Note 10 - Rental Property Leases 49 Talent Avenue, Talent, Oregon The Foundation leases a medical facility to Ashland Community Hospital. A new lease was negotiated in June 2011. The lease expires on July 31, 2021 and includes two five-year renewal options. The initial monthly base rent is $3,766 which will increase annually in August by three percent of the base rent. Income on this lease and the preceding lease for the years ended December 31, 2012 and 2011 was $45,754 and $37,856, respectively. 205 N. Pacific Highway, Talent, Oregon The Foundation rents a commercial building under a lease that renews annually in March with a February 2016 expiration date. The base rent increases by three percent at each renewal date. Lease income is $2,320 per month until March 1, 2012 then $2,390 per month until March 1, 2013. Income for the years ended December 31, 2012 and 2011 was $28,538 and $27,707, respectively. -13- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 10 - Rental Property Leases (continued) 209 N. Pacific Highway, Talent, Oregon The Foundation entered into an agreement to lease a commercial building to an unrelated party for $2,050 per month effective April 15, 2009. The five year lease includes one five year renewal option and is subject to an increase of $100 per month every April 15. Lease income for the years ended December 31, 2012 and 2011 was $26,600 and $25,400, respectively. 317 Maple Street, Ashland, Oregon The Foundation rented a single family residence on a month to month basis through July 2011 at which time the Foundation made the decision to terminate its use as a residential rental. The Foundation entered into a lease agreement with Ashland Community Hospital at $1 per year allowing the Hospital to use the building as a storage facility. The lease expires December 31, 2015. Rental income for the year ended December 31, 2011 was $6,950. 499 Chestnut Street, Ashland, Oregon The Foundation purchased a single family residence and converted it into a medical office building in December 2000. The property is rented under a one year lease which expires June 30, 2013. The monthly rental rate is $2,595. Rental income for each of the years ended December 31, 2012 and 2011 was $31,140. 530 Catalina Drive, Ashland, Oregon The Foundation entered into a lease of unimproved land with Ashland Community Hospital to be used as a parking lot. The lease expires December 31, 2016. The base rent is $441 per month. Rental income for each of the years ended December 31, 2012 and 2011 was $5,292. 548 N. Main Street, Ashland, Ashland, Oregon The Foundation entered into an agreement to lease land to an unrelated party, commencing January 1, 1994, and expiring December 31, 2054. The lease is based on 14 percent of an initial appraised value at January 1, 2000 of $600,000. The lease provides for a reappraisal of value every five years. In 2010, a January 1, 2009 retrospective appraisal of the property established a value of $1,200,000. Income for each of the years ended December 31, 2012 and 2011 was $168,000. 595 N. Main Street, Ashland, Oregon The Foundation leases a medical professional building completed in 1999. Various tenants occupy the building and lease terms and payments vary between tenants. The leases expire July 31, 2013. Base rent for four new leases negotiated in February 2009 was $1,679 per month. Annual rent increases are based on the Consumer Price Index, with a minimum of two percent and an annual cap of five percent. Total rents collected during 2012 and 2011 were $144,239 and $139,096, respectively. 628 N. Main Street, Ashland, Oregon The Foundation leases medical facilities to Ashland Community Hospital. A new lease was negotiated in June 2011 which expires on July 31, 2021 and includes two five-year renewal options. The monthly base rent is $5,320 which will increase annually in August by three percent of the base rent. Income from the current and preceding leases and month-to- month agreements for the years ended December 31, 2012 and 2011 was $64,638 and $48,719, respectively. Future minimum lease payments to be received for the next five years are estimated as follows: Year Amount 2013 $ 425,512 2014 320,686 2015 325,108 2016 302,765 2017 301,268 Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 11 - Income Taxes - Uncertain Tax Positions The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Foundation is required to report net income derived from unrelated business activities generated by the rental of certain debt-financed property. At December 31, 2012 and 2011, the rental activity reported net income of $3,773 and $27,072 respectively. Unused net operating loss carryforwards from prior years may be applied against future taxable income. The deferred tax asset created by this activity has not been recorded in the financial statements due to the undeterminable timing of events which would allow the Foundation to utilize the loss carryforwards. The net operating loss carryforwards expire after 20 years. The Foundation's Federal Exempt Organization Business Income Tax Returns (Form 990-T) for 2009, 2010, and 2011 are subject to examination by the IRS, generally for three years after they were filed. Management believes it has appropriate support for any tax positions taken. The 20 year net operating loss carryforwards expire as follows: Year Amount 2017 $ 9,004 2018 2,418 2019 6,938 2020 3,239 2021 1,438 Thereafter to 2029 504,586 Total net operating loss carryforward 15 7623 Note 12 - Trustee of Charitable Lead Annuity Trust On December 31, 1999, the Foundation was made Trustee of a Charitable Lead Annuity Trust. The term of the trust is for 15 years. At termination the remaining principal reverts back to the grantor. Annual payouts of $8,010 equaling 10.68 percent of the original fair market value of $75,000 of the Annuity Trust are received by the Foundation. The Foundation does not own the assets of the Annuity Trust. Therefore, the value of the trust is not reported in the Foundation's financial statements. Note 13 - Trustee of Memorial Trust On February 3, 2003, the Foundation was made Trustee of a perpetual Family Memorial Trust established to provide floral arrangements for the family's crypts located at the Ashland Memorial Mausoleum. The Foundation has not taken ownership of the Trust's assets. Therefore, the value of the trust is not reported in the Foundation financial statements. Note 14 - Approval to Issue Annuity Agreements Ashland Community Hospital Foundation has been approved to hold a certificate of authority to transact annuity business in the State of Oregon. For the years ending December 31, 2012 and December 31, 2011 there was no activity to report with regard to this endeavor. -15_ Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 15 - Fair Value Measurements The Foundation follows the requirements of the FASB ASC 820, Fair Value Measurements and Disclosures. Accordingly, investments in debt and equity securities with readily determinable values are required to be presented in the financial statements at their fair value (current market value) on December 31, 2012 and 2011. In addition, the liability for the Foundation's estimated obligation under the standard unitrust is presented at fair value. The fair value of the long-term mortgage debt approximates the carrying value of the obligation because stated rates are similar to rates currently available to the Foundation for debt with similar terms and maturities. FASB ASC 820 describes three levels of measurement inputs that may be used to determine fair value: Level 1 - Quoted prices in active financial markets for identical assets or liabilities. Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A table of fair values determined and methods used as of December 31, 2012 follows: Quoted Prices Significant in Active Markets Other Significant for Identical Observable Unobservable Fair Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Financial assets Long-term investments $ 863,155 $ 863,155 $ - $ - Charitable remainder unitrust 179,898 - 179,898 - Total assets L1,043 ,053 $ 863,155 $ 179 898 $ - Financial liabilities Unitrust obligation $ 136,646 $ - $ 136,646 $ - Interfund loan payable 170,000 170,000 - - Long-term debt - mortgages 1,367,432 1,367,432 - - Total liabilities a1,674 078 $ 1,537 432 $ 136,646 $ - A table of fair values determined and methods used as of December 31, 2011 follows: Quoted Prices Significant in Active Markets Other Significant for Identical Observable Unobservable Fair Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Financial assets Long-term investments $ 1,322,150 $ 1,322,150 $ - $ - Charitable remainder unitrust 178,911 - 178,911 - Total assets $ 1 501 061 $ 1,322,150 $ 178 911 $ Financial liabilities Unitrust obligation $ 138,163 $ - $ 138,163 $ - Interfund loan payable 170,000 170,000 - - Long-term debt - mortgages 1,985,730 1,985,730 - - Total liabilities $ 2 293 893 $ 2,155,730 $ 138,163 $ -16- Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds During 2007, an enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) became effective in the state of Oregon (SPMIFA). The Board of Directors has interpreted the new law as requiring the preservation of the fair value of the original gift as of the gift date of the donor- restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. The duration and preservation of the fund 2. The purposes of the Foundation and the donor-restricted endowment fund 3. General economic conditions 4. The possible effect of inflation and deflation 5. The expected total return from income and the appreciation of investments 6. Other resources of the Foundation 7. Investment policies of the Foundation Return Objectives The Foundation has adopted investment and spending policies for endowment assets that are designed to offer preservation of value with potential for both capital appreciation and current income. To preserve the value of its assets, the Endowment will not pay out more than the return it earns from its investment portfolio. A total return objective is recommended to meet the objective. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor- specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested based upon an investment horizon of greater than ten years (or in perpetuity). As such, the asset allocation should be based upon the appropriate long-term time horizon. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation utilizes diversification within the full spectrum of traditional sectors of the domestic and foreign stock and fixed income markets, as well as other asset classes such as commodities, real estate, Treasury Inflation Protected Securities (TIPS), and cash to achieve its long-term return objectives within prudent risk constraints. Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds (continued) Spending Policy The Foundation has a spending target based on the current interest rate of the 10-year Treasury and 100% of the net earnings will be available for appropriation each year to fulfill the mission of the Foundation or the donor specified purpose. Board-Designated Quasi Endowment The board-restricted quasi endowment consists of donations that were directed by the Foundation's Board of Directors to a quasi endowment. The quasi endowment fund is an unrestricted fund and any portion of the fund may be used with the approval of the Board of Directors. Earnings remain in the account until the Board of Directors authorizes their use. Each year, up to 100% of all dollars in this fund may be transferred to any Hospital or Foundation fund at the Board's discretion. This board-restricted quasi endowment, which resulted from an internal designation, is not donor restricted and is classified as unrestricted net assets and reported as designated on the Statement of Financial Position. Donor-Designated Endowment - Cora Nixon Fund In 2002, the Foundation received a gift from Cora Nixon to establish a permanently restricted endowment in which the principal is invested in perpetuity and earnings from interest and dividends net of account fees are gifted annually to the Foundation to support the Lights for Life Campaign. The Foundation established a separate investment account to segregate these funds from other Foundation funds. The principal has been invested to maximize income as prescribed by the Foundation's "Endowment Fund Management and Investment Guideline". In the event the Lights for Life Campaign ends, proceeds from the trust will be used for charitable purposes as directed by the Foundation Board of Directors. The donor-designated endowment is reported as permanently restricted net assets. Donor-Designated - Evans Nursing Scholarship The Evans Nursing Scholarship funds are held in the Evans Scholarship Endowment and its accompanying Evans Scholarship Fund. The endowment is a permanently restricted fund where the principal is held in perpetuity. The Evans Scholarship Fund is a temporarily restricted fund that is used to annually award scholarships to students who are pursuing nursing degrees from Oregon Health Sciences University (OHSU) at Southern Oregon University (SOU) or Rogue Community College (RCC), who intend to work in the Rogue Valley. Students who meet the award criteria are selected by the Evans Scholarship Committee and the Foundation's Board of Directors. Evans Endowment fund earnings, consisting of interest and dividends, net of account fees may be transferred to the Evans Scholarship fund annually, at the donor's discretion. One hundred percent of earnings, consisting of interest and dividends, net of account fees, capital gain dividends and unrealized and realized capital gains and losses in the Evans Scholarship fund will be used to annually award nursing scholarships as described above. The donor reserves the right to change the distribution of earnings between the scholarship fund and endowment fund at each annual review. _~g_ Ashland Community Hospital Foundation Notes to Financial Statements December 31, 2012 and 2011 Note 16 - Endowment Funds (continued) The changes in net assets of the endowment funds are as follows for the years ended December 31: 2012 2011 Contributions Donor designated funds $ 50 $ 2,475 Evans endowment fund - 41,951 Nixon endowment fund - - Total contributions 50 44,426 Interest and dividends Donor designated funds 2,510 1,948 Evans endowment fund 11,852 10,339 Nixon endowment fund 15,680 15,064 Total interest and dividends 30,042 27,351 Capital gains dividends and net realized and unrealized appreciation Donor designated funds 2,635 <3,676> Evans endowment fund 11,587 <14,160> Nixon endowment fund 3,877 <6,906> Total net appreciation <depreciation> 18,099 <24,742> Advisory fees Donor designated funds <739> <715> Evans endowment fund <3,226> <2,701> Nixon endowment fund <1,255> <1,243> Total advisory fees <5,220> <4,659> Change in net assets 42,971 42,376 Appropriated for expenditure <24,822> <22,692> Increase in endowment net assets 18,149 19,684 Donor-restricted endowments at beginning of year 695,384 675,700 Donor-restricted endowments at end of year $ 713,533 $ 695,384 _2g_ SUPPLEMENTAL INFORMATION ASHLAND COMMUNITY HOSPITAL FOUNDATION Property Value Comparison Book Value versus Assessed I Appraised Value December 31, 2012 UNAUDITED County Buildings and RMV or Acquisition Improvements Appraised Change in Property Location Date Land Net of Depreciation Total Value Value 548 N. Main Street Ashland, Oregon 1992 $ 397,892 $ - $ 397,892 $ 1,200,000 $ 802;108 209 N. Pacific Highway Talent, Oregon 1993 71,248 134,537 205,785 423,270 217,485 205 N. Pacific Highway Talent, Oregon 1993 13,580 94,553 108,133 165,320 57,187 49 Talent Ave & Tax lot 1200 Talent, Oregon 1993 56,420 256,652 313,072 994,320 681,248 317 Maple Street Ashland, Oregon 1995 58,800 25,360 84,160 196,980 112,820 588 N. Main Street Ashland, Oregon 1997 74,000 83,879 157,879 303,760 145,881 595 N. Main Street Ashland, Oregon 1998 266,000 842,204 1,108,204 1,608,370 500,166 499 Chestnut Avenue Ashland, Oregon 1999 99,972 93,788 193,760 373,340 179,580 628 N. Main Street Ashland, Oregon 2003 189,874 513,976 703,850 982,440 278,590 530 Catalina Street Ashland, Oregon 2005 275,386 - 275,386 190,740 (84,646) Total $ 1,503,172 $ 2,044,949 $ 3,548,121 $ 6,438,540 $ 2,890,419 -20- Schedule 35.4.2 ACH Foundation Accounting Methods Not Conforming with GAAP No exceptions. Schedule 35.5 Legal Proceedings, Adverse Claims and Threatened Investigations Involving ACH Foundation ACH Foundation Accounting Methods Not Conforming with GAAP No exceptions. Schedule 35.7 Laws, Regulations and Ordinances ACH Foundation Is Subject to in Which it is Not in Compliance No exceptions. Schedule 35.8.1 ACF Foundation Real Property Attached hereto is an accurate and complete list of all real property owned by ACH Foundation which will be conveyed to ACH at closing. PDXDOCS:2009337.1 V) X vi N N Q O ^L LL LL 2 U Q O O O O C) O O O O O O O o 0 0 0 0 0 0 0 0 0 I- O co (D O O_ 00 N CO O O H r Nt Nt r N r p O J O O x M Q D D p Q D D U U U U U D D Ln LO LO LO LO co N co co co co N N N LO LO O O O O O O N O O z ww w w w w w w a rn rn rn rn rn rn co co co co rn rn rn Q co co co co Cl) Cl) co co co co co co co E J O O co O d J co J J J m w 0' a, W 0) m 0) m O m > co = O Y L O L O L w (n a 2 co 2 co _ p c c c c c c ~ Q Q c ~ U U - N co co a co CL Z Z U Z Z Z Z Z N ca ca U 2. V ~ rn co co co rnLO O r I I ~ Q co O O O N 00 O O O O O co LO N N N M LO LO Nt LO Nt Nt LO Schedule 35.8.2 Exceptions to Title of ACF Foundation Real Property ACH Foundation has no disclosures to make regarding Section 35.8.2 of the Affiliation Agreement. PDXDOCS:2009338.1 Schedule 35.8.3 List of ACF Foundation Real Property in Which ACH is a Tenant, Lessee, or Subtenant Attached here is an accurate and complete list of real property in which ACH is a tenant, lesee subtenant, or otherwise in possession of real property owned by ACH Foundation. PDXDOCS:2009339.1 z O Q 0 z D O LL J _ Z d Q cn z OH Z = ~ Q O U D z Q J U Q O O O O O H H H H H Z Z Z Z Z O O O O O U U U U U ~ D D D D D z a Q Q Q Q Q z ~ Q Q Q Q Q Schedule 35.9.1 List of ACF Foundation Insurance Policies Attached hereto is an accurate, correct and complete list (including the name of the insurer, coverage, premium, and expiration date) of all binders and policies of insurance (the "Insurance Policies") maintained by ACH Foundation in which ACH is a named insured or which otherwise insures assets used in connection with the operation of ACH. PDXDOCS:2009341.1 v 0 0 0 N U) U O 0 X IL ~ a A ~ O O O O N N N N n n n n W M M M M O C.0 ~ O O O O O O _CG O ~ C~j C~j nn o CA U v ~ w ~ 0 0 0 0 U U U U CA CA CA U~ Schedule 35.9.2 ACH Foundation Insurance Polices Not in Full Force and Effect No exceptions. Schedule 35.11.1 Environmental Laws ACH Foundation is Not in Compliance No exceptions. Schedule 35.11.2 Notifications of Pending or Ongoing Investigations Involving ACH Foundation Regarding Environmental Laws No exceptions. Schedule 35.11.3 Disclosures of Items on ACH Foundation Real Property Outline in Section 35.11.3 of the Affiliation Agreement No exceptions. Schedule 35.11.4 ACH Foundation Environmental Reports The following are all Environmental Reports (as defined in the Affiliation Agreement) and assessments relating to potential or actual environmental conditions on the ACH Foundation Real Property and any real property owned by ACH Foundation and leased to or occupied by ACH that ACH Foundation has in its possession, control, or knowledge: • September 18, 1991 Level I Environmental Assessment Proposal prepared by Baker & Franklin Engineering • April 7, 1993 Environmental Questionnaire and Disclosure Statement regarding 209 S. Pacific Highway, Talent, Oregon • April 29, 1996 Soils Testing Lab, Inc. Concrete Tests • Phase I Environmental Site Assessment dated September 19, 1997 prepared by BWR Associates, Inc. • Soil Investigation Property Located at 613 N. Main, Ashland, Oregon dated September 26, 1997 • November 14, 1997 Letter from Oregon Department of Environmental Quality Schedule 33.3.1 No Violation; Approvals Commencing as of the Closing, Asante is guaranteeing the monthly payments on the loan ACH has with Umpqua Bank, Loan No. 3068534823. This monthly guarantee does not include the final balloon payment. This guarantee constitutes a permissible assumption of debt under Asante's Master Trust Indenture dated May 1, 1998 and supplements One to Nine of that Indenture with Wells Fargo as Master Trustee. Schedule 33.3.2 No Violation; Approvals Approval from Umpqua. Bank is required for the sole corporate membership in ACH to transfer from the City of Ashland to Asante. Umpqua. Bank has provided this approval. Asante has filed Form CMS-855A with Noridian for a change in management control for ACH, ACH Home Health, and ACH Hospice, and Form 855B with respect to ACH's employed physicians. Asante will file the appropriate forms with DMAP (Oregon Medicaid). Asante has filed licensure applications with the Oregon Health Authority for ACH's hospital, home health, and hospice. Exhibit 33.4.1 Financial Statements See attached audited financial statements of Asante for the fiscal years ended September 30, 2012 and September 30, 2011, and unaudited interim financial statements. MIA ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidated Financial Statements and Schedules September 30, 2012 and 2011 (With Independent Auditors' Report Thereon) m KPMG LLP Suite 3800 1300 South West Fifth Avenue Portland, OR 97201 Independent Auditors' Report The Board of Directors Asante Health System and subsidiaries: We have audited the accompanying consolidated balance sheets of Asante Health System and subsidiaries (Asante) as of September 30, 2012 and 2011, and the related consolidated statements of operations, changes in net assets, and cash flows for the years then ended. These consolidated financial statements are the responsibility of Mante's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Asante's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Asante Health System and subsidiaries as of September 30, 2012 and 2011, and the results of their operations, changes in their net assets, and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Our audits were conducted for the purpose of forrninng an opinion on the consolidated financial statements as a whole. The supplementary information included on pages 29 31 is presented for the purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. K'PMC=, AMP December 13, 2012 KPM1AG LLP Is a Delaware Vm+led &abTd padne+shtp, the U.S. member firm of KPMG lntematiana€ Cooperative Pord~ndWrta ('KPMG lntemationai'), a S-ffn entity. + 9 1 2 - 2 0 1 2 ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2012 and 2011 (In thousands) Assets 2012 2011 Current assets: Cash and cash equivalents $ 19,375 18,631 Assets whose use is limited, current portion 10,935 4,005 Patient accounts receivable (less allowance for doubtful accounts of $3,398 and $4,329 in 2012 and 2011, respectively) 81,053 68,551 Accrued interest and other receivables 1,789 4,046 Inventories 4,952 3,826 Prepaid expenses 5,735 4,801 Total current assets 123,839 103,860 Assets whose use is limited: Restricted by donors 4,352 3,831 Held by trustee 12,655 Board-designated assets 25,913 17,036 42,920 20,867 Less amount required to meet current obligations 10,935 4,005 31,985 16,862 Marketable securities 460,919 381,234 Property, plant, and equipment, net 264,438 242,072 Land held for future use 12,960 12,960 Other assets, net 29,991 20,303 Total assets $ 924,132 777,291 2 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2012 and 2011 (hi thousands) Liabilities and Net Assets 2012 2011 Current liabilities: Accounts payable 13,694 8,095 Payroll, payroll taxes, and related benefits 23,230 20,779 Self-insurance liability, current portion 7,906 7,195 Estimated reimbursement due to governmental agencies, net 3,432 5,748 Other current liabilities 14,922 11,919 Current portion of long-term debt and capital lease obligations 12,954 4,337 Total current liabilities 76,138 58,073 Long-term debt and capital lease obligations, net of current portion 344,446 320,736 Other long-term liabilities 26,631 13,354 Total liabilities 447,215 392,163 Net assets; Unrestricted 472,565 381,297 Temporarily restricted 1,109 674 Permanently restricted 3,243 3,157 Total net assets 476,917 385,128 Commitments and contingencies (note 13) Total liabilities and net assets $ 924,132 777,291 See accompanying notes to consolidated financial statements. 3 ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidated Statements of Operations Years ended September 30, 2012 and 2011 (In thousands) 2012 2011 Unrestricted revenues, gains, and other support: Net patient service revenue $ 503,867 478,280 Other operating revenue 13,564 14,744 Total revenues, gains, and other support 517,431 493,024 Operating expenses: Salaries and benefits 268,106 254,558 Supplies 93,034 94,691 Purchased services 30,689 27,806 Professional fees 7,644 7,383 Repairs and maintenance 10,820 10,540 Insurance 6,023 6,064 Rent and utilities 8,303 7,794 Interest 13,021 12,560 Depreciation 30,174 26,205 Other 27,604 19,804 Total operating expenses 495,418 467,405 Operating income 22,013 25,619 Nonoperating income: Investment income, net of fees 22,752 20,205 Change in unrealized gains (losses) on trading investments 49,105 (22,486) Other, net (3,918) (3,062) Total nonoperating income (loss) 67,939 (5,343) Excess of revenues over expenses 89,952 20,276 Net assets released from restriction used for purchases of property, plant, and equipment 1,295 1,415 Other 21 (3) Increase in unrestricted net assets $ 91,268 21,688 See accompanying notes to consolidated financial statements. 4 ASANTE HEALTH SYSTEM AND SUBSIDIA UES Consolidated Statements of Changes in Net Assets Years ended September 30, 2012 and 2011 (In thousands) 2012 2011 Unrestricted net assets: Excess of revenues over expenses $ 89,952 20,276 Net assets released from restriction used for purchases of property, plant, and equipment 1,295 1,415 Other 21 (3) Increase in unrestricted net assets 91,268 21,688 Temporarily restricted net assets: Contributions and investment income 1,522 1,987 Net assets released from restrictions (1,087) (2,373) Increase (decrease) in temporarily restricted net assets 435 (386) Permanently restricted net assets; Contributions 86 216 Licrease in permanently restricted net assets 86 216 Increase in net assets 91,789 21,518 Net assets, beginning of year 385,128 363,610 Net assets, end of year $ 476,917 385,128 See accompanying notes to consolidated financial statements. 5 ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidated Statements of Cash Plows Years ended September 30, 2012 and 2011 (In thousands) 2012 2011 Cash flows from operating activities: Increase in net assets S 91,789 21,518 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation and amortization 31,899 27,940 Provision for bad debts 4,671 8,741 Net change in realized and unrealized gains and losses on marketable securities (58,092) 12,787 Equity in earnings on investments in healthcare ventures (1,651) (1,392) Distributions from investments in healthcare ventures 1,463 1,420 Investment in healthcare ventures (36) Restricted donations and investment income (1,010) (2,203) Loss (gain) on sale of assets (106) 233 Change in operating assets and liabilities: Patient accounts receivable, accrued interest, other receivables, and other assets (25,491) (14,509) Inventories and prepaid expenses (2,060) (783) Accounts payable, accrued payroll, payroll tares and related benefits, self-insurance liability, estimated reimbursement due to governmental agencies, other current liabilities, and other long-term liabilities 19,988 3,288 Net cash provided by operating activities 61,400 57,004 Cash flows from investing activities: Purchases of property, plant, and equipment (46,717) (34,119) Sales of marketable securities and assets whose use is limited 210,654 242,373 Purchases of marketable securities and assets whose use is limited (254,300) (262,313) Notes receivable repayments 748 220 Proceeds on sale of assets 121 38 Net cash used in investing activities (89,494) (53,801) Cash flows from financing activities: Principal payments on long-tern debt and capital lease obligations (8,131) (4,186) Proceeds from restricted donations and investment income 1,010 2,203 Proceeds from new debt 36,099 - Payments for deferred financing costs (140) Net cash provided by (used in) financing activities 28,838 (1,983) Net increase in cash and cash equivalents 744 1,220 Cash and cash equivalents, beginning of year 18,631 17,411 Cash and cash equivalents, end of year $ 19,375 18,631 Supplemental disclosure of cash flow information: Cash paid for interest S 12,496 12,033 Capital purchases in accounts payable 2,737 752 Capital lease of property, plant and equipment 4,398 - See accompanying notes to consolidated financial statements. 6 ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (1) Organization Asantc Health System (Asante) is a private, not-for-profit, community-based healthcare organization providing health-related services to the residents of Southern Oregon and Northern California. Asante includes the operations of the following operating units and affiliates: Asante (Parent Company) Asante provides various support services to its operating units and other affiliates. (a) Operating Units (which comprise the Obligated Group) Asante has established an Obligated Group to access capital markets. Obligated Group members are jointly and severally liable for the long-term debt outstanding under the Obligated Group's master trust indenture. Asante's operating units, which comprise the Obligated Group, are as follows: Rogue Regional Medical Center (RRMC) A regional tertiary not-for-profit healthcare facility providing for the healthcare needs of Southern Oregon and Northern California. Three Rivers Medical Center (TRMC) A community not-for-profit hospital in Josephine County providing inpatient and outpatient healthcare services to the Grants Pass community and surrounding area. Asante Community Services Freestanding outpatient facilities that provide occupational health services, work performance through Asante Work Health, home infusion, outpatient pharmacy, outpatient physician services, and employee assistance programs. AIM Real Property, LLC An Oregon Limited Liability Company (the LLC) owned by Asante and a local physician. The LLC owns and maintains a medical clinic building for the purpose of leasing the building for health-related activities. Asante owns 65% of the LLC, which is included within the obligated group given this ownership. Sleep Center of Southern Oregon An Oregon LLC, which provides sleep lab management, staff, and equipment for RRMC patients. Asante owns 51% of the LLC, with local physicians owning the remaining 49%. As a result of this investment, the LLC is included in the obligated group. 7 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (h) Other Affiliates The following are consolidated affiliates of Asante and arc not part of the Asante obligated group. Asante Physician Partners (APP) Wholly owned subsidiary that employs and manages physician providers, including primary care, specialists, and raid-level providers. Asante Foundation (the Foundation) The Foundation is a not-for-profit public benefit corporation of Asante, responsible for fund-raising and development. Southern Oregon Insurance, Inc. (SOH) SOH is a not-for-profit single parent direct issue captive, incorporated in the state of Hawaii, providing healthcare professional and commercial general liability insurance and claims management services for Asante. Southern Oregon Trauma and Emergency Services, LLC (SOTES) SOTES is an Oregon LLC that coordinates trauma and emergency medical services provided at RRMC and TRMC. (2) Summary of Significant Accounting Policies (a) Basis of Consolidation The accompanying consolidated financial statements include the accounts of Asante and other affiliates. All significant intercompany account balances and transactions have been eliminated. (b) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted ur the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidatcd financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates in Asantc's consolidated financial statements include accounts receivable allowance, third-party payor settlement liabilities, valuation of investments, and liabilities related to self-insurance programs. (c) Cash and Cash Equivalents Cash and cash equivalents include certain investments in highly liquid financial instruments with original maturities of three months or less when purchased. Cash equivalent balances included in cash and cash equivalents in the consolidated balance sheets at September 30, 2012 and 2011 were $1,564,000 and $11,109,000, respectively. Cash and cash equivalents held in the investment portfolio and limited as to use are also included in assets whose use is limited on the consolidated balance sheets. 8 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 Asante maintains cash and cash equivalents on deposit at various institutions, which at times exceed the insured liunits by the Federal Deposit Insurance Corporation. This exposes Asante to potential risk of loss in the event the institution becomes insolvent. (d) Patient Accounts Receivable Accounts receivable arc reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered. Credit is granted without collateral to Asante's patients, most of whom are local residents and are insured under third-party payor agreements. Asante manages the receivables by regularly reviewing its accounts and contracts and by providing appropriate allowances for contractual discounts and uncollectible amounts. Asante estimates these allowances based on the aging of accounts receivable, historical collection experience by payor, and other relevant factors. The mix of receivables from significant third-parry payor classifications is as follows: September 30 2012 2011 Medicare 40% 38% Medicaid 17 19 Private pay 16 17 Others 27 26 100% 100% (e) Inventories Inventories are stated at the lower of average cost or market. (fl Assets Whose Use is Limited Assets whose use is limited are carried at fair value and are accounted for as trading securities and primarily include assets held by trustees under indenture agreements, assets subject to donor restrictions, and designated assets set aside by the Board of Trustees (the Board) for certain purposes, over which the Board retains control and may, at its discretion, subsequently use for other purposes. Assets held by trustees and collateral consists of treasury or agency securities. Amounts that will be used to satisfy current liabilities are classified as current assets in the accompanying consolidated balance sheets. Gains and losses on sales of assets whose use is limited are computed on the specific-identification method. Interest income or loss (including realized gains and losses on investments, interest, and dividends) is included in income unless the income or loss is restricted by donor or law. Unrealized gains and losses on trading securities are included in nonoperating income in the accompanying consolidated statements of operations. (g) Marketable Securities Marketable securities are accounted for as trading securities and consist principally of U.S. government agency obligations, corporate obligations, and equity securities that are stated at fair value. Amounts are classified as noncurrent assets in the accompanying consolidated balance 9 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 sheets as they will not be used to satisfy current obligations. Gains and losses on sales of marketable securities are computed on the specific-identification method. Interest income or loss (including realized gains and losses on investments, interest, and dividends) is included in nonoperating income unless the income or loss is restricted by donor or law. Unrealized gains and losses on trading securities are included in nonoperating income in the accompanying consolidated statements of operations. (h) Property, Plant, acid Equipment Property, plant, and equipment additions are recorded at cost. Depreciation is provided over the estimated useful life of each class of depreciable asset, which ranges from 3 to 40 years for buildings, improvements, and equipment, and is computed using the straight-line method. Equipment under capital lease obligations is amortized on the straight-line method over the shorter period of the lease term or the estimated useful life of the equipment. Such amortization is included within depreciation in the accompanying consolidated financial statements. Gifts of long-lived assets such as land, buildings, or equipment are reported as unrestricted support, and are excluded from excess of revenues over expenses, unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Asante assesses potential impairment to its long-lived assets, including land held for future use, when there is evidence that events or changes in circumstances have made recovery of the asset's carrying value unlikely. An irnpainncnt loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. No impairment losses have been identified. (i) Financing Costs Financing costs incurred in connection with debt agreements are deferred and amortized over the life of the respective debt and arc included in other assets in the accompanying consolidated balance sheets. (j) Investments in IlealNrcare Ventures Investments in healthcare-related joint ventures, where Asante does not have a controlling interest, have been accounted for using the equity method and are included in other assets in the accompanying consolidated balance sheets. (k) Self-Insuran ce Workers' Compensation The annual self-insured retention under Asante's workers' compensation program is $400,000 per claim per year. The accrued liability for the self-insured components of the plan includes the unpaid portion of claims that have been reported and estimates for claims that have been incurred but not reported. Asante has recorded an actuarially estimated liability, undiscounted of $8,144,000 and discounted at 5% of $5,914,000 at September 30, 2012 and 2011, respectively. The current portion 10 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 of the accrued liability for workers' compensation is included in the self-insurance liability. The long-term portion of the accrued liability is included in other long-term liabilities. Asante carries an excess coverage policy for its worker's compensation program. Medical Asante maintains a self-insured medical plan for its employees. The accrued liability for the self-insured components of the plan includes estimates of the costs for the incurred but not paid claims as well as related claims administration expense. The estimated liability is $3,668,000 and $3,985,000 at September 30, 2012 and 2011, respectively, and is included in self-insurance liability. Professional Liability Asante is self-insured for professional liability exposures through SOII. 801I provides coverage for Asante's claims up to $1 million per claim with a $5 mullion annual aggregate for the year ended September 30, 2012 and a $10 million annual aggregate for the year ended September 30, 2011. Asante has purchased insurance with third-party carriers for claims in excess of the $1 million amount per claim or $5 million aggregate. The coverage provided by SON and the third-party carriers is in the form of claims-made insurance policies. Should the claims-made policies not be renewed or replaced, claims related to occurrences during the terms of the policies but reported subsequent to their termination may be uninsured. Asante, including SOII, records actuarially estimated liabilities for reported claims as well as an estimated tail liability for claims that have been incurred but not reported. Accounting Standards Update (ASU) No. 2010-24 Health Care Entities (Topic 954): Presentation of Insurance Claims and Related Insurance Recoveries, effective for Asante beginning October 1, 2011, requires loss reserves to be recorded with separate components for gross liability and provision for insurance recoveries. The total estimated gross liability at September 30, 2012 is $20,983,000 with $9,466,000 of this amount insured by excess carriers. The net estimated self-insurance obligation recorded for professional liability at the expected value, undiscounted is $11,517,000 and $9,002,000 at September 30, 2012 and 2011, respectively. The current portion of the liability is recorded in self-insurance liability. The long-term portion is included in other long-term liabilities. The provision for insurance recoveries is included in other assets. Management is not aware of any potential professional liability claims whose settlement would be in excess of amounts provided or would otherwise have a material adverse effect on Asante's consolidated financial position. (l) Oregon State Provider Tax Effective July 1, 2004, the State of Oregon instituted a provider tax on certain patient service revenues at certain qualifying hospitals including RRMC and TRMC. During the year ended September 30, 2012, the State of Oregon adjusted the provider tax rate, resulting in increased taxes paid by the Company. Asante recorded provider taxes of approximately $21,641,000 and $14,060,000 for the years ended September 30, 2012 and 2011, respectively, which arc included in other operating expenses in the accompanying consolidated statements of operations. Asante recorded provider tax liabilities of $5,132,000 and $6,024,000 at September 30, 2012 and 2011, 11 (Continued) ASANTE HEALTH SYSTEM AND SUBS]IDLUUES Notes to Consolidated Financial Statements September 30, 2012 and 2011 respectively, which are included in other current liabilities in the accompanying consolidated balance sheets. In addition, Asante has entered into an agreement with the Oregon Association of Hospitals and Health Systems (OAHHS), which provides that all payments to Asante related to beneficiaries of the Oregon Medical Assistance Program are to be remitted directly to OAHHS. OAHHS aggregates these payments, returning a portion to Asante. The remaining funds are pooled by OAHHS with like amounts received on behalf of other hospitals subject to the provider tax, and OAHHS redistributes such funds to the qualifying hospitals. Asante estimates the amounts received or receivable from OAHHS for the years ended September 30, 2012 and 2011 are $21,641,000 and $14,060,000, respectively, which are reflected as a component of net patient service revenue in the accompanying consolidated statements of operations. Asante recorded tax receivables of $5,115,000 and $6,024,000 at September 30, 2012 and 2011, respectively, which are included in patient accounts receivable in the accompanying consolidated balance sheets. (m) Net Assets Unrestricted All net assets that are not restricted by donors are included in unrestricted net assets. Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are those whose use by Asante has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by Asante in perpetuity. Based on Asante's policy, income earned on permanently restricted funds is transferred to temporarily restricted net assets and used to support specific programs with either a restricted or unrestricted purpose. When a qualified expenditure is incurred, the funds are released to unrestricted net assets. Spending may not exceed 5% of the corpus in any fiscal year, based on Asante's endowment spending policy. Unconditional promises to give cash and other assets to Asante are reported at fair value at the date the promise is received. Conditional promises to give and indications of intentions to give are reported at fair value at the date the gift is received. The gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When restricted funds to be used for operations are expended for their restricted purposes, these amounts are reflected in unrestricted net assets as net assets released from restrictions for operations and are included in other income. When restricted fiords are expended for the acquisition of property, plant, and equipment, these amounts are reported as released from restriction for capital in the statements of changes in net assets. 12 (Continued) I ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 Temporarily restricted and permanently restricted net assets are maintained for the following purposes as stipulated by donors at September 30 (in thousands): 2012 2011 Temporarily restricted: Capital $ 85 151 Child and infant health (capital) 393 53 Others 631 470 $ 1,109 674 Permanently restricted: Education $ 570 565 Francis Cheney Fancily PlaceiTRCH Family House 1,878 1,803 Others 795 789 $ 3,243 3,157 (n) Net Patient Service Revenue Net patient service revenues are reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Estimated settlements under third-party reimbursement agreements are accrued in the period the related services are rendered and adjusted in future periods, primarily as a result of final settlements. (o) Charity Care Asante provides care to patients who meet poverty guidelines under its charity care policy. Asante does not pursue collection of amounts determined to qualify as charity care; therefore, they arc not reported as revenue. (p) Nonoperatiag Income Nonoperating income includes certain items that management deems to be outside the scope of its primary business. Items consist primarily of investment income, net results of the Foundation, and other income. Investment income consists of investment income from marketable securities and assets whose use is limited, offset by investment management fees, and unrealized gain (loss). 13 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (q) Net Contributions front the Foundation Asante reports the net results of the Foundation activities as part of nonoperating income under the "other, net" classification. Net results from the Foundation for the years ended September 30 (in thousands) are as follows: 2012 2011 Other operating revenue $ 778 835 Total operating revenue 778 835 Salaries and benefits 800 783 Supplies 134 133 Purchased services 187 272 Rent and utilities 25 23 Other 89 105 Total operating expenses 1,235 1,316 Operating loss (457) (481) Unrealized gains (losses) on trading investments 2,199 (1,334) Excess (deficit) of revenues over expenses $ 1,742 (1,815) (i) Rveess of Revenues over Expenses The consolidated statements of operations report the excess of revenues over expenses and other changes in unrestricted net assets. Changes in unrestricted net assets, which are excluded from excess of revenues over expenses, consistent with industry practice, include transfers of assets to and from unconsolidated affiliates for other than goods and services, and contributions of long-lived assets (including assets acquired using contributions that by donor restriction were to be used for the purposes of acquiring such assets). (s) Federal and State Income Tares Asante has received a determination letter from the Internal Revenue Service stating that it is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, except for unrelated business income. Management believes Asante is operated in a manner that qualifies it for tax-exempt status. Income taxes are provided for the tax effects of transactions unrelated to Asante's tax-exempt purpose reported in the consolidated financial statements; however, such activities are not significant to the consolidated financial statements. Asante does not believe that it has adopted any uncertain tax positions as defined by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 740-10, Income Taxes - Overall. 14 (Continued) i ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (t) Ne?vAccountlugPronouncetnents In 2010, the FASB issued ASU No. 2010-23, Health Cate Entities (Topic 954): Measuring Charity Care for Disclosure. This ASU is intended to reduce the diversity in practice regarding the measurement basis used in the disclosure of charity care. This ASU requires that cost, including direct and indirect costs, be used as the measurement basis for charity care disclosure purposes and that the method used to identify or determine such costs be disclosed. This ASU is effective for Asante beginning October 1, 2011. Disclosures in note 9 have been updated as a result of the implementation of this ASU. In 2010, the FASB issued ASU No. 2010-24, Health Care Entities (Topic 954): Presentation of Insurance Claims and Related Insurance Recoveries. This ASU prohibits a healthcare entity from netting insurance recoveries against related claim liabilities for reporting purposes. Additionally, this ASU requires that the amount of the claim liability be determined without consideration of insurance recoveries. This ASU is effective for Asante beginning October 1, 2011. In 2011, the FASB issued ASU No. 2011-07, Presentation and Disclosure of Patient .service Revenue, Provision for Bad Debts, and the Allowance for Doublf tl Accounts for Certain Health Care Entities, which provides financial statement users with greater transparency about a healthcare entity's net patient service revenue and the related allowance for doubtful accounts. This update provides information to assist financial statement users in assessing an entity's source of net patient service revenue and related changes in its allowance for doubtful accounts. The amendments require healthcare entities that recognize significant amounts of patient service revenue at the time the services are rendered, even though they do not assess the patient's ability to pay, to present the provision for bad debts related to patient service revenue as a deduction from patient service revenue in their statement of operations. This ASU is effective for Asante beginning October 1, 2012, but has been early adopted for the year ended September 30, 2012. Additional disclosures have been included in note S as a result of the implementation of this ASU. In accordance with the provisions of this ASU, Asante has also reclassified bad debt expense of $8,741,000 from operating expenses to offset net patient service revenue in the consolidated statement of operations for the year ended September 30, 2011. (u) Reclassifteations Certain 2011 amounts have been reclassified to conform to the 2012 presentation. 15 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (3) Marketable Securities and Assets Whose Use is Limited The composition of marketable securities and assets whose use is limited at fair value at September 30 is as follows (in thousands): 2012 2011 Corporate equity securities $ 190,787 145,977 Mutual funds 79,412 57,909 Corporate bonds 79,182 67,557 Exchange traded funds 60,196 49,763 U.S. government agency obligations 46,475 48,502 U.S. government obligations 20,536 20,509 Cash and cash equivalents 15,728 2,918 Collateralized mortgage obligations 4,233 3,817 Municipal bonds 3,679 - Convertible preferred securities 2,692 2,797 Certificates of deposit 919 837 Convertible bonds - 1,515 503,839 402,101 Less: Assets whose use is limited, current portion 10,935 4,005 Assets whose use is limited, net of current portion 31,985 16,862 Marketable securities $ 460,919 381,234 Investment income for the years ended September 30 comprised the following elements (in thousands): 2012 2011 Interest and dividends $ 15,469 12,376 Realized and unrealized gains, net 8,987 9,699 24,456 22,075 Less: Investment fees {1,704) (1,870) $ 22,752 20,205 In accordance with ASC 820, financial assets and fmancial liabilities measured at fair value are grouped in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to estimate fair value. These levels are: • Level I Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. 16 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 • Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Level 2 valuations are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. • Level 3 Valuations for assets and liabilities that are derived from other valuation methodologies, including discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The following table presents the balances of assets measured at fair value on a recurring basis at September 30, 2012 (in thousands): Level 1 Level 2 Level 3 Fair value Assets: Corporate equity securities: Large cap value S 58,810 - - 58,810 Small/mid cap growth 74,729 - - 74,729 Large cap growth 57,248 - 57,248 Total 190,787 - 190,787 Mutual funds: Money market 64,873 - - 64,873 Small cap equity fund 14,539 - - 14,539 Total 79,412 - - 79,412 Corporate bonds - 79,182 - 79,182 Exchange traded international index funds 60,196 - - 60,196 U.S, government agency obligations - 46,475 - 46,475 U.S. government obligations 20,536 - 20,536 Cash and cash equivalents 15,728 - - 15,728 Collateralized mortgage obligations - 4,233 - 4,233 Municipal bonds - 3,679 -W- 3,679 Convertible prefeaTcd securities - 2,692 - 2,692 Certificates of deposit - 919 - 919 Total $ 346,123 157,716 503,839 17 (Continued) I ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 The following table presents the balances of assets measured at fair value on a recurring basis at September 30, 2011 (in thousands): Level 1. Level 2 Level 3 Fair value Assets: Corporate equity securities: Large cap value 61,997 - 61,997 Small/mid cap growth 60,361 - - 60,361 Large cap growth 23,619 - - 23,619 Total 145,977 - - 145,977 Mutual funds: Money market 45,993 - - 45,993 Small cap equity fiend 11,916 - - 11,916 Total 57,909 - - 57,909 Corporate bonds - 67,557 67,557 Exchange traded international index fluids 49,763 - 49,763 U.S. government agency obligations 48,502 - 48,502 U.S. government obligations 20,509 20,509 Cash and cash equivalents 2,918 - - 2,918 Collateralized mortgage obligations - 3,817 3,817 Convertible preferred securities - 2,797 - 2,797 Convertible bonds - 1,515 - 1,515 Certificates of deposit - 837 - 837 Total S 256,567 145,534 - 402,101 All investments held at September 30, 2012 and 2011 are able to be redeemed or liquidated on a daily basis with one or two days' notice. 18 (Continued) f l ASAINTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (4) Property, Plant, and Equipment Property, plant, and equipment, net as of September 30 consist of the following (in thousands): 2012 2011 Land and land improvements $ 14,527 14,434 Buildings 288,146 277,408 Equipment and furniture 269,206 244,394 Leaschold improvements 95 82 Buildings under capital leases 5,414 5,414 577,388 541,732 Less allowance for depreciation (359,980) (329,113) 217,408 212,619 Construction in progress 47,030 29,453 $ 264,438 242,072 Depreciation expense, including depreciation expense on rental properties classified as nonoperating, for the years ended September 30, 2012 and 2011 was $31,280,000 and $27,322,000, respectively. Accumulated amortization for assets under capital lease obligations was $3,019,000 and $2,686,000 at September 30, 2012 and 2011, respectively. (5) Other Assets Other assets at September 30 consist of the following (in thousands): 2012 2011 Unamortized bond issue costs $ 11,231 11,529 Investments in healthcare ventures 2,988 2,800 Professional liability insurance recoveries 9,466 - Other 6,306 5,974 $ 29,991 20,303 19 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (6) Long-Term Debt and Capital Lease Obligations Long-term debt and capital lease obligations at September 30 consist of the following (in thousands): 2012 2011 The Hospital Facilities Authority of the City of Medford, Oregon Revenue Bonds Series 2002-A (net of unamortized discount of $1 and $1, respectively) maturing in varying annual amounts, due 2015 $ 1,379 1,804 The Hospital Facilities Authority of the City of Medford, Oregon Revenue Bonds Series 2002-B maturing in varying annual amounts, due 2034 84,525 84,525 The Hospital Facilities Authority of the City of Medford, Oregon Revenue Bonds Series 2005-A, (net of unamortized discount of $1,472 and $1,524, respectively) maturing in varying annual amounts, due 2040 68,228 68,176 The Hospital Facilities Authority of the City of Medford, Oregon Revenue Bonds Series 2010, (net of unamortized premium of $2,606 and $2,700, respectively) maturing in varying annual amounts, due 2040 163,667 167,339 Oregon Hospital Authority Direct Placement, maturing in varying annual amounts, due 2019 (2011 loan) 27,314 Department of Agriculture, Rural Utility Service, fixed-rate note, due 2014 4,974 - Capital lease obligations 7,313 3,229 Total long-tern debt and capital lease obligations 357,400 325,073 Less current portion (12,954) (4,337) Total long-term debt and capital lease obligations, net of current portion $ 344,446 320,736 20 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 Annual maturities of long-term debt and the future minimum capital lease obligations, excluding net bond premium discounts of $1,134,000, are as follows as of September 30, 2012 (in thousands): Long-term Capital lease debt obligations 2013 $ 11,499 1,732 2014 10,485 1,763 2015 8,657 1,767 2016 8,430 1,447 2017 8,649 502 Thereafter 302,367 1,431 350,087 8,642 Less amounts representing interest - 4% and 8% - 1,329 Net present value 350,087 7,313 Less current portion (12,608) (346) Total long-term debt and capital lease obligations $ 337,479 6,967 A summary of interest cost and investment income on borrowed funds held by the trustee under the 2002 Series A and B Bond Indentures, and the 2005 A, the 2008 and the 2010 Bond Indentures, and the 2011 loan during the years ended September 30, 2012 and 2011 are as follows (in thousands): 2012 2011 Bond interest and amortization cost $ 12,602 12,399 Other interest 419 161 $ 13,021 12,560 Bond investment income $ 10 14 At September 30, 2012 and 2011, there were approximately 512,655,000 and $0 in debt funds held with the trustee. (a) 2002 Series A Bonds The Series A Bonds were issued in February 2002. The bonds bear interest rates ranging from 4.0% to 4.6%. (b) 2002 Series B Bonds The Series B Bonds were issued in February 2002. The bonds are currently issued as seven-day auction rate bonds. Conversion to a different maturity period or to a fixed rate is available at Asante's option. 21 (Continued) 3 ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 The interest on these bonds is reset every seven days by the auction process. Should current bondholders desire to sell more bonds than bids are received to purchase them, this would result in a ! failed auction. Failed auctions result in a reset of the interest rate for that issue at the failed auction rate (a calculated rate not to exceed 15.0% for 2002 Series B Bonds). A failed auction on these bonds does not result in a default or failure, but could result in higher interest costs. The 2002 Series B Bond auctions failed February 14, 2008, and for each weekly auction thereafter through September 30, 2012. The average rate paid by Asante for the failed auction interest rate during the year was 0.189%. The rates for those failed auctions ranged between 0.045% and 0.390%. (c) 2005 Series A Bonds The Series A Bonds were issued in November 2005. The bonds were converted from seven-day auction rate bonds to fixed-rate bonds in February 2010. The bonds bear interest at a rate of 5.0%. (r1) 2010 Series Bon(ls The 2010 Bonds were issued in February 2010. The bonds were issued as fixed-rate securities, with maturities beginning in 2012 and final maturity in 2040. The bonds bear interest ranging from 3.0% to 5.5%. (e) 2011 Loan The 2011 loan was issued during the year ending September 30, 2012 as a direct placement to fund a portion of information system installation and implementation costs. The loan has a fixed-rate with an effective interest rate of 1.92%. The loan is repaid monthly and matures in 2019 (fl Rural Utilities Service This loan was initiated in March 2012. It is a fixed-rate loan with an effective interest rate of 0.38°/x. It was issued in conjunction with a federal grant, with all funds being used for telemedicine and development of rural medicine capabilities. The loan is repaid monthly and matures in 2014. (g) Line of Crerlit and Guarantees Asante has a $5,000,000 revolving line-of-credit arrangement with a commercial bank. The line of credit has as an interest rate of the daily LIBOR phis 0.90% (1.12% at September 30, 2012). No amounts were drawn on this line of credit as of, and for the year ended, September 30, 2012. The line of credit expires on August 15, 2013. Asante guarantees a loan for CVI Real Property, LLC, which owns a building on the RVMC campus. The amount of this loan was $3,940,000 and $3,959,000 at September 30, 2012 and 2011, respectively. Asante has a 25% guarantee of indebtedness for CVISO Management Company, LLC. This guarantee is for an operating line of credit in an amount up to $500,000. There was no balance outstanding on the line of credit at September 30, 2012. 22 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (b) Debt Covenants The bond indentures and other loan agreements contain, among other things, provisions placing restrictions on additional borrowings and leases and requiring the maintenance of debt service coverage and other ratios. Management believes that Asante is in compliance with these covenants as of September 30, 2012. (7) Retirement Plan Asante sponsors the Asante Retirement Plan and Trust, a defined-contribution plan, which has two components, the Matching Plan and the Basic Plan. In the Matching Plan, Asante matches the employee's pretax contributions with $0.50 for each dollar, capped at 3% of salary. Under the Basic Plan, Asante contributes 3% of the employee's salary to a tax deferred account. All eligible employees receive this contribution, whether or not they contribute to a tax deferred account. To be eligible for both the Basic and Matching Plans, employees must work at least one year and maintain a work level of at least 1,000 hours a year. Contributions are funded every two weeks and are fully and immediately vested. Costs related to these defined-contribution plans by Asante totaled approximately $9,818,000 and $9,185,000 for the years ended September 30, 2012 and 2011, respectively. (8) Net Patient Service Revenue Asante has agreements with Medicare and Medicaid programs and various other payors, which provide for payments to Asante at amounts different from its established rates. A summary of the payment arrangements with major third-party payors follows: Medicare/Medicaid - Inpatient acute care services rendered to these program beneficiaries are paid at prospectively determined rates per discharge. These rates vary according to patient classification systems that are based on clinical, diagnostic, and other factors. Medical education costs related to Medicare beneficiaries are paid based on a cost reimbursement methodology. The majority of Medicare outpatient services are reimbursed based on the prospective payment system known as Ambulatory Payment Classification. Asante is reimbursed for cost reimbursable items at a tentative rate, with final settlement determined after submission of annual cost reports by Asante and audits thereof by the third-party payors. Adjustments from finalization and adjustment of prior years' cost reports and other third-party settlement estimates resulted in an increase in net patient service revenues of approximately $425,000 and $689,000 for the years ended September 30, 2012 and 2011, respectively. For the year ended September 30, 2011, Asante recorded $1,932,000 of other operating revenue related to Medicaid compensation for meaningful use of electronic health records. This amount may be subject to future audits. In fiscal year 2010, the Centers for Medicare and Medicaid Services (CMS) began recovery audits (RAC) to identify and recover overpayments to providers. At September 2012 and 2011, Asante recorded estimated settlement liabilities of approximately $2,013,000 and $2,575,000 for estimated RAC audit findings. 23 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 The composition of significant third-party payors for the years ended September 30, as a percentage of gross patient service revenues, is as follows: 2012 2011 Medicare 55% 54% Commercial and other insurance 23 25 Medicaid 16 15 Self-pay 6 6 100% 100% Accounts receivable are reduced by allowances for contractually obligated deductions and for doubtful accounts. Allowances are calculated based on recent historical trends for every payor-source category. Management reviews and updates these calculations monthly. The difference between the standard rates and the amounts actually collected on patient accounts is charged off against these contractual allowances and allowances for doubtful accounts. Asante's allowance for doubtful accounts has decreased from $4,329,000 to $3,398,000 for the year ended September 30, 2011 and 2012, respectively, due to continued focus oil identifying patients who qualify for charity care, which leads to lower bad debt expense and higher charity care deductions. Asante has also increased efforts to collect partial payments from patients at time of service, which also leads to lower bad debt expenses. Bad debt expense included as an offset to patient service revenue was approximately $4,670,000 and $8,741,000 for the years ending September 30, 2012 and 2011, respectively. 24 (Continued) i ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (9) Charity and Community Benefit Asante provides services without charge, or at amounts less than its established rates, to patients who meet the criteria of its charity care policy. Asante also provides services to patients covered under government programs that pay less than established costs. The estimated cost of charges foregone is determined by multiplying forgone charges by the ratio of gross operating expenses divided by gross operating revenue. The estimated cost of charges foregone for these programs, plus other educational and community programs provided at no cost at September 30, are summarized in the chart below (in thousands): 2012 2011 Cost of charges foregone: Charity care services $ 22,927 22,889 Medicaid services, net of reimbursement 31,424 19,504 Other public services 3,721 2,856 Total charity and government programs 58,072 45,249 Cost of other programs: Sponsorships and donations 95 194 Community education and other 15,608 11,600 Total direct community programs 15,703 11,794 Total community benefit $ 73,775 57,043 In addition to the community benefit summarized above, Asante provides services to Medicare patients for which reimbursement is estimated by management to be less than cost by approximately $59,819,000 and $60,364,000 for the years ended September 30, 2012 and 2011, respectively. Asante prides itself on providing high quality, accessible, and cost-effective care in all areas, thus allowing it to achieve its mission, which includes offering a broad range of health programs and services to the community. In some cases, the revenues from these needed programs do not cover the costs of the program. These programs are offered due to community need, and so reflect additional support provided by Asante to the community. Among these services are Behavioral Health programs, Obstetrics, Maternal Fetal Medicine, Lab Outreach programs, and Child Development. Services. Sponsorships and donations include funds donated to social service and community agencies for healthcare and community related activities. Community education includes programs offered by Asante to support and improve the quality of healthcare programs and services available to the residents of Southern Oregon and Northern California. The programs are low cost or free to participants. Examples include health programs for women and children, senior wellness services, health screenings, and immunizations. 25 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (10) Functional Classification of Operating Expenses The following is a summary of management's functional classification of operating expenses for the years ended September 30 (in thousands): 2012 2011 Patient care services $ 377,119 357,641 Support services and administrative costs 118,299 109,764 $ 495,418 467,405 (11) Fair Value Measurements The estimated fair value of certain assets and liabilities is reflected in the accompanying consolidated balance sheets in the following manner: the carrying amount of cash and cash equivalents, accounts receivable, inventory, accounts payable, accrued payroll, payroll taxes and related benefits, other current liabilities, and estimated reimbursement due to governmental agencies approximates fair value of these instruments due to short-term maturities. Fair values of marketable securities and assets whose use is limited are based on quoted market prices, if available, or estimated using quoted market prices for similar securities, as shown in note 3. The fair value of long-term debt is shown below (in thousands): 2012 2011 Carrying Carrying amount Fair value amount Fair value Long-term debt and capital lease obligations $ 357,400 366,171 325,073 336,419 (12) Investments in Healthcare Ventures Asante has the following investments in healthcare ventures at September 30 (in thousands): Ownership 2012 2011 Grants Pass Surgery Center, LLC 35% $ 663 508 Surgery Center of Southern Oregon, LLC 20 1,022 973 CVI Real Property, LLC 25 373 426 CVISO Management Company, LLC 25 182 200 Siskiyou Imaging, LLC 33 199 211 Southern Oregon Linen Services 34 517 538 Others varies 32 (56) $ 2,988 2,800 26 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 The investments in these ventures are accounted for on the equity method and are included in other assets, net, in the accompanying consolidated balance sheets. Income (net) from the equity investments in joint ventures, which was $1,651,000 and $1,392,000 for the years ended September 30, 2012 and 2011, respectively, is included in other operating revenue in the accompanying consolidated statements of operations. (13) Commitments and Contingencies (a) Operating Leases Asante leases various buildings, office space, and equipment under noncancelable operating leases. These leases expire at various tunes and have various renewal options. Rent expense related to these leases was $3,482,000 and $2,926,000 for the years ended September 30, 2012 and 2011, respectively. Future minimum lease commitments at September 30, 2012 under noncancelable operating leases with initial terms of one year or more are as follows (in thousands): 2013 $ 3,315 2014 1,483 2015 1,282 2016 1,286 2017 975 Thereafter 3,681 (b) Litigation Asante is involved in litigation and other routine regulatory investigations arising in the ordinary course of business. In management's opinion, after consultation with legal counsel, these matters will be resolved without material adverse effect on Asante's consolidated financial position or results from operations. (c) Regulatory Environment The healthcare industry is subject to numerous laws and regulations of federal, state, and local gover►unents. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Government agencies are actively conducting investigations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers. Violations of these laws and regulations could result in expulsion from government healthcare programs, together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Management believes that Asante is in compliance with the fraud and abuse regulations as well as other applicable government laws and regulations. Compliance with such laws and regulations can be subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time. 27 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2012 and 2011 (d) Collectipe Bargaining Agreements Approximately 18.6% of Asante's employees are covered by a collective bargaining agreement. All are bedside nurses with the Oregon Nurses Association. One contract covers all of the employecs in this bargaining unit, and the current contract expires June 30, 2014. (e) Purchase Commitments Asante has committed to various construction and information technology purchases, including a new electronic medical records system. As of September 30, 2012, the future colrunitments for these projects total approximately $5,995,000. (14) Affordable Care Act As enacted, the Affordable Care Act will change how health care services are covered, delivered and reimbursed through expanded coverage of uninsured individuals, reduced growth in Medicare program spending, reductions in Medicare payments, and the establishment of programs in which reimbursement is tied to quality and integration. In addition, the law reforms certain aspects of health insurance, expands existing efforts to tie Medicare and Medicaid payments to performance and quality, and contains provisions intended to strengthen fraud and abuse enforcement. Further, it provides for a value-based purchasing program, the establishment of Accountable Care Organizations (ACOs) and bundled payment pilot programs, which may create sources of additional revenue. There remains a significant amount of uncertainty regarding the overall impact of healthcare reform. (15) Subsequent Events Asante has evaluated the impact of subsequent events through December 13, 2012, the date on which the consolidated financial statements were issued, and has determined that all subsequent events have been appropriately reflected in the accompanying consolidated financial statements. 28 OTHER FINANCIAL INFORMATION ASAi\'TE HEALTH SYSTEM AND SUBSHHARIES Consolidating Schedule Balance Sheet Infonnation September 30, 2012 (In thousands) Asante obligated Other Consolidated Assets group affilintes Eliminations total Current assets: Cash and cash equivalents $ 17,805 1,570 - 19,375 Assets whose use is limited, current portion 10,935 - - 10,935 Patient accounts receivable, net 80,183 870 - 81,053 Accrued interest and other receivables 1,731 58 - 1,789 Inventories 4,952 - 4,952 Prepaid expenses 5,632 103 - 5,735 Total current assets 121,238 2,601 - 123,839 Intercompany receivable (payable) 14,336 (14,336) Assets whose use is limited: Restricted by donors - 4,352 - 4,352 Held by trustee 12,655 12,655 Board-designated assets 10,935 14,978 - 25,913 Less amount required to meet current obligations 10,935 - 10,935 12,655 19,330 - 31,985 Marketable securities 441,257 19,662 - 460,919 Property, plant, and equipment, net 264,044 394 - 264,438 Land held for future use 12,960 - 12,960 Beneficial interest in the Foundation 18,466 (18,466) - Other assets, net 299641 350 - 29,991 Total assets $ 914,597 28,001 (18,466) 924,132 29 (Continued) ASANTE HEALTH SYSTEM AND SUBSIDIARIES Consolidating Schedule- Balance Sheet lnforination September 30, 2012 (In thousands) Asante obligated Other Consolidated Liabilities and Net Assets group affiliates Eliminations total Current liabilities: Accounts payable $ 13,150 544 13,694 Payroll, payroll taxes, and related benefits 23,073 157 - 23,230 Self-insurance liability, current portion 6,874 1,032 7,906 Estimated reimbursement due to governmental agencies, net 3,432 - 3,432 Other current liabilities 14,686 236 - 14,922 Current portion of long-term and capital lease obligations 12,954 - 12,954 Total current liabilities 74,169 1,969 - 76,138 Long-term debt and capital lease obligations, net of current portion 344,446 - - 344,446 Other long-term liabilities 22,980 3,651 - 26,631 Total liabilities 441,595 5,620 447,215 Net assets: Unrestricted 468,650 18,029 (14,114) 472,565 Temporarily restricted 1, tfl9 1,109 (1,109) 1,109 Permanently restricted 3,243 3,243 (3,243) 3,243 Total net assets 473,002 22,381 (18,466) 476,917 Total liabilities and net assets $ 914,597 28,001 ______(18,466) 924,132 See accompanying independent auditors' report, 30 (Continued) ASAiINTE HEALTH SYSTEM AND SUBSIDIARIES Consolidating Schedule - Operations and Changes in Net Assets Information Year ended September 30, 2012 (In thousands) Asante obligated Other Consolidated group affiliates Eliminations total Unrestricted revenues, gains, and other support: Net patient service revenue $ 495,295 8,572 503,867 Other operating revenue 13,388 2,684 (2,508) 13,564 Total revenues, gains, and other support 508,683 11,256 (2,508) 517,431 Operating expenses: Salaries and benefits 253,490 14,616 - 268,106 Supplies 92,791 243 - 93,034 Purchased services 29,007 1,682 - 30,689 Professional fees 5,958 1,686 7,644 Repairs and maintenance 10,773 47 - 10,820 Insurance 4,148 3,983 (2,108) 6,023 Rent and utilities 7,911 392 - 8,303 Interest 13,021 13,021 Depreciation 30,147 27 - 30,174 Other 26,762 842 27,604 Total operating expenses 474,008 23,518 (2,108) 495,418 Operating income 34,675 (12,262) (400) 22,013 Nonoperating income 63,686 5,594 (1,341) 67,939 )excess of revenues over expenses 98,361 (6,668) (1,741) 89,952 Net assets released from restrictions used for purchases of property, plant, and equipment, and other 1,316 - - 1,316 Increase (decrease) in unrestricted net assets 99,677 (6,668) (1,741) 91,268 Temporarily restricted net assets: Contributions and investment income 1,522 1,522 (1,522) 1,522 Net assets released from restrictions (1,087) (1,087) 1,087 (1,087) Decrease in temporarily restricted net assets 435 435 (435) 435 Permanently restricted net assets: Contributions and investment income 86 86 (86) 86 Increase in permanently restricted net assets 86 86 (86) 86 Increase (decrease) in net assets 100,198 (6,147) (2,262) 91,789 Net assets, beginning of year: Unrestricted net assets 368,973 24,697 (12,373) 381,297 Temporarily and permanently restricted net assets 3,831 3,831 (3,831) 3,831 Net assets, end of year $ 473,002 22,381 (18,466) 476,917 See accompanying independent auditors` report. 31 a m u~ v m 0 N r O LO le O CC) I-- M N E O N 00 m m r N N le M 0 L!7 I-- (O LO N O O O V O M O I~ F-- N N V I- 1- 00 (O V LO LO O a0 CA co V N N O N m O M I-- (O O CO I~ L(7 O O M Ln 00 00 00 O= I- M O 00 N O_ V LO r W O I-- O 00 O co ~ M O I- r- CC) O N V O I 00 M N 1- 0 0 0 LO LO CO 00 N O I-- CO N 00 I- - (D 00 F- I-- 00 CO N V O ~ co M V (O (O N N N I- r co l ~ CO ~ q CO LO co M V LO co Cl) M Cl) Q (A EA EA EA (A EA EA (A EA (A (A to} ff} 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 I- O O (O ~ 00 CO (O ~ 00 I- O ~ O1- N 00 I- 00 O 00 V V ('7 ~ 00 N L(7 V (O V O O O O CO N O N N V O V CO O N (O 00 (O (O N O = O N V I~ 00 O 00 N CO V O ('7 ('7 67 ('7 O N O I-- N M V M O m~ LO 00 O m M w M LO O O~ 00 LO (O CO Ln lCJ M co (O O O V F-- L~ N Cl) L(7 O L(7 M CO ('7 L(7 L!7 O O ; N O O O O O m 0 00 LO N 00 Lo _ Lo CA CC) N M O - O O N le O r O Lo N Z: 'T F-: F-: cri C4 C4 L6 4 - L6 !P C'~ Cq Q r r r r r ~C Q fA EA EA EA fA EA EA fA EA fA fA EA EA W 0 LO r (D ~ O V I-- N 0 1- 00 V O N 0 N O 00 V W r N I~ V co 4m 00 LO le 1- CO Lf) n le O O le O O N (D V I-- LO le O ('7 Cl) co (O N N N 0 h O CO Cl) (NV V L(7 co I* 00 N N V LO N_ V V O CO LO N LO N I-- F- CC) O CC) (C)= NO V , M co 0 Q W M (O M O L6 - I~ C ('7 Ln ( V O O C7 0 0 4 C7 F-: O LO - - M F-: W W N M_6 06V CA O LO I~ O N N N O r co le r N Q) IT (3) C14 le Lo w J H y-+ O N r CA V (O CA N_ M (O O ; O ~ ('7 0 V O O 00 CO N ~ m ~ 00 O V C) N ~ (0 V Oo V V (O V N 0 O LC) m m m M (o Lo co O LO O O 00 00 C) m LO I~ O N O O N 00 I- = V O O v I- 00 I~ O a r C7 --t O N LO CO L(7 Ln w M (o 1- M O w 00 Ln V 00 O LO (O co O O N O u N N LO V Ln Ln N O M O n co M LO (O (O N N N CA co M N N N N N W E (fl T O CD M M M x O J U 4-1 M J V) co cn Q fA EA EA EA fA EA EA fA EA fA fA EA EA W ~~w z cn u)pw X~ W z z D < ~ o ~ J W w LL, W w -z w - LU z z~ W W W w Cl) Cl) ~ z a w w w Q o W O Q Q 0 O<C7 >00 Wz~? z JLU L) w>I~wzzT- zzX0 U) ~zzO0z_ a)m Wpzzw Q=ct U> oz aCl)F-- Lu F-- 0-0- w L) C) Xxp> >~Z j wwl-i(nzHQz>QwzZ c D~OQQz ~zUpQ~Ow wwQ~ C < Cl)oOpw T-LU Z c v0QwZ~ 0 Z WZp=of W p cnof of ZJW ZQ(ncnotSQQCnQ- zZp~z~ Z W w m U w p p w Q W m w W Q w~ U o m T W H p z O O w - ~Qp pzQ zFm~ Q ==I~z~~T wWaa CL z~pz~CL zza O>O w ~0ofcrof pzOJa a00 ~w~OzOz -O Of a~ Qa~= a0 ~m Of W0 Q0 Cl) \0 L'i of m z w~ _0 Wcn z w 0 ~O 0 Q z z z < a Z O _ o m_ 0 U m 0 O U `o T O U Asante Balance Sheet (000's) CURRENT LAST FISCAL INCREASE ASSETS: MONTH YEAR END (DECREASE) CURRENT ASSETS: CASH-CHECKING/SWEEP ACCOUNTS $ 15,976 $ 19,375 $ (3,399) PATIENT ACCOUNTS RECEIVABLE 270,638 227,830 42,808 ALLOWANCE FOR DOUBTFUL ACCTS (185,278) (146,777) (38,501) NET PATIENT ACCOUNTS RECEIVABLE $ 85,360 $ 81,053 $ 4,307 ACCRUED INTEREST & OTHER REC. 1,796 1,789 7 INVENTORIES 5,203 4,952 251 PREPAID EXPENSES 4,785 5,735 (949) TOTAL CURRENT ASSETS: $ 113,119 $ 112,904 $ 216 MARKETABLE SECURITIES $ 507,955 $ 503,839 $ 4,115 less BOND RESTRICTED FUNDS (12,655) 12,655 UNRESTRICTED MARKETABLE SECURITIES $ 507,955 $ 491,185 $ 16,770 PROPERTY, PLANT & EQUIPMENT 671,886 624,417 47,468 ACCUMULATED DEPRECIATION (382,776) (359,980) (22,796) NET PROPERTY, PLANT & EQUIPMENT $ 289,110 $ 264,438 $ 24,672 INVESTMENTS IN HEALTHCARE VENTURES 2,998 2,988 10 UNAMORTIZED BOND ISSUE COSTS 10,882 11,231 (349) LAND HELD FOR FUTURE USE 12,960 12,960 - OTHER ASSETS 11,294 15,772 (4,479) TOTAL NON-CURRENT ASSETS $ 835,198 $ 811,228 $ 23,970 TOTAL ASSETS $ 948,318 $ 924,132 $ 24,186 LIABILITIES & NET ASSETS: CURRENT LIABILITIES: ACCOUNTS PAYABLE $ 12,961 $ 13,694 $ (733) PAYROLL, PAYROLL TAXES & BENEFITS 25,948 23,230 2,717 SELF- INSURANCE RESERVES 9,448 7,906 1,541 EST REIMB DUE TO THIRD PARTIES 3,344 3,432 (88) OTHER CURRENT LIABILITIES 20,255 14,922 5,333 CURRENT PORTION-LTD 10,698 12,954 (2,256) TOTAL CURRENT LIABILITIES $ 82,653 $ 76,139 $ 6,515 LONG-TERM LIABILITIES: SELF INSURANCE RESERVES 21,309 25,946 (4,637) OTHER LONG TERM LIABILITIES 750 685 65 TOTAL LONG TERM LIABILITIES $ 22,059 $ 26,631 $ (4,572) LONG TERM DEBT: 2002 A BONDS: 13-YEAR FIXED RATE 939 939 2002 B BONDS: 32-YEAR AUCTION BONDS 84,525 84,525 - 2005 A BONDS: 35-YEAR FIXED RATE 68,268 68,228 40 2010 BONDS: 30-YEAR FIXED RATE 159,911 159,981 (70) CAPITAL LEASES & OTHER LTD 26,632 30,772 (4,140) TOTAL LONG TERM DEBT $ 340,275 $ 344,446 $ (4,171) TOTAL LONG-TERM DEBT & LIABILITIES $ 362,334 $ 371,077 $ (8,743) NET ASSETS: UNRESTRICTED $ 498,331 $ 472,565 $ 25,766 TEMPORARILY RESTRICTED 1,603 1,109 494 PERMANENTLY RESTRICTED 3,396 3,243 153 TOTAL NET ASSETS $ 503,330 $ 476,917 $ 26,414 TOTAL LIABILITIES & NET ASSETS $ 948,318 $ 924,132 $ 24,186 Asante Cash Flow (000's) June 2013 9 Months of FY 2013 Income From Operations $ 95 add back non-cash items: Depreciation 22,617 Amortization 216 Cash generated from/(used by) Operations $ 22,928 Adjustments in cash due to working capital changes: Net AR $ (4,307) Other Current Assets 692 Other Long Term Assets 4,469 Current Liabilities (exclude current portion LTD) 9,096 Other Long Term Liabilities (4,572) Cash generated from/( used by) working capital changes $ 5,377 Cash generated from Operations and Working Capital $ 28,305 Cash used for PPE purchases $ (50,211) Cash transferred from/(to) bond funds - cash from sales of business units - Net Cash provided by/(used for) PPE and bond funds $ (50,211) Line of credit draw/(repayment) $ - Foundation and Other (1,397) Transfer cash (to) from investments 14,857 2011 Loan restricted investment activity 12,656 Investment management fees (1,182) Long Term Debt new borrowing/(principal payments) (6,427) Cash provided by/(used for) investments and debt transactions $ 18,507 Total Changes in Cash balances $ (3,399) Beginning Cash $ 19,375 Total Changes in Cash balances (3,399) Ending Cash $ 15,976 N I-CF) C) CF) LO LO C) - 19t qqt C> LO CF) r- - - CN - - M LO - M O M O O N N 00 Co (7 0 0 -00- 1--:, M N O N Lo (D M O M N N O O O N LO W co (fl G L M O CA 11 N w N O 1 O co O c) co CF) CN r- Z O M co N O co M co co N 0 U) ~ Q i . i-. i-. i-. i-. i-. i-. i-. i-. i-. i . i . CA i . 3 (O (O co O M- O W N CA O -p qqt qqt LO O O (O LO r- LO co (O LO (2) cd M' CO NLO 00 N (O CO N O N CO I-- CA - CA p W r r L r- o N C 0 U C) LO r- qqt LO (D LO N r- (O L N r- 00 (O O LO f M co "p Q' (O N N LO 00 00 N O qt LC N ' N co W co o N 2 co H rn O o co W O O O O N 00 00 LO N ^ CO N ^ 00 ~ LO O LO M co M O 0 co r- 0') Z M M O M co U O O O LO N 00 LO I- N O r r co - N N U co LL W O L a U c 0 O^ LO ^ N N (O q-* CA O N co 0 0 Lo LO 00 CN 00 co LL O N N O M co LO 0) co ~(D (D O M 0 co - Nt r O CO co co CD O CO LO C W N N N W M r Q " .2 r- co 2 N I- m co p a co W ^ C Q CU CO ^ O CO I~ CO O O ^ co m co LL L o 0 \0 \0 C i N co O m m N N Mq-* M CO M co I-- co U) -7 U- Cq Cl) N L CO N M M~ O O (n N CA 0 00 M I~ M M (O N a) Z N Co N Q ~ J M^ CO L r- N CO L ^ I- N r- C \0 \0 m m r r ---t LO 00 O r O N M m O m o 0 0 O CC N I- M- co co Nt 0) Nt co cq co co co co m LO r- M M O O co O C N CA Z U M N I-- co N LO CO N I'- U O I- N N N U W Z co Q Q W D W Z (n W H U) IL W W UUw j ~ W Z W W W Z H U) U 5 W co 0 U) W D Z H U Z C) 2 z W m W a O z W Q z Q w O OU Q U Q Q' w O J W H Q d Ur 0 2 Q W Z co H W W Q Q d O U z w Z Fn ~ Z H J w~~wJ c 0 -1 QW w~0 a~ Q w 0 0 ~ = Q Q 0 w Z O 0 Q ~ U d ~ c 2 c ~0Qw~ O W (n 0 0)cu d = (Q c co w 2-1 O 0 °'0 76- z 0 w ~ Schedule 33.4.2 Financial Statements Exceptions : Cash Flow Statement is not in GAAP required format Gain/Loss on disposal excluded from operating income, included in non- operating section Schedule 33.4.3 Financial Statements No exceptions. Schedule 33.5 Asante Legal Proceedings No exceptions. Schedule 33.7 Asante Compliance With Law No exceptions. Schedule 33.9 Taxes No exceptions. Schedule 33.10 Medicare and Medicaid No exceptions. Schedule 33.11 Exclusion from Health Care Programs No exceptions. Schedule 34.3 No Violations; Approvals No exceptions. Schedule 40.9 EIB; Seniority ACH and Asante have agreed to credit each employee with the seniority they have earned at ACH. The PTO balance will be transferred to Asante except in those cases where the balance exceeds the Asante maximum balance, in that case the employee will be paid for the amount of excess PTO, plus 40 additional hours so they can continue to accrue PTO at the Closing Date. The excess PTO will be paid on the last check from ACH. The extended illness benefit (EIB) balance of each employee will be transferred to Asante. The provisions of this Schedule 40.9 will control over any conflicting provision of Section 14.5 of the Affiliation Agreement. PDXDOCS:2009395.2 Schedule 34.3.2 No Violations; Approvals No exceptions. Schedule 34.4.2 Financial Statements No exceptions. Schedule 34.5 Legal Proceedings No exceptions. Schedule 34.6 Compliance with Law No exceptions. Schedule 34.7.1 Two Parcels of City Real Property to be conveyed to Ashland Community Healthcare Services EXHIBIT "A" PARCEL I: Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 3 P West along said East side-line, 202.00 feet to the northeast corner of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 09 P East along the west line of said Lot 70.0 feet to the northeast corner of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 99 P West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City. ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest corner of said tract; thence North along the west line thereof 115.0 feet to the northwest corner of said tract; thence East 142.00 feet to a point 115.00 feet North of the place of beginning; thence South 115.00 feet to the place of beginning. Being a part of Lot 6 of WIMER'S SUBDIVISION to the City of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Sims Address: 278 & 280 Maple St, Ashland, OR 97520 PARCEL V: Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Sims Address: 560 Catalina Dr, Ashland, OR 97520 Schedule 34.7.2 No exceptions other than an as yet undetermined amount between $40,000 and $70,000 owing to Val Swanson and Janice Swanson under a promissory note and deed of trust dated May 31, 1995, Recording No. 95-14482, assigned December 29, 1995, Recording No. 95-37618. This affects Parcel V (560 Catalina Dr., Ashland, OR 97520). The City of Ashland represents and warrants that the balance owing of approximately $40,000 will be paid to Val Swanson and Janice Swanson as of the Closing. Schedule 34.7.3 Leases from City of Ashland to Ashland Community Healthcare Services other than the City Real Property None. Schedule 34.8.1 Insurance None. Schedule 34.8.2 Insurance Policies in Full Force and Effect None. Schedule 34.10.1 Environmental Compliance No exceptions. Schedule 34.10.2 Environmental Notices No exceptions. Schedule 34.10.3 Underground Storage Tanks, Etc. No exceptions. Schedule 34.10.4 Environmental Reports Phase I environmental site assessment report for Ashland Community Hospital Parcel at 280 Maple Street, Ashland, Oregon, prepared by Baker Environmental, Medford, Oregon, dated November 24, 2003. WRITTEN CONSENT OF THE SOLE MEMBER OF ASHLAND COMMUNITY HEALTHCARE SERVICES AMENDED AND RESTATED ARTICLES OF INCORPORATION WHEREAS in connection with the affiliation between Ashland Community Healthcare Services (the "Corporation") and Asante ("Asante"), pursuant to the Affiliation Agreement, dated June 4, 2013 (the "Affiliation Agreement"), by and among the Corporation, Asante, the City of Ashland (the "City"), and the Ashland Community Hospital Foundation, the Corporation is required to adopt the Restated Articles of Incorporation, attached as Exhibit A (the "Restated Articles") and the Restated Bylaws, attached as Exhibit B (the "Restated Bylaws"); WHEREAS the Corporation's board of directors has directed that the Restated Articles. and Restated Bylaws be submitted for the approval of the City, as sole member of the Corporation, upon and subject to the Closing, as that term is defined in the Affiliation Agreement; NOW THEREFORE it is RESOLVED that, subject to and effective upon the Closing, the City, as sole member of the Corporation, hereby approves the adoption of the Restated Articles, in the form attached as Exhibit A, and approves the Restated Bylaws, in the form attached as Exhibit B. Dated: July 3 I, 2013 The City of Ashland, sole member David Kanner, City dministrator PDXDOCS:2008158.2 Exhibit A Restated Articles of Incorporation See attached. PDXDOCS:2008158.2 RESTATED ARTICLES OF INCORPORATION OF ASHLAND COMMUNITY HEALTHCARE SERVICES Pursuant to ORS 65.451 and ORS 65.437, the Board of Directors hereby amends and restates the Articles of Incorporation of Ashland Community Healthcare Services. ARTICLE I The name of the corporation is Ashland Comin-ruuiity Healthcare Services. Its duration shall be perpetual. This corporation is a public benefit corporation. ARTICLE 11 1. The corporation is organized and shall be operated exclusively for charitable, educational and scientific purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). In firrtherance of such purposes, the corporation is empowered to exercise all rights and powers conferred by the laws of the State of Oregon upon nonprofit corporations, including: a. To establish, own, operate, manage and maintain for charitable purposes, hospitals, and other health care services, arrangement for the provision of medical and surgical services, educational, and health care facilities and programs as may be deomed advisable for the advancement of health care and the betterment of the general health of the residents of Ashland, Oregon and the surrounding geographic service area; b, To provide scientific research, educational, charitable and such other activities, services and programs related to its health care facilities and services; C. To engage in other charitable works which are consistent with the .objectives of the corporation and the mission and values of Asante, an Oregon nonprofit corporation, as appropriate; anal d. To engage in any lawful activity for which corporations may be organized under the Oregon Nonprofit Corporation Act, provided that such activities (a) have been authorized by the corporation's board of directors; (b) are consistent with the foregoing purposes; and (c) are not inconsistent with the provisions of these restated articles of incorporation, Notwithstanding any other provision of these Articles, the corporation shall not cant' on any activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under section 501(c)(3) of the Code or (b) by a corporation contributions to which are deductible under section 170(c)(2) of the Code. 1 2. The corporation shall not carry on propaganda, or otherwise attempt to influence legislation, to such extent as would result in the loss of exemption under section 501(c)(3) of the Code, and the corporation shall not directly or indirectly participate in, or intervene in (including the publication or distribution of statements), any political campaign on behalf of or in opposition to any candidate for public office. 3. No part of the net earnings, income or assets of this corporation shall inure to the benefit of any person having a personal and private interest in the activities of the corporation, except that the corporation may pay reasonable compensation for services rendered and male payments and distributions in furtherance of the purposes set forth in this Article. ARTICLE III The sole member of the corporation shall be Asante, an Oregon nonprofit public benefit corporation. Asante shall have voting rights to the fullest extent allowed to the membership of nonprofit corporations under the Oregon Nonprofit Corporation Act. ARTICLE IV The corporation shall have no capital stock and no shares of stock in the corporation shall be issued. The corporation shall not engage in any activity which is prohibited under the Oregon Nonprofit Corporation Act, as it may be amended from time to time. The corporation shall not engage in any activity which would cause the corporation to be defined as a private foundation within the meaning of section 509(a) of the Code. ARTICLE V Upon. dissolution of the corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the corporation, dispose of all of the assets of the corporation to Asante, its sole corporate member, provided Asante is still in existence and qualifies as an exempt organization under the Code. If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity which is organized and operated exclusively for charitable, educational, religious or scientific purposes and qualifies as an exempt organization tinder the Code (or the corresponding provision of any future United States Internal Revenue Law). AR'T'ICLE VI No director or uncompensated officer shall be personally liable to the corporation or its members for monetary damages for conduct as a director or officer, provided that this Article shall not eliminate the liability of a director or officer for any act or omission for which such elimination of liability is nut permitted under the Oregon Nonprofit Corporation Act (the "Act"). No amendment to the Act that further limits the acts or omissions for which elimination of liability is permitted shall affect the liability of a director or uncompensated officer for any act or omission which occurs prior to the effective date of the amendment. 2 ARTICLE VII The corporation may indemnify to the fullest extent not prohibited by law any person who is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative, investigative, or other (including an action, suit or proceeding by or in the right of the corporation), by reason of the fact that the person is or was a director or officer, employee or agent of the corporation or a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the corporation, or serves or served at the request of the corporation as a director, officer, employee or agent, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust or other enterprise. This Article shall not be deemed exclusive of any other provisions for indemnification or advancement of expenses of directors, officers, employees, agents and fiduciaries included in any statute, bylaw, agreement, general or specific action of the Board of Directors or other document or arrangement. ARTICLE VIII The power to alter., amend, restate or repeal the Articles of Incorporation and Bylaws of the corporation shall be vested exclusively by the affirmative action of the sole member of the corporation, provided that such alternation, amendment, restatement or repeal has been proposed or concurred in by a majority of the corporation's Board of Directors at a board meeting called for that purpose. ARTICLE IX The name and address of the corporation's registered agent is Asante, c/o Chief Administrative and Finance Officer, 2650 Sisk.iyou Blvd., Medford, OR 97504. ARTICLE X The corporation shall be managed by a Board of Directors. The Board of Directors shall consist of the same individuals as those then currently serving on the Board of Directors of the corporation's sole member, Asante. These Restated Articles of. Incorporation supersede the Articles of Incorporation currently on file with the Secretary of State and all amendments and supplements thereto, DATED: , 2013 ASHLAND COMMUNI'T'Y HEALTHCARE SERVICES Chair of the B and of Directors 3 CITY OF ASHLAND L:LZ a or 4 Exhibit B Restated Bylaws See attached. PDXDOCS:2008158.2 RESTATED BYLAWS OF ASANTIE ASHLAND COMMUNITY HOSPITAL August 1, 2013 ARTICLE I THE CORPORATION IN GENERAL 1.1 NAME AND- (DESCRIPTION. The name of the corporation shall be Asante Ashland Community Hospital ("AACIT' or "Corporation"). It is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. It is part of the Asante Health System ("Asante" or the "System"). 1.2 PURPOSES AND MISSION. 1.2.1 Purposes, The purposes for which the Corporation is organized and operated shall be as provided in its Articles of Incorporation, as restated or amended. 1.2.2 Mission. AACH exists to provide quality healthcare services in a compassionate manner; valued by the communities it serves. 1.3 LOCATION. The principal office of the Corporation shall be located at 280 Maple Street, Ashland, OR 97520. ART, ICLE IN M n 1MIEH 2.1 MEMBER. The sole Member of the Corporation is Asante. Asante is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. 2.2 AC'T'IONS BY MIEMBIEI~. Unless a greater number is required by its articles of incorporation, by its bylaws or by law, Asante may act, in its capacity as sole Member of AACH, through Asante's Board of Directors, either by a majority vote at a meeting at which a. quorum is present or by a consent without a meeting or in any other manner authorized in the Bylaws of Asante, as restated or amended. 23 POWERS OF THE MEMBER. In addition to all matters required by the Articles of Incorporation or other provisions of these Bylaws which are required to be approved by Asante, Asante shall at all tines have voting rights to the fullest extent allowed to the membership of nonprofit corporations under the Oregon Nonprofit Corporation Act. Without limitation of the rights of Asante as the sole Member of the Corporation, Asante shall have the right to take the following actions with respect to this Corporation and of any corporation or other legal entity of which this Corporation is the sole or controlling member or shareholder, except as otherwise noted below: Page 1- RESTATED BYLAWS OF AACH 23,1 To adopt or change the mission, philosophy, or values; 2.3,2 To amend, restate, or repeal the Articles of Incorporation or Bylaws; 2.3.3 As to this Corporation, to fix the number of Directors, elect the Board of Directors and to remove such Directors at any time with or without cause; 2.3A To appoint and remove the Chief Executive Officer ("CEO") of the hospital operated by the Corporation and to remove such CEO, with or without cause, after requesting a recommendation from the Board of Directors; 2.3.5 To approve the acquisition of assets, the incurrence of indebtedness or the lease, sale, transfer, assignment, or encumbering of the assets, if the amount involved in any such transaction is in excess of an amount specified from time to time by resolution of Asante, and to approve the sale or transfer of other property; 2.3.6 To approve the dissolution, liquidation, consolidation or merger with another corporation or entity; 2.3,7 To approve on a consolidated system-wide basis the annual operating and capital budgets and approval of any deviations from such budget in excess of an amount or percentage specified from time to time by resolution of Asante; and 23.$ To appoint the certified public accountants after receiving the recommendation of the Board of Directors and to receive the annual audit report from such accountants. 2A MEETINGS, An annual meeting of Asante, in its capacity as sole member of AACH, shall be held each year at such time and date as the Board of Directors of Asante shall determine. Special meetings of Asante, in its capacity as sole member of AACH, may be called by the Board of Directors of Asante, or by the President or the Chair of the Board of Directors of Asante. 2.5 NOTICE OF MEETING, Notice of meetings of Asante as the sole member of the Corporation may be called by Asante in accordance with Asante's Bylaws. Asante's Bylaws are hereby incorporated in their entirety into these Bylaws. ARTICLE III BOARD OF DIRECTORS OF THE CORPORATION 3.1 POWER OF THE BOARD OF DIRECTORS. The Board of Directors (sometimes referred to as "Board") of AACH shall exercise general governance and control of the nrission and business affairs of the Corporation and shall have and exercise all of the powers which may be exercised or performed by the Corporation under the laws of the State of Oregon and these Bylaws, with due regard for the powers reserved to the Member of the Corporation as stated in Article 11 of these Bylaws. Page 2 - RESTATED BYLAWS OF AACH 3.2 COMPOSITION O THE BOARD. The Board of Directors of the Corporation shall consist of the. same individuals as those then currently serving on. the Board of :Directors of its sole Member, Asante. The individuals who are ex-officio members of the Asante Board shall be ex-officio members of the Board of Directors of the Corporation. Appointment, term, or removal of a Board -of Director from the Corporation's sole Member, Asante, shall constitute appointment, term of office, or removal from such individual's service as a Board of Director of the Corporation without farther action. In the event a Member of the Board of Directors of Asante shall resign, such resignation shall automatically cause the resignation of such Board of Director as a Director of the Corporation. The terin of office of each Director of AACH shall be coextensive with his or her respective term of office as a Director of Asante. 3.3 VACANCIES. A vacancy on the Board of Directors shall exist upon the death or resignation of a Director, upon removal of any Director by Asante or upon the creation of an additional directorship. Asante may fill a vacancy on the Board of Directors in the manner and for the term provided herein for the election of Directors. 3.4 BOARD CHAIR. The Board Chair of the Board of Directors of the Corporation shall be the same individual then serving as the Board Chair of the Corporation's sole Member, Asante. Such Board Chair shall serve in such capacity so long as such individual is serving as the Board Chair of Asante. 3.5 ME, E`II'l NGS AND PRO CE>1DURA.)L RULE' S. 3.5.1 Annual Meeting. The annual meeting of the Board of Directors shall be held by December 31 of each year. Such meeting shall be held at the principal office of the Corporation or at such place as may be designated from time to time by the Board Chair. The purposes of the annual meeting shall include, without limitation, electing officers as herein provided and transacting such other business as shall be necessary or desirable. 3.5.2 Regular Meetings of the Board. Regular meetings of the Board of Directors shall occur at such times as the Board shall from tirne to time determine. 3.53 Special Meetings of the Board. Special meetings of the Board of Directors may be called as provided in the Asante Bylaws, which provide in Article III Section 10.5 as follows: "Special meetings of the Board for any purpose or purposes shall be called by the Secretary upon request. by the Board Chair; by the President and CEO, or by at least one-third (113) of the directors." 3.5.4 Notice of Bayard of Directors Meetings. Notice of all Board of Directors meetings shall be given in the same manner as provided in the Asante Bylaws, which provide in Article III, Section 103 as follows: "No notice shall be required of any regular or annual organization meeting which is held at a time and place fixed by these Bylaws or by a previous resolution of the Board. Notice of the time and place of any other meeting shall be delivered personally, communicated by electronic mail, telephone, or facsimile, or sent to each director by first-class mail, charges prepaid, addressed to the director at the director's address or contact number Page 3 - RESTATED BYLAWS OF AACH as it is shown on the records of the corporation, or, if it is not so shown on such records or is not readily ascertainable, to the place where the principal office of the corporation is located. If personally delivered or communicated by electronic mail, telephone, or facsimile, such notice shall be delivered at least twenty-four (24) hours prior to the meeting. If sent by mail, such notice shall be sent at least four (4) days prior to the meeting." 3.5.5 Quorum; Manneu• of Acting, A majority of the voting members of the Board shall constitute a quorum at any meeting of the Board. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. 3.5.6 Action by Unanimous Written Consent. Waiver of notice of any Board meeting or any action required to be taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the Directors entitled to vote with respect to the subject matter thereof. Any consent signed by all the Directors shall have the same effect as a unanimous vote. 3,53 Telephonic Meetings. Directors may participate in and act at any meeting of such Board by means of confcrence telephone, videoconference or similar communication equipment by which all persons participating in the meeting can speak to and hear each one another. Participation in such a meeting shall constitute presence ixi person at the meeting. ARTICLE IV AACH ADVISORY BOARD AACH will form an AACH Advisory Board of community mernbers which will consist of the persons on the Ashland Community Hospital Board of Directors immediately prior to the closing of the Affiliation Agreement dated June 4, 2013 among Asante, Ashland Community Healthcare Services, Ashland Community Hospital Foundation, and the City of Ashland ("Affiliation Agreement"), and shall include the current chief of the AACH Medical Staff, tip to two additional medical staff members and the Asante Chief Quality and Medical Officer. The Chair of the AACH Advisory Board shall become an ex-officio, voting member of the Asante Board and the AACH Board. The current Chief of the AACH Medical Staff shall become an ex-officio, non-voting member of the Asante Board and the AACH Board. The AACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at AACH, and for confirming credentialing and other decisions of the AACH Medical Staff. The AACH Advisory Board actions and. minutes will be submitted to the Asante Board, which shall have the final approval authority. The AACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee at a time to be determined by the Asante Board. Page 4 - RESTATED BYLAWS OF AACH ARTICLE V OFFICERS OF THE CORPORATION 5.1 OFFICERS, The officers of the Corporation shall be the same individuals serving as the officers of the Corporation's sole Member, Asante, without further action. In the event any such officer either resigns or is otherwise removed as an officer of Asante, such officer's office with the Corporation shall automatically terminate as of the effective date of their removal or resignation as an officer of Asante. The powers and duties of the officers shall be as set forth in the Asante Bylaws and as otherwise designated from time to time by the Board of Directors of Asante, to the extent consistent with law, the Articles of Incorporation of the Corporation and these Bylaws. ARTICLE VI COMMITTEES OF THE BOARD Except for the AACH Quality Committee and the AACH Appointment Committee, (i) the Corporation shall have the same committees, committee members, and coterminous committee meetings as those committees established by the Corporation's sole Member, Asante, (ii) the Corporation's committees shall meet conterininously with the Asante Board committees established pursuant to the Asante Bylaws, and (iii) the Board committee charters and other rules for functioning of such committees of the Corporation shall be identical to those of its sole Member, Asante. 6.1 Quality Committee for AACH, 6.1.1 General. The AACH Advisory Board, with additional members, will function as the Quality Committee for AACH, and will be the formal and official point of contact among the Board, management, and the Professional Staff of AACH. The Advisory Board/Quality Committee will review matters relating to medical services provided at AACH, including monitoring patient safety and quality of care as well as performance improvement matters. 6.1.2 Appointment. The AACH Advisory Board/Quality Committee will consist of members as provided in the Affiliation Agreement and these Bylaws. 6.1.3 Membership. The AACH Advisory Board/Quality Committee will consist of the following: 6.13.1 Up to AACH Advisory Board members who were previously Board members of Ashland Community Hospital; 6.1.3.2 The Cluef of Staff of the hospital; Page 5 - RESTATED BYLAWS OF AACH 6.1.33 The Immediate Past Chief of Staff or the Vice Chief of Staff of the hospital; 6.1,3,4 One (1) or two (2) additional at-large members of the Professional Staff of the hospital appointed by the ARCH Board Chair; 6.1.3.5 The senior executive of the hospital; 6.1.3.6 The Asante chief executive for quality; 6.1.3.7 The physician executive at the hospital as an optional .member; and 6.1.3.& Three (3) members of the AACH Board, one of whom is the ex officio member of the AACH Board as chair of the AACII Advisory Board/Quality Committee as defined in the Affiliation Agreement, and the two others are appointed by the AACII Board Chair. A member of the AACII Quality Committee who is not a Professional Staff' officer shall be designated as Chair. The AACII Board Chair and the President and CPO of Asante shall be notified of all meetings and invited to attend. The President and CEO of Asante may appoint a member of the management staff to serve as an interim member of the committee during the time the position of a manager designated to serve is unfilled. With respect to review of decisions made under the Fair Hearing Plata of the Professional Staff and other similar matters, any member of the Quality Committee who has actively participated in an investigation or prior decision of a matter before the Quality Committee shall decline to act with respect to that matter at the Quality Committee or upon review of the Quality Committee decision, and any committee member who has acted on a matter in a Quality Committee decision shall decline to act with respect to that matter on any review of such Quality Committee decision. If necessary, additional Board members may be appointed to the Quality Committee to serve with respect to a particular matter in order to constitute a quorum or otherwise constitute an appropriate body. 6.1.4 Meetings. The Quality Committee shall in general meet monthly and shall maintain a permanent record of its activities. The minutes of the Committee shall be presented to the Board at or before its next meeting. The Quality Committee shall conduct joint meetings with other System hospital Quality Committees as appropriate to conduct the committees' work at the System hospitals. 6.1.5 Roles and Responsibilities. 6.1,5.1 The Quality Committee shall receive reports from the Professional Staff of the affiliated hospital on matters relating to quality of patient care, shall evaluate the services Page 6 - RESTATED BYLAWS OF AACH being provided by the Professional Staff and by the departments of the hospital, shall review audits and performance improvement and other evaluation activities of the Professional Staff, and shall make recommendations to the Board concerning services provided in the hospital. 6.1.5.2 The Quality Committee shall oversee preparation for accreditation review of its hospital by the Det Norske Veritas Health Care Inc.'s (DNVHC) Accreditation Program, National Integrated Accreditation for Healthcare Organizations (NIAHO). 6.1.5.3 The Quality Committee shall work to develop a plan to evaluate quality of patient care, risk management, performance improvement, and clinical resource utilization at the hospital and shall monitor and report to the Board on the results. 6.1.5.4 The Quality Committee shall make recommendations to the Board, and with respect to appropriate staff appointment and privileges matters, to the Appointment Committee of the hospital, as to appointment, reappointment, and termination. of appointment to the appropriate Professional Staff; the granting, withholding, restricting and termination of privileges of appointees to the staff; the structure, procedures, and policies of the Professional Staff and the adoption, amendment, or repeal of the Professional Staff Bylaws; and actions on other matters arising from or with respect to the Professional Staff. Any recommendations of the Quality Committee with respect to matters involving adverse actions or the Fair Hearing Plan are advisory to the Board only. 6.1.5.5 The Quality Committee has authority to approve bylaws of the Auxiliary Service for its respective hospital and amendments thereto. 6.2 Appointment Committee for ARCH. 6.2.1 General. The Board delegates to the Appointment Committee of AACH the authority to make decisions for the hospital with respect to Professional Staff appointment, reappointment, and renewal or modification of clinical privileges in the circumstances set forth below. 6.2.2 Appointment and Membership. The Appointment Committee shall consist of the members of the Quality Committee for the hospital who are also voting members of the AACH Board. The Chair of the Quality Committee, if serving as a member of the Appointment Committee for the hospital, shall hold that position for such Appointment Committee. 6.2.3 Meetings. The AACH Appointment Committee shall in general meet monthly immediately following the AACH Advisory Board/Quality Committee meetings and shall maintain a permanent record of its activities. Two (2) members shall constitute a quorum. The minutes of each committee shall be presented to the Board at or before its next meeting. Page 7 - RESTATED BYLAWS OF AACH 6.2.4 Roles and Responsibilities. The Appointment Committee shall review and evaluate the qualifications and competence of applicant practitioners and shall make decisions with respect to initial appointment and reappointment to the associated Professional Staff, and renewal or modification of clinical privileges as provided in this section. Decisions approving the recommendations of a Medical Executive Committee shall be effective when made by the Appointment Committee of the related hospital, except as provided below. Any decision by the Appointment Committee that is adverse to an applicant shall be referred back to the Medical Executive Committee for fitrther evaluation. All affirmative appointment and privileges decisions of the Appointment Committee shall be presented to the Board at its next regular meeting for ratification as appropriate. Decisions as to appointment, reappointment, and renewal or modification of clinical privileges are not effective until the Board has acted on the matter if, at the time of initial appointment for new applicants or since the time of the most recent appointment or reappointment for continuing appointees, any of the following has occurred: 6,2.4.1 The applicant submits an incomplete application; 6.2.4.2 The Medical Executive Committee makes a final recommendation that is adverse or has limitations; 6.2.4.3 There is a current challenge or a previously successful challenge to licensure or registration; 6.2.4.4 The applicant has received an involuntary termination of medical staff membership at another organization; 6.2.4.5 The applicant has received an involuntary limitation, reduction, denial, or loss of clinical privileges; or 6,2.4,6 There has been either an unusual pattern. of, or an excessive number of, professional liability actions resulting in final judgments against the applicant. ARTICLE VII PROFESSIONAL. STAFF 7.1 ORGANIZATION AND FUNCTIONS. The physicians and other healthcare practitioners granted clinical privileges at ARCH shall be organized into a separate Medical Staff' or Professional Staff for ARCH ("ARCH Professional Staff'). The AACH Professional Staff is an integral part of AACH and Asante. Page 8 - RESTATED BYLAWS OF AACH The AACH Professional Staff shall review qualifications of physicians and other practitioners who provide care in AACH and shall make recommendations to the Board as to appointment and reappointment, privileges, and corrective action with respect to such physicians and other practitioners. The AACH Professional Staff shall effectively review and make recommendations to the Board with respect to quality and safety of the care, treatment and services provided in AACH, The AACH Professional Staff shall have Professional Staff Bylaws which provide for a Medical Executive Committee, departments, and other committees or groups as appropriate to carry out its functions, and which also provide for officers, department chairs, and other designated positions. The AACH Professional Staff Bylaws and amendments thereto shall become effective only after approval by the Board. The Bylaws shall provide a hearing and appeals process for matters affecting appointment, clinical privileges, and corrective action matters. The Board shall appoint to the AACH staff, in munbers not exceeding AACH's needs, qualified physicians and other practitioners. Appointment to the AACH staff is a prerequisite to the exercise of clinical privileges in AACH except as otherwise provided in the Professional Staff Bylaws. There shall also be provision for allied health professionals and other practitioners, Asante has established a Quality Committee for AACH as provided in Article V of the Asante Bylaws and Section 6.1 of these AACH Bylaws, and has also established an Appointment Committee for AACH in Section 6.2 of these AACH Bylaws and delegated to the Appointment Committee the authority to make decisions as to certain appointments as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. Authority granted to the President and CEO of Asante in Article VII of the Asante Bylaws and in the AACH Professional Staff Bylaws may be exercised by the President and CEO of Asante or by a member of management of the System designated by the President and CEO of Asante to exercise such authority with respect to AACH or a particular matter. 7.2 CONSTRUCTION OF BYLAWS, These Bylaws and the AACH Professional Staff Bylaws are intended to be compatible with the Asante Bylaws and should be construed accordingly, Should there be a conflict between the three sets of Bylaws or a question of interpretation as to the meaning of these Bylaws with respect to the AACH Professional Staff Bylaws, the Asante Bylaws, and the decision of the Asante Board shall be controlling. 7.3 ADIIMNISTIBATION AND CARE OF PATIENTS. Practitioners appointed to the AACH Professional Staff have the authority and responsibility for the admission and care of their patients, subject to the limitations contained in these Bylaws, and in the Bylaws and related documents of the AACH Professional Staff, and to any other conditions of their appointment, Page 9 - RESTATED BYLAWS OF AACH T4 APPLICATIONS AMID APPOINTMENT, Applications for appointment to the AACH Professional Staff shall be made in accord with the procedures established. by the AACH Professional Staff Bylaws. Applications shall be in writing and shall contain all material and relevant information concerning the applicant's education, licensure and qualifications, practice history, and previous hospital and other experience, The applicant has the responsibility to provide complete information, which shall be provided to the Medical Staff Office. After evaluation as provided in the AACH Professional Staff Bylaws, the recommendations of the Medical Executive Committee shall be submitted to Board committees as provided in Article V of the Asante Bylaws and Article V of these AACH Bylaws and to the Board. The privileges and appointment of each practitioner appointed to the staff shall be reviewed at least every two (2) years. 7.5 NOTICE OF APPOINTMENT. Staff appointees and applicants for staff appointment shall receive notice of the decision of the Board regarding the initial and later appointments and the clinical privileges granted in accord with the AACH Professional Staff Bylaws. 7.6 BEARING PROCEDURES, A Professional Staff applicant or appointee who has been the subject of an adverse action by the Medical Executive Committee or the Board regarding appointment, privileges, or corrective action and who files a request for hearing as provided in the AACH Professional Staff Bylaws shall be entitled to one hearing pursuant to the hearing procedures of those Bylaws, Written notice of the decision after the hearing shall be given to the practitioner. Hearing procedures shall be in accord with the provisions of the AACH Professional Staff Bylaws and the Health Care Quality Improvement Act of 1986, as amended. 7.7 BOARD REVIEW, The Board shall provide a process for an appeal of an adverse decision made at the AACH Professional Staff level in accord with procedures set forth in the AACH Professional Staff Bylaws, 7.8 SELECTION OF AACH PROFESSIONAL STAFF OFFICERS AND DEPARTMENT CI; MI1tS. The selection procedures, terms of office, and functiona of the AACH Professional Staff officers, Department Chairs, and other officials of the AACH Professional Staff shall be as detailed in the AACH Professional Staff Bylaws, 7.9 QUALITY OF PATENT CARE. The Quality Committee of AACH shall conduct a continuing review and appraisal of activities of assessing, preserving and assuring the quality of patient care within the hospital as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. The findings of the Quality Committee in its quality assurance activities shall be reported to the President and CEO of Asante and the Board. 7.10 SUMMARY SUSPENSION. The AACH Professional Staff Bylaws shall designate persons who have the authority to summarily suspend the clinical privileges of a practitioner for Page 10 - RESTATED BYLAWS OF AACH cause in accord with the procedures in the AACH Professional Staff Bylaws, The President and CEO of Asante or designee shall promptly give notice of such action in writing to the affected practitioner. Further proceedings with respect to summary suspension shall be as provided in the AACH Professional Staff Bylaws, 7.11 PHYSICIANS EMPLOYED BY AACH, 7.11.1 When any dispute arises between a physician employed by AACH and the hospital which is not covered by the terms of the physician's employment contract, it shall be governed by this section of these Bylaws. 7,11.2 A physician employed by AACH in an administrative capacity with no clinical duties does not need to be appointed to the staff. 7.113 A physician employed by the hospital who carries out both administrative and clinical responsibilities, or who functions with the AACH Professional Staff in. a capacity involving the physician's professional capacity may perform such clinical or professional functions only after appointment to the AACH Professional Staff. 7.11,4 Upon termination of the employment of a physician or other practitioner who has both administrative and clinical or professional responsibilities, the President and CEO of Asante or the senior executive of AACH shall determine whether the action is administrative only or whether it involves matters of professional competence or conduct, 7.11.5 If the President and CEO of Asante or the senior executive of AACH determines that the reason for termination involves the individual's professional competence or conduct, the President and CEO of Asante or the senior executive of AACH shall initiate corrective action as provided in the AACH Professional Staff Bylaws. 7.11.6 If the President and CEO of Asante or the senior executive of AM 14 determines that the reason for the action is administrative and does not involve the practitioner's professional competence, conduct, staff appointment or privileges, AACH shall follow its usual personnel policies. ARTIC1L,lE V II I VOTING UPON STOCK OF OTHER CORPORATIONS Subject to the reserved rights set forth in Section 2.3, and unless otherwise ordered by the Board of Directors and subject to the direction, if any, given by the Board of Directors, any officer of the Corporation shall have full power and authority on behalf of the Corporation to vote either in person or by proxy at any meeting of stockholders or members of any corporation, limited liability company, or other entity in which the Corporation may hold stock or other equity interests, otherwise have an opportunity to vote, and at such meeting may possess and Page 11 RESTATED BYLAWS OF AACH exercise all the rights and powers incident to the ownership of such stock or membership which, as the owner thereof, the Corporation might have possessed and exercised if present. ARTICLE IX CONFLICT OF INTEREST Any contract or other transaction of this Corporation in which a Director of the Corporation or a member of any Board committee or subcommittee has a direct or indirect interest, as defined in the Oregon Nonprofit Corporation Act and in the policies of this Corporation, is a conflict of interest transaction. A conflict of interest transaction shall be valid if (a) it is fair to the Corporation at the time it was entered into, (b) it is approved by the Board as provided below, and (e) it complies with the Oregon Nonprofit Corporation Act. If the material facts of the transaction and the Director's interest are disclosed or known to the Board, an approval as described in this paragraph is valid, notwithstanding the presence and participation (but not vote) of the interested Director. Authorization, approval or ratification of a conflict of interest transaction requires the affirmative. vote of a majority of the Directors on the Board who have no direct or indirect interest in the transaction, so long as there is more than one such Director. It is the policy of the Board that all. actual or possible conflicts of interest between AACH and a member of the Board or of a Board committee (to include a subcommittee) with respect to a matter to come before the Board or committee shall be reported to the Board Chair or the chair of the committee. The Chair shall raise the issue of such conflict at a meeting to consider the matter, and if it is determined at the meeting that a conflict exists, the member shall not vote with respect to such matter. The member may, however, participate in the discussion to provide information. Each member of the Board or of a Board committee shall report to the appropriate Chair any actual or possible conflict with respect to himself or herself, and also with respect to other members. A Chair who becomes aware of an actual or possible conflict shall raise the issue for consideration at the meeting. ARTICLE X INDEMNIFICATION 10.1 The Corporation shall defend, advance expenses on behalf of and indelnni.fy any present or former director or officer for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.2 The Corporation shall have the power to indemnify, defend and advance expenses on behalf of any present or former employee or agent of the corporation for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of Page 12 - RESTATED BYLAWS OF AACH conduct of the Oregon Nonprofit Corporation Act are met and provided. the actions' do not violate any other state or federal law. 10.3 The Corporation will only pay for or reimburse expenses in advance of the final disposition of a proceeding upon receipt of a written affirmation of the person's good faith belief that the person has met the standards of conduct of the Oregon Nonprofit Corporation Act and any other applicable law and a written undertaking in accord with such Act to repay the expenses advanced if it is ultimately determined that the person did not meet the standard of conduct. 10.4 Indemnification pursuant to the foregoing authority shall not be deemed to be exclusive of any other rights to which such person may be entitled under any other bylaw, an agreement, the Oregon Nonprofit Corporation Act or otherwise, 10.5 The repeal or modification of this article shall be prospective only and shall not adversely affect any right or protection that is based upon. this article and. pertains to an act or omission that occurred prior to the time of such repeal or modification. 10.6 The Attorney General of Oregon shall be given written notice at least twenty (20) days prior to the indemnifi cation of a director or an uncompensated officer. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall commence on October 1 and end on September 30 of each year. ARTICLE XII P.ROIMr ION AGAINST 831A)l G IN CORPORATE, EARNINGS No Member, Director, officer, employee, committee member or other person connected or affiliated with the Corporation, and no other private individual, shall receive at any time any of the net earnings or pecuniary profit from the operations of the Corporation, provided that the Corporation shall not prevent the payment to any such person of such reasonable compensation for services rendered to or for the Corporation in effecting any of its purposes as such compensation shall be fixed by the Board of Directors; and no such person or persons shall possess any proprietary right in or to the property of the Corporation or be entitled to share in the distribution of any of the corporate assets upon dissolution of the Corporation. ARTICLE XIH DISSOLUTION OF THE CORPORATION Upon dissolution of the Corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the Corporation, dispose of all of the assets of the corporation to Asante, its sole corporate Member, provided Asante is still in existence and qualifies as an exempt organization under the Internal Revenue Code of 1986, as amended (the "Code"). If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity that is Page 13 - RESTATED BYLAWS Of AACH organized and operated exclusively for charitable, educational, religious or scientific purposes and qualifies as an exempt organization under the Code (or the corresponding provision of any future United States Internal Revenue Law). ARTICLE T INVESTMENTS Except as otherwise provided in the Articles of Incorporation of the Corporation, the Corporation shall have the right to retain all or any part of any securities or property acquired by it in whatever manner, and to invest and reinvest any funds held by it, according to the judgment of the Board of Directors. ARTICLE XV EXEMPT ACTIVITIES Notwithstanding any other provisions of these Bylaws, no Member, Director, .officer, employee or agent of the Corporation shall take any action or carry out any activity by or on behalf of the Corporation not permitted to be taken or carried on without penalty by an organization exempt from federal taxation as now exists or as may hereafter be amended. ARTICLE XVl AWNDME TICS No amendment of these Bylaws shall be effective without the written approval of the Member. In addition, the Board of Directors shall regularly review these Bylaws and recommend any revisions to these Bylaws to conform to applicable requirements of state or federal law and/or accreditation standards. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 DEPOSITORIES. All funds of the Corporation.not otherwise employed shall be deposited from tune to time to-the credit of the Corporation in such banks, financial institutions, mutual funds or other depositories as the Board of Directors may designate. 17.2 CHECKS, All checks, drafts, or other orders for the payment of money issued in the name of the Corporation shall be signed by such officer or officers or person. or persons, whether or not officers of Corporation, in such manner as shall from. time to time be determined by the Board of Directors. 17.3 CONTRACTS AND INSTR>1JMENTS.. Subject to any limitations contained in these Bylaws or by resolution of the Board of Directors, all deeds, mortgages, bonds and other contracts or instruments of the Corporation shall be signed on behalf of the Corporation by the President/Chief Executive Officer of Asante or such other officers as may be designated by the Board from time to time. Page 14 - RESTATED BYLAWS OF AACH 17,4 AGENTS AND REPRESENTATIVES. The Board of Directors may appoint such agents and representatives of the Corporation with such powers and with the authority to perform such acts or duties on behalf of the Corporation as the Board of Directors may deem appropriate, consistent with these Bylaws, the Articles of Incorporation of the Corporation and applicable law. 17.5 ELECTRONIC COMMUNICATIONS. To the fullest extent permitted by law, the Member, Board of Directors and Board Committees may utilize electronic communications such as email, fax and other electronic communications for purposes of distributing notices of meetings, voting by ballot or otherwise, executing unanimous written consents as otherwise authorized by these Bylaws, and for all other legitimate purposes of communicating, v Dated this t day of August, 2013 M Secretary of the Corporation Page 15 - RESTATED BYLAWS OF AACH Secretary of State Corporation Division Registry Number: 510305-84 255 Capitol Street NE, Suite 151 Type: DOMESTIC` NONPROFIT CORPORATION Salem„OR 97310-1327 Phone;(503)986=2200 www.fili hgino regon. com Next Renewal Date:' 04/08/2014 ASHLAND COMMUNITY HEALTHCARE SERVICES 280 MAPLE ST ASHLAND OR:97520 Acknowledgment Letter The document you submitted was recorded as shown below. Please review and verify the information listed for accuracy. Document RESTATED ARTICLES Filed On Jurisdiction Nonprofit Type 08/01/2013 OREGON PUBLIC BENEFIT WITH MEMBERS Name ASHLAND COMMUNITY HEALTHCARE' SERVICES Principal Place of Business Registered Agent 280 MAPLE ST ASANTE ASHLAND OR 97520 C/O CHIEF ADMINISTRATIVE AND FINANCE OFF 2650 SISKIYOU BLVD MEDFORD OR 97504 Mailing Address President 280 MAPLE ST MARVIN HAAS ASHLAND OR 97520 280 MAPLE ST ASHLAND OR 97520 Secretary ALAN JEBARR 280 MAPLE ST ASHLAND OR 97520 JAIWED ACK 08/012013 Restated Articles of Incorporation:-.Nonprofit ;Secretary pfState •CarporaUOn Division 455 CaplotSt: NE, 6ude1751•Sale m; OR 87310.1327,hap:Itimw.FiSnglnOrepan.wm•Runs: (503)988-2200 t '.NOTE: This document shall have afi effective date and time of August 1, 2013;at 12:01-a.m. REGISTRY NUMBER: .5,030W AUG ®12013 OREGON cT In accordance Wth Oregon Revised Statute 184;410.182.490, the inlormatbn on thlsappiiradon is public rewnf: SECRETAIT EpcBrO~ omy. Wemust release this Information to all parties upon request and it will be posted on ow.webste.. Please. Typa or Print _Leglbly In Black Ink. Attach Additional Sheet If Necessary. V'. NAME OF CORPORATION: Ashland Community Healthcare Services. 2) NEW NAME OF THE CORPORATONC (If,changed) 3) ACOPY OF THE'RESTATED ARTICLES MUST BE ATTACHED. 4) CHECK THE APPROPRIATE STATEMENT: ❑ The restated articles contain amendments which do not r4quire.inembership approval -The date of the adoption of the amendments and restated articles was . These' amendments were duly adopted 6y the board ofdlreclois. e'resWt m amendments which require membership approvaL,The data of the adoption of the amendments and. restated W ITb articles was~~`•"' The vote of the members was as follows: Class(es),enfitled4o.vole Numbedof:members Number of votes entitled Numberofvotes, cast' Number of entitled.lo Vote to be cast, FOR votes cast AGAINST T 1 1 1 0, 'ti) EXE6011611 (Must be signed-by at least one officer or director.) By my signature, I declare as an authorized authority,:tha0thls filing has been. examined by me and Is. to (he best of my knowledge and belief, true, correct, and complete. Making false statements In this. document Is:agalnsf the law and may be penalized by.Ones, imprisonment or both. Signature: Printed Name: Title: John Stromberg Mayor; City of Ashland 5) EXECUTION: ..Signature:: ;Printed Name: Title: r 1 E ~ Anne Golden Board Chair, Ashland Community Healthcare Services CONTACT NAME: (To resolve ques9ons with this riletg.) Peter, FStoloft LEA _ _ -.T ~RequvedProcossop Fee.•. 350 1I - ~Praesi' Fees are nonietundaMs: Mew ma%echeck aMSta' t~ PHONE'NUMBER;(Induda area code.) "g pay Capora6on Dvkdn^ 503-992-6463 ,jFreecupes meara!zppeiFisnaln0ieaoncam usingMOeasiims NemeSearch program - r 32 Restated AnlCtee of Inwrporeuon, Nonprofit (04/12) RESTATED ARTICLES OF INCORPORATION OF ASHLAND COMMUNITY' HEALTHCARE SERVICES Pursuant to ORS 65A51: and ORS 65A37, the Board of Directors hereby amends and restates the Articles of Incorporation of. Ashland Community Healthcare Services. ARTICLE I The naive of the corporation is Ashland Community Healthcare Services. Its duration shall be perpetual. This corporation is a public benefit corporation. ARTICLE II 1: The corporation is organized and shall be operated exclusively for charitable, educational and scientific,purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the. "Code"). In furtherance of such purposes, the corporation is empowered'to exercise all rights and powers conferred by the laws of the State of Oregon upon nonprofit. corporations, including; a. To establish, own, operate, manage and maintain for charitable purposes, hospitals, and other health care services, arrangement for the provision of medical and surgical services, educational, and health care facilities and programs as may be deemed advisable for the advancement of health care and the betterment of the general health of the residents of Ashland, Oregon and the surrounding geographic service area; b. To provide scientific research, educational, charitable and. such other activities, services and programs related to its health care facilities and services; C. To engage in other charitable works which are consistent with the objectives of the corporation and the mission and values of Asante, an Oregon nonprofit corporation, as appropriate; and d. To engage in any lawful activity for which corporations may be organized under the Oregon Nonprofit; Corporation Act, provided that such activities (a) have been authorized by the corporation's board of directors; (b) are consistent with the foregoing purposes; and (c) are not inconsistent with the provisions of these restated articles of incorporation. Notwithstanding any other provision of these Articles, the corporation shall not carry on any activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under section 561(c)(3) of the Code or (b) by a corpordtion contributions to which are deductible under section 170(c)(2) of the Code. 1 The corporation'.shall,not carry.onfpropaganda, or otherwise attempt to influence legislation, to such.ektent:as would.result in the loss ofexemption under-section 501(c)(3) of the Code, and the corporation shall not directlyor indirectly participate in; or Intervene in f including the publication or distribution of statements);;any political campaign,onbehalf of or in opposition to any candidate forpublic office. 1. No part of the net.earnings, income or assets of this corporation shall inure to the benefit of any person having a personal and private"interest in the activities.of the corporation; except that the corporation'may pay reasonable compensation for services rendered, and make payments and distributions in,furiherance:of the purposes set forth in this Article. ARTICLE IIL The sole member, of the corporation shall'beAsante, an Oregon nonprofit`public benefit corporation. Asante shall have voting rights to the,fuliest extent allowed`to the memberst ip•of nonprofit corporations under the!Oregon Nonprofit Corporation Act. ARTICLE IV The corporation`shall have. no capital stock'and no shares of stock;in the corporation. shall be issued. The corporationshall_not engage,in any activity which is. prohibited under-the Oregon Nonprofit Corporation Act, as it may be amended from.time to time. The corporation shall not engage inany'activity which would cause the corporation to be defined as a private foundation within the meaning of section, 509(a) of the, Code:, ARTICLE V 'Upon dissolution-of the corporation, the Board.of Directors shall, afterpaying or, making provision for the payment of all of the liabilities of the corporation, dispose of all of the assetsrof the corporation to Asante,;its.sole corporate'member, provided,Asante isstill.in existence and qualifies as an exempt organization under the Code. lf, at the time of dissolution, Asante is not, an exempt.organization under the Code, or is no longer inexistence, the.Board of Directors shall dispose of all"the corporate'assets Wanentity wluclid's organized and operated exclusively for charitable, educational, religious or_scientific.purposes:and_qualifies as an exempt organization under the Code (or, the:corresponding provisionof any future United States IntemaFRevenue Law). ARTICLE VI No, director or uncompensated'officer.;shall 'be personally liable .to;the corporation or. its members for monetary damages for conduct as a director or officer, provided that this Article shall not eliminate the liability of a:director:orofficer for any-a. or:omission for which such elimination of.liability is not permitted: under the Oregon Nonprofit Corporation Act (the "Act"): No,amendment to the Act that further limits the acts or omissions-for which elimination of liability is permitted shall a5eet:the.liability of a director or:uncompensated officer for. any act or omission whichoccurs prior to. the effective date of the'amendment. 2 ARTICLE VII The corporation.may indemnify to thefiillest extent not prohibited by law any person who is made, or threatened to be made, a party to an action, suitor proceeding, whether civil, criminal, administrative, investigative, or other (including an action, suit or proceeding by or in the right of the corporation)i by reason of the fact that the person is or was a director or officer, employee or agent of the,corporation or a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect.to any employee benefit plan of the corporation, or serves or served, at the request of the corporation as a director, officer, employee or agent; or as a fiduciary of an employee. benefit plan, of another corporation, partnership, joint venture, trust or other enterprise. This Article shall not be deemed exclusive of any other provisions for indemnification or advancement of expenses of directors, officers, employees, agents and fiduciaries included in any statute, bylaw, agreement, general or specific action of the Board of Directors or other document or arrangement., ARTICLE' VIII,, The power to alter; amend, restate or repeal the Articles of Incorporation and.Bylaws of the corporation shall be vested exclusively by the affirmative action of the sole member of the corporation, provided that-such alternation, amendment, restatement or repeal has been proposed or concurred in by a majority of the corporation's Board of Directors at a board meeting called for that purpose. ARTICLE IX The name and address of the corporation's registered agent is Asante, c/o Chief Administrative and Finance Officer, 2650 Siskiyou.Blvd., Medford, OR 97504. ARTICLE X The corporation shall be managed by a Board of Directors. The Board' of Directors shall consist of the same individuals as those then currently serving on the Board of Directors of the corporation's sole member, Asante. These Restated Articles of Incorporation supersede the Articles of Incorporation currently on file with the Secretary, of State and all amendments and supplements thereto. DATED: 37al ox 2013 ASHLAND COMMUNITY HEALTHCARE SERVICES Chair of the M rd of Directors 3 CITY OF ASHLAND A a or 4 RESTATED BYLAWS OF ASANTE ASHLAND COMMUNITY HOSPITAL August 1, 2013 ARTICLE I THE CORPORATION IN GENERAL 1.1 NAME AND DESCRIPTION. The name of the corporation shall be Asante Ashland Community Hospital C'AACH" or "Corporation"). It is a nonprofit public benefit, charitable :corporation organized and existing under. the laws of the-State of Oregon. It is part of the Asante Health System C Asante" or the "System"). 1.2 PURPOSES AND MISSION. 1.2.1 P u r.p o's e 9. The purposes for. which the Corporation is organized and operated shall be as provided in its Articles of Incorporation, as restated or amended. :1.2.2 'Mission. AACH exists to provide quality healthcare services in a compassionate manner, valued by the communities it serves. 1.3 LOCATION. The principal office of the Corporation shall be located at 280 Maple Street, Ashland, OR 97520. ARTICLE II. MEMBER 2.1 MEMBER. The sole Member of the Corporation is Asante. Asante is a nonprofit public benefit charitable. corporation organized and existing under the laws of the State of Oregon: 2.2 ACTIONS BY MEMBER. Unless a greater number is required by its articles of incorporation, by its bylaws or by law, Asante: may act, in its, capacity as sole Member of ARCH; through Mante's Board of Directors, either by a majority vote at z meeting at which a quorum is. present or by A consent without a meeting, or in any other manner authorized in the Bylaws of Asante, as restated or amended. 2.3 POWERS OF THE MEMBER. In addition to all matters required by the Articles of Incorporation or other provisions of these Bylaws which are required to be approved by Asante, Asante shall at all times. have voting rights to the fullest extent allowed to the membership. of nonprofit corporations under the Oregon Nonprofit Corporation Act. Without lirnitation of the rights of Asante as the sole Member of the Corporation, Asante shall have the right to take the following actions with respect to this Corporation and of any corporation or other legal entity of which this Corporation is the sole or controlling member or shareholder, except as otherwise noted:below:. Page 1- RESTATED' BYLAWS OF AACH 2.3.1 'To, adopt or change the mission,' philosophy, or values; 2.3.2' To amend, restate; or repeal the Articles of Incorporation or Bylaws; 2.3.3 As to this Corporation, to fix the number of Directors, elect the Board of Directors and to remove such Directors at any time with or without cause; 2.3.4 To appoint and remove the Chief Executive Officer ("CEO") of the hospital operated by the Corporation ,and 'to 'remove such CEO, with or without cause, after requesting a recommendation from the Board of Directors; 2.3.5 To approve the acquisition of assets, the incurrence of indebtedness or the lease, sale, transfer, assignment, or encumbering of the assets, if the amount involved in any such transaction is in excess of an amount specified from time to time by resolution of Asante, and to approve the sale or transfer of other property; 2.16 To approve the dissolution, liquidation, consolidation or merger with another corporation or entity; 2.3.7 To approve on a consolidated system-wide basis the annual operating and capital budgets and approval of any deviations from such budget in excess of an amount or percentage specified from time to time by resolution of Asante; and 2.3.8 To appoint the certified . public accountants after receiving the recommendation of the Board of Directors and to receive the annual audit report from such accountants. 2.4 MEETINGS. An annual meeting of Asante, in its capacity as sole member of ARCH, shall be held each year at such time and date as-the Board of Directors of Asante shall determine. Special meetings of Asante, in its capacity as sole member of AACH, may be called by the Board of Directors of Asante; or by the President or the Chair of the Board of Directors of Asante. 2.5 NOTICE OF MEETING. Notice of meetings of Asante as the sole member of the Corporation may be called by Asante in accordance with Asante's Bylaws. Asante's Bylaws are hereby incorporated in their entirety into these Bylaws. ARTICLE III BOARD OF DIRECTORS OF THE CORPORATION 3.1 POWER OF THE BOARD OF DIRECTORS. The Board of Directors (sometimes referred to as "Board") of AACH shall exercise general governance and control of the mission and business affairs of the Corporation and shall have and exercise all of the powers which may be exercised or performed by the Corporation under the laws of the State of Oregon and these Bylaws, with due regard for the powers reserved to the Member of the Corporation as stated in Article II of these Bylaws. Page 2 - RESTATED BYLAWS OF AACH 3.2 COMPOSITION OF TILE BOARD. The Board of Directors of the Corporation shall consist of the same individuals as those then currently serving on the Board of Directors of its sole Member, Asante. The individuals who are ex-officio members of the Asante Board shalt be ex-officio members of the Board of Directors of the Corporation. Appointment, term, or removal of a Board of Director, from the Corporation's sole Member, Asante, shall constitute appointment, term of office, or removal from such individual's service as a Board of Director of the Corporation without further action. In the event a Member of the Board of Directors of Asante shall resign, such :resignation shall automatically cause the resignation of such Board of Director as a Director of the Corporation. The term of office of each Director of AACH shall be coextensive with his or her respective term of office as a Director of Asante. 3.3 VACANCIES. A vacancy on the Board of Directors shall exist upon the death or resignation of a Director, upon removal of any Director by Asante or upon the creation of an additional directorship. Asante may fill a vacancy on the Board of Directors in the manner and for the term provided. herein for the election of Directors. 3.4 BOARD CHAIR. The Board Chair of the Board of Directors of the Corporation shall be the same individual then serving as the-Board Chair of the Corporation's sole Member, Asante. Such Board Chair shall serve in such capacity so long as such individual is serving as the Board Chair ofAsante. 3.5 MEETINGS AND PROCEDURAL RULES. 3.5.1 Annual Meeting. The annual meeting of the Board of Directors shall be held by December 31 of each year. Such meeting shall be held at the principal office of the Corporation or at such place as may be designated from time to time by the Board Chair. The purposes of the annual meeting shall include, without limitation, electing officers as herein provided and transacting such other business as shall be necessary or desirable. 3.5.2 Regular Meetings of the Board. Regular meetings of the Board of Directors shall occur at such times as the Board shall from time to time determine. 3.5.3 Special Meetings of the Board. Special meetings of the Board of Directors may be called as provided in the Asante Bylaws, which provide in Article III Section 10.5 as follows: "Special. meetings of the Board for any purpose or purposes shall be called by the Secretary upon request by the Board Chair, by the President and CEO, or by at least one-third (1/3) of the directors." 3.5.4 Notice of Board of Directors Meetings. Notice of all Board of Directors meetings shall be given in the same manner as provided m the Asante Bylaws, which provide in Article HL Section 10.7 as follows: "No notice shall be required of any regular or annual organization meeting which is held at a time and place fixed by these Bylaws or by a previous resolution of the Board. Notice of the time and place of any other meeting shall be delivered personally, communicated by electronic mail, telephone, or facsimile, or sent to each director by first-class mail, charges prepaid, addressed to the director at the director's address or contact number Page 3 - RESTATED BYLAWS OF AACH as it is shown on the records of the corporation, or, if it is not so shown on such records or is not readily ascertainable, to the place where the principal office of the corporation is located. If personally delivered or communicated by electronic mail, telephone, or facsimile, such notice shall be delivered at least twenty-four (24) hours prior to the meeting. If sent by mail, such notice shall be sent at least four (4) days prior to the meeting." 3.5.5 Quorum; Manner of Acting. A majority of the voting members of the Board shall constitute a quorum at any meeting of the Board. The act of a majority of the directors present at any meeting at which a quorum is present shall'be the act of the Board. 3.5.6 Action by Unanimous Written Consent. Waiver of notice of any Board meeting or any action required to be taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of;Directors, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the Directors entitled to vote with respect to the subject matter thereof. Any consent signed by all the Directors shall have the same effect as a unanimous vote. 3.5.7 Telephonic Meetings. Directors may participate in and act at any meeting of such Board by means of conference telephone, videoconference or similar communication equipment by which all persons participating in the meeting can speak to and hear each one another. Participation in such a meeting shall constitute presence in person at the meeting. ARTICLE IV AACH ADVISORY BOARD AACH will form an AACH Advisory Board of community members which will consist of the persons on the Ashland Community Hospital Board of Directors immediately prior to the closing of the Affiliation Agreement dated June 4, 2013 among Asante, Ashland Community Healthcare Services, Ashland Community Hospital. Foundation, and the City of Ashland ("Affiliation Agreement'), and shall include the current chief of the AACH Medical Staff, up to two additional medical staff members and the Asante Chief Quality and Medical Officer. The Chair of the AACH Advisory Board shall become an ex-officio, voting member of the Asante Board and the AACH Board. The current Chief of the AACH Medical Staff shall become an ex-officio, non-voting member of the Asante Board and the AACH Board. The AACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at ARCH, and for confirming credentialing and other decisions of the AACH Medical Staff. The AACH Advisory Board actions and minutes will be submitted to the Asante Board, which shall have the final approval authority. The AACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee at a time to be determined by the Asante Board. Page 4 - RESTATED BYLAWS OF AACH ARTICLE V OFFICERS OF THE CORPORATION 5.1 OFFICERS. The officers of the. Corporation shall. be the .same individuals serving as the officers of the Corporation's sole Member, Asante, without further- action. In the event any such officer either resigns or.is otherwise: removed as an officer ofAsante, such officer's office with the Corporation, shall automatically; terminate as of the effective date of their removal or resignation ps an officer of Asante. The powers and duties of the officers shall be as set forth in the Asante Bylaws. and as otherwise designated from time to time by the Board of Directors of Asante, to the extent consistent. with law, the Articles of Incorporation of the Corporation and, these, Bylaws. ARTICLE VI. COMMITTEES OF THE BOARD Except for the AACH Quality Committee and the AACH Appointment Committee, (i) the Corporation. shall have the same committees, committee members, and coterminous committee meetings as those committees established by the Corporation's sole Member, Asante, (ii) the Corporation's committees shall meet conterminously with the Asante Board committees established pursuant to the Asante ;Bylaws, and (iii) the Board committee charters and. other rules for functioning of such committees of the Corporation shall be identical to those of its sole Member, Asante. 6.1 Quality Committee:for ARCH. 6.1.1 General. The AACH Advisory Board, with additional members, will function. as the Quality Committee for AACH,.and will'be the formal and official point of contact among the Board, management, and the Professional Staff of ARCH. The Advisory Board/Quality Committee will review matters relating to medical services provided at AACH, including monitoring patient safety and quality of care as well as performance improvement matters. 6:1.2 Appointment. The AACH' Advisory Board/Quality Committee will consist of members as provided in the Affiliation Agreement and these Bylaws. 6;1.3 Membership. The AACH Advisory Board/Quality Committee will consist of the following: 6.1.3.1.Up to AACH,.Advisory Board members who were previously Board.members of Ashland Community Hospital; 6.1.3.2 The Chief of Staff of the hospital; Page 5 - RESTATED BYLAWS Of AACH 6.1.33 The Immediate Past Chief of Staff or the Vice Chief of Staff of the hospital; 6.1.3.4 One (1) or two (2) additional at-large members of the Professional Staff of the hospital appointed by the AACH Board.Chair;, 6.13;5 The senior executive of.the'.hospital; 6.1.3:6 The Asante chief executive for quality- 6. fS7 -The physician executive at the hospital as an optional member;. and 6.1:3.8 Three (3) members of the,AACH Board, one of whom is the ex,officio member of the AACH' Board as chair of the AACH Advisory Board/Quality,Committee as defined. in the Afliation.Agreement, and the two•others are appointed by the. AACH Board Chair: A member of the AACH Quality Committee who is not a Professional Staff officer shall be designated as Chair. The AACH Board. Chair and the Presidentand CEO of Asante shall be notified of all ,meetings and invited to attend. The President and CEO of Asante. may appoint a member of "the management staff to serve as an interim member.of the committee during the. time the position of a manager designated to serve is unfilled. With respect to:review of decisions made under the Fair Hearing Plan of -the Professional Staff and other similar matters,;any member of the Quality Committee who has actively participated in an investigation or prior decision of a matter before the Quality Committee shall decline to act with respect to that matter at the Quality Committee. or upon review of the Quality Committee decision, and; any committee. member who has acted' on a matter in a Quality Committee decision shall decline to -act with respect to that -matter on, any review of such Quality Committee decision. if necessary, additional Board members may be appointed to the Quality Committee to serve with respect to a particular "matter in order to constitute a quorum or otherwise constitute an appropriate body. 6.1.4 Meetings. The. Quality Committee shah .in general :meet monthly and shall maintain a permanent record of its activities. The minutes of the Committee shall be presented'to the Board at or.before.its next meeting. The Quality Committee shall conduct joint.meetings with other System hospital Quality Committees as appropriate to conduct the committees' work at the System hospitals: 6.1.5 Roles and Responsibilities. 6.1.5.1 The Quality Committee shall receive reports from the Professional Staff of the affiliated hospital on.matters relating to quality of patient care, shall evaluate the services I Page6 - RESTATED BYLAWS OF AACH being provided by the Professional Staff and by the departments of the hospital, shall review audits and performance improvement and.other evaluation activities of the Professional Staff, and shall make: recommendations to the Board concerning services provided in the hospital. 6.1:5.2 The Quality Committee shall oversee preparation for accreditation review of its hospital by the bet Norske Veritas Health. Care Inc.'s (DNVHC) Accreditation Program, National Integrated Accreditation for Healthcare Organizations (NIAHO). 6.1.5.3 The Quality Committee shall work to develop a plan to evaluate quality of patient care, risk management, performance improvement, and clinical resource utilization at the hospital and shall monitor and report to the Board on the results. 6.1.5.4 The Quality Committee shall make recommendations to the Board, and with respect to appropriate staff appointment and privileges matters, to the Appointment Committee of the hospital, as to appointment, reappointment, and termination of appointment to the appropriate Professional Staff; the granting, withholding, restricting and termination of privileges of appointees to the staff; the structure, procedures, and policies of the Professional Staff and the adoption, amendment, or repeal of the Professional Staff Bylaws; and actions on other matters arising from or with respect to the Professional Staff. Any recommendations of the Quality Committee with respect to matters involving adverse actions or the Fair Hearing Plan are advisory to the Board only. 6.1.5.5 The Quality Committee has authority to approve bylaws of the Auxiliary Service for its respective hospital and amendments thereto. 6.2 Appointment Committee for.AACH. 6.2.1 General. The Board delegates to the Appointment Committee of AACH the authority to make decisions for the hospital with respect to Professional Staff appointment, reappointment, and renewal or modification of clinical privileges in the circumstances set forth below. 6.2.2 Appointment and Membership. The Appointment Committee shall consist of the members of the Quality Committee. for the hospital who are also voting members of the AACH .Board. The Chair of the Quality Committee, if serving as a member of the Appointment Committee for the hospital, shall hold that position for such Appointment Committee. 6.2.3 Meetings. The AACH Appointment Committee shall-in general meet monthly immediately following the AACH Advisory Board/Quality Committee meetings and shall maintain a permanent record of its activities. Two (2) members shall constitute a quorum. The minutes of each committee shall be presented to the Board at or before its next meeting. Page 7 - RESTATED BYLAWS OF AACH 6.2.4 Roles and Responsibilities. The, Appointment Committee shall review and evaluate the qualifications and competence of applicant practitioners and shall make decisions with respect to initial appointment and reappointment to the associated Professional Staff, and renewal or modification of clinical privileges as provided in this section. Decisions approving the recommendations of a Medical Executive Committee shall be effective when made by the Appointment Committee of the related hospital, except as provided below. Any decision by the Appointment Committee that is adverse to an applicant shall be referred back to the. Medical Executive Committee for further evaluation. All affirmative appointment and privileges decisions of the Appointment Committee shall be presented to the Board at its next regular meeting for ratification as appropriate. Decisions as to appointment, reappointment, and renewal or modification of clinical privileges are not effective until the Board has acted on the matter if, at the time of initial appointment for new applicants or since the time of the most recent appointment or reappointment for continuing appointees, any of the following has occurred: 6.2.4.1 The applicant submits an incomplete application; 6,2.4.2 The Medical Executive Committee makes a final recommendation that is adverse or has limitations; 6.2.4.3 There is a current challenge or a previously successful challenge to licensure or registration; 6.2.4.4 The applicant has received an involuntary termination of medical staff membership at another organization; 6.2.4.5 The applicant has received an involuntary limitation, reduction, denial,. or loss of clinical privileges; or 6.2.4.6 There has been either an unusual pattern of, or an excessive number of, professional liability actions resulting in final judgments against the applicant.. ARTICLE VII PROFESSIONAL STAFF 7.1 ORGANIZATION AND FUNCTIONS. The physicians and other healthcare practitioners granted clinical privileges at ARCH shall be organized into a separate Medical Staff or Professional Staff for AACH C AACH Professional Staff'). The AACH Professional Staff is an integral part of AACH and Asante. Page 8 - RESTATED BYLAWS OF AACH The AACH Professional Staff shall review qualifications of physicians and other practitioners who provide care in AACH and shall make recommendations to the Board as to appointment and reappointment, privileges, and corrective action with respect to such physicians and other practitioners. The AACH Professional Staff shall effectively review and make recommendations to the Board with respect to quality and safety of the care, treatment and services provided in-AACH. The AACH Professional Staff shall have Professional Staff Bylaws which provide for a Medical Executive Committee, departments, and other committees or groups as appropriate to carry out its functions, and which also provide for officers; department chairs, and other designated positions. The AACH Professional Staff Bylaws and amendments thereto shall become effective only after approval by the Board. The Bylaws shall provide a hearing and appeals process for matters affecting. appointment, clinical privileges, and corrective action matters. The Board shall appoint,to the AACH staff, in numbers not exceeding AACH's needs, qualified physicians and other practitioners. Appointment to the AACH staff is a prerequisite to the exercise of clinical privileges in AACH except as otherwise provided in the Professional Staff Bylaws. There shall also be provision for allied health,professionals and other practitioners. Asante has established a Quality Committee for AACH as provided in Article V of the Asante Bylaws and Section 6.1 of these AACH Bylaws, and has also established an Appointment Committee for AACH in Section 6.2 of these AACH Bylaws and delegated to the Appointment Committee the authority to make decisions as to certain appointments as provided in Article V of the Asante Bylaws and Article VI of these ARCH Bylaws. Authority granted to the President and CEO of Asante in Article VII of the Asante Bylaws and in the ARCH Professional Staff Bylaws may be exercised by the President and CEO of Asante or by a member of management of the System designated by the President and CEO of Asante to exercise.such authority with respect to AACH or a particular matter. 7.2 CONSTRUCTION OF BYLAWS. These Bylaws and the AACH Professional Staff Bylaws are intended to be compatible with the Asante Bylaws and should be construed accordingly. Should there be a conflict between the three sets of Bylaws or a question of interpretation as to the meaning of these Bylaws with respect to the AACH Professional Staff Bylaws, the Asante Bylaws, and the decision of the Asante Board shall be controlling. 7.3 ADMINISTRATION AND CARE OF PATIENTS. Practitioners appointed to the AACH Professional Staff have the authority and responsibility for the admission and care of their patients, subject to the limitations contained in these Bylaws, and in the Bylaws and related documents of the AACH Professional Staff, and to any other conditions of their appointment. Page 9 - RESTATED BYLAWS Of AACH 7.4 APPLICATIONS AND APPOINTMENT. Applications for appointment to the ARCH Professional Staff shall be made in accord with the procedures established by the AACH Professional Staff Bylaws. Applications shall be in writing and shall contain all material and relevant information concerning the applicant's education, licensure and qualifications, practice history, and previous hospital and other experience. The applicant has the responsibility to provide complete information, which shall be provided to the Medical Staff Office. After evaluation as provided in the AACH Professional Staff Bylaws, the recommendations of the Medical Executive Committee shall be submitted to Board committees:as provided in Article V of the Asante Bylaws and Article V of these ARCH Bylaws and to the Board.. The privileges and appointment of each practitioner appointed to the staff shall be reviewed at least every two (2) years. 7.5 NOTICE OF APPOINTMENT. Staff appointees and applicants for staff appointment shall receive notice of the decision of the Board regarding the initial and later appointments and the clinical privileges granted in accord with the AACH Professional Staff Bylaws. 7.6 HEARING PROCEDURES. A Professional Staff applicant or appointee who has been the subject of an adverse action by the Medical Executive: Committee or the Board regarding appointment, privileges, or corrective action and who files a request for hearing as provided in the AACH Professional Staff Bylaws shall be entitled to one hearing pursuant to the hearing procedures of those Bylaws. Written notice of the decision after the hearing shall be given to the practitioner. Hearing procedures shall be in accord with the provisions of the AACH Professional Staff Bylaws and the Health Care Quality Improvement Act of 1986, as amended. 7.7 BOARD REVIEW. The Board shall provide a process for an appeal of an adverse decision made at the AACH Professional Staff level in accord with procedures set forth in the AACH Professional Staff Bylaws. 7.8 SELECTION OF AACH PROFESSIONAL STAFF OFFICERS AND DEPARTMENT CHAIRS. The selection procedures, terms of office, and functions of the AACH Professional Staff officers, Department Chairs, and other officials of the AACH Professional Staff shall be as detailed in the AACH Professional Staff Bylaws. 7.9 QUALITY OF PATIENT CARE. The Quality Committee of AACH shall conduct a continuing review and appraisal of activities of assessing, preserving and assuring the quality of patient care within the hospital as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. The findings of the Quality Committee in its quality assurance activities shall be reported to the President and CEO of Asante and the Board, 7.10 SUMMARY SUSPENSION. The AACH Professional Staff Bylaws shall designate persons who have the authority to summarily.suspend the clinical privileges of a practitioner for Page 10- RESTATED BYLAWS OF AACH cause in accord with the procedures in the ARCH Professional Staff Bylaws. The President and CEO of Asante or 'designee shall 'promptly .give notice of such action m writing to the affected practitioner. Further-proceedings with respect to summary .suspension `shall be as provided in the. AACH'Professional Staff Bylaws. 7.1.1 PHYSICIANS EMPLOYED: BY ARCH. 7.1,1,1 When any dispute arises, between a physician employed by ARCH and the hospital which is not covered by the terms, of the physician's employment contract, it shall be governed by this section of these Bylaws. 7.11:2 A physician employed by ARCH in an administrative capacity with no clinical duties does not needto be appointed to the staff. 7.11:3 A physician employed by the,hospital who carries out both administrative and clinical responsibilities, or who, functions with the.AACHProfessional Staff in a-capacity involving the physician's professional capacity may perform such clinical or professional functions only after appointment to.the AACH:Professional Staff. 7:11.4 Upon termination of the employment of a physicianor other practitioner who has both administrative and.clinical or professional responsibilities, the President and CEO of Asante or the senior executive of ARCH shall determine whether, the action is administrative only or whether it inyolvesmatters of professional competence or conduct. 7.11.5 If the :President and CEO' of Asante or the senior executive of AACH determines that the reason for termination involves the individual's 'professional competence or conduct, the President and CEO ofAsante or thefsemor executive of AACH shall initiate corrective action as provided in the AACH'Professional Staff-Bylaws. 7.11:6 If the President and CEO' of Asante or the senior executive of AACH detemunes that the reason for the action is administrative and does not involve the practitioner's professional competence; conduct, staff appointment or privileges, .AACH shall follow its usual personnel policies. ARTICLE'V III VOTING UPON STOCK OF OTHER CORPORATIONS Subject to the reserved rights set forth in Section 2.3, and unless otherwise ordered by the Board of Directors and subject to the direction, if any, given `by the Board of Directors, any officer of the Corporation. shall have full power and authority on behalf of the Corporation to vote either in person or by proxy at any meeting of stockholders or members of any, corporation, limited liability company, or other entity in which the Corporation may hold stock or other equity interests, otherwise have an opportunity -to "vote, and at such meeting may possess and Page 11- RESTATED BYLAWS OF AACH exercise all the rights and powers incident to the ownership of such stock or membership which, as the owner thereof; the, Corporation might have possessed and ,exercised, if present. ARTICLE IX CONFLICT OF INTEREST Any, contract or other transaction of this Corporation in Which a Director of the Corporation or a member of any Board committee.or subcommittee has a direct or indirect interest, as defined in the Oregon Nonprofit Corporation Act and in the policies of this Corporation, is a conflict of-interest transaction. A conflict of interest transaction shall be valid if:(a).itis fair to the Corporation at, the time it was:entered into, (b) it is approved by the Board as;provided below, and (c) it complies with the Oregon Nonprofit Corporation Act, If the :material facts of the transaction and the Director's interest are disclosed or known to the Board, an approval as described in this paragraph is valid, ;notwithstanding the presence and participation (but not vote) of the interested Director. Authorization, approval or ratification. of a conflict of.interest transaction requires the affirmative vote of a majority of the Directors on the Board who have no direct or indirect interest in the transaction, so long as there is more than one such Director. It is the policy of the Board that all actual or possible conflicts of interest between AACH; and a :member of the Board or of a Board committee (to include a subcommittee) with respect to a matter to come before the Board or committee shall be reported to the Board Chair orthe chair of the committee., The Chair shall raise the issue of such conflict at a meeting to consider the matter; and if it is determined at the meeting that a conflict exists, the member shall not vote, with respect to such matter., The member may, however; participate in the discussion to provide information. Each member of the Board or of a Board committee shall report to the appropriate Chair any actual or possible conflict with respect to himself or herself; and also with respect to other ,members. A Chair who becomes aware of an actual or possible conflict shall raise the issue for consideration at the meeting. ARTICLE X :INDEMNIFICATION 10. 1, The Corporation shall defend, advance expenses on behalf of and indemnify any present or former director or officer for' expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred, by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit-Corporation Act are met,and provided the actions do.not violate any other state or federal. law. 10.2 The Corporation shall,have, the power to indemnify; ;defend and advance expenses on behalf,of any presenror former employee or agent of the corporation: for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of Page 12 - RESTATED BYLAWS OF AACH conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.3 The Corporation will. only pay for or reimburse expenses in advance of the final disposition of a proceeding upon receipt of a written affirmation of the person's good faith belief that the person has met the standards of conduct of the Oregon Nonprofit Corporation Act and any other applicable law and a written undertaking in accord with such Act to repay the expenses advanced if it is ultimately determined that the person did not meet the standard of conduct. 10.4 Indemnification pursuant to the foregoing authority shall not be deemed to be exclusive of any other rights to which such person may be entitled under any other bylaw, an agreement, the Oregon Nonprofit Corporation Act or otherwise. 10.5 The repeal or modification of this article shall be prospective only and shall not adversely affect any right or protection that is based upon "this article and pertains to an act or omission that occurred prior to the time of such repeal or modification. 10.6 The Attorney General of Oregon shall be given written notice at least twenty (20) days prior to the indemnification of a director or an uncompensated officer. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall commence on October 1 and end on September 30 of each year. ARTICLE XUi PROHIBMON AGAINST SHARING IN CORPORATE EARNINGS No Member, Director, officer, employee, committee member or other person connected or affiliated with the Corporation, and no other private individual, shall receive at any time any of the net earnings or pecuniary profit from the operations of the Corporation, provided that the Corporation shall not prevent the payment to any such person of such reasonable compensation for services rendered to or for the Corporation in effecting any of its purposes as such compensation shall be fixed by the Board of Directors; and no such person or persons shall possess any proprietary right in or to the property of the Corporation or be entitled to share.in the distribution of any of the corporate assets upon dissolution of the Corporation. ARTICLE XIII DISSOLUTION OF THE CORPORATION Upon dissolution of the Corporation, the Board of Directors shall, after paying or making provision for the payment of all of-the liabilities of the Corporation, dispose of all of the assets of the corporation to Asante, its sole corporate Member, provided Asante is still in existence and qualifies as an exempt organization under the Internal Revenue Code of 1986, as amended (the "Code"). If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity that is Page 13 - RESTATED BYLAWS OF AACH organized and :operated exclusively for charitable, educational,.religious or scientific purposes and qualifies as anexempt organization under the Code (or the corresponding provision of an y future United States..Internal Revenue Law). ARTICLE XIV INVESTMENTS -Except as otherwise provided. in the Articles of Incoiporatioh of the Corporation, the Corporation shall have the right to4etain all or any part of any securities or property acquired by it in whatever manner, and to `invest and reinvest any funds. held by it, according to the judgment of the Board of Directors. ARTICLE XV EXEMPT ACTIVITIES Notwithstanding any other provisions of these Bylaws, no Member, Director, officer, employee or agent of the Corporation shall take any action or :carry out any activity by,or on`behalf of the Corporation not permitted to be taken or carried on without penalty by an organization exempt from federal taxation as now exists or as may hereafter be amended. ARTICLE XVI AMENDMENTS No amendment of these Bylaws shall be effective without the written approval of the Member. in addition, the Board of.Directors shall regularly review these Bylaws, and recommend any revisions to these Bylaws to conform to applicable requirements of state or federal law and/or accreditation standards.. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 DEPOSITORIES. All fririds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, financial institutions, mutual funds or other.depositories as the Board of-Directors may designate. 17.2 CHECKS. All checks, drafts, or other orders for the payment of money issued in the name of-the Corporation shall be signed by such officer or officers or person or persons, whether or not officers of Corporation, in such mariner as shall: from, time to time be determined by the Board of Directors. 173 CONTRACTS- AND INSTRUMENTS. Subject to any limitations contained in these Bylaws or by resolution of the 'Board of Directors, all deeds, mortgages, bonds and othencontracts or instruments of the Corporation shall, be signed on behalf of the Corporation by the President/Chief Executive Officer of-Asante or such. other officers as may be designated by the Board from time to time. Page 14 -RESTATED BYLAWS OF AACH 17.4 AGENTS AND REPRESENTATIVES. The Board of Directors may appoint such agents and representatives of the Corporation with such powers and with the. authority to perform such acts or duties on behalf of the Corporation. as the Board of Directors may deem appropriate, consistent with these Bylaws, the Articles of Incorporation of the Corporation and applicable law. 17.5 ELECTRONIC COMMUNICATIONS. To the fullest extent permitted by law, the Member, Board of Directors and Board Committees may utilize electronic communications such as email, fax and other electronic communications for purposes of distributing' notices of meetings, voting by ballot or otherwise; executing unanimous written consents as otherwise authorized by these Bylaws, and for all other legitimate purposes of communicating. i t 8 V Bated this day of August; 2013 Secretary of the Corporation Page 15 - RESTATED BYLAWS OF AACH RESOLUTIONS OF THE BOARD OF DIRECTORS OF ASHLAND COMMUNITY HEALTHCARE SERVICES -July 24, 2013 RESTATED ARTICLES 'OF INCORPORATION AND RESTATED.BYLAws WHEREAS in connection with the affiliation between Ashland Community Healthcare Services (the "Corporation") and Asante ("Asante"), pursuant to the Affiliation Agr eement, dated June 4, 2013 (the "Affiliation Agreement"), by and among the Corporation, Asante, the City of Ashland (the "City'''), and the Ashland Community Hospital Foundation, the Corporation is required to adopt the 'Restated Articles of Incorporation, attached as "Exhibit A, And the.Restated Bylaws, attached as;Exhibit.B; NOW THEREFORE it is RESOLVED that, subject to and effective upon the Closing, as that term is defined 'in. the _Affiliation Agreement,'the Board hereby approves the Restated Articles of Incorporation; attached as Exhibit .A and directs that,they be submitted for approval by the City as the Corporation's sole member, and recommends' that the City approve: hem; and RESOLVED FURTHER that, subject to and effective upon Closing, the Board hereby approves the Restated Bylaws, attached as Exhibit B. EXECUTION RESOLVED that upon Closing, Anne Golden, 'as Board Chair of the Corporation, Doug Diehl, M.D.., as,Board Chair Elect of the Corporation, and Alan.DeBoer, as Secretary of the Corporation, are each individually authorized, to execute the Restated Articles of Incorporation and Restated.Bylaws on behalf of the.Corporation. ASANTE MISSION STATEMENT WHEREAS pursuant to Section 2.3 of the Affiliation Agreement; the Corporation has agreed 'to adopt Asante's mission statement, effective upon Closing; NOW THEREFORE it is RESOLVED that, subject to and effective upon the Closing, the Corporation hereby adopts the mission statement of Asante, in the form attached as Exhibit C. PDXDOCS:2008157.2 FURTHER ACTIONS RESOLVED that the officers of the Corporation be, and each of them acting alone-is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary or advisable to (i) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the approval, execution, and filing of the Restated Articles of Incorporation and Restated Bylaws, and (ii) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. The undersigned, in his capacity as. Secretary of the Corporation, certifies that the above resolutions were duly adopted by the Corporation's board of directors, at a meeting of the board held on July 24, 2013. Alan DeBoer, Secretary PDXDOCS:2008157.2 Exhibit.A Restated Articles of Incorporation. See attached. PDXDOCSt2008157.2 Exhibit B Restated Bylaws See attached. PDXDOCS:2008157.2 'RESTATED BYLAWS OF ASAN.TE ASHLAND COMMUNITY HOSPITAL August Y, 2013 ARTICLE 1 THE CORPORATION IN GENERAL 1.1 NAME AND DESCRIPTION. The name of the corporation. shall be Asante Ashland Community Hospital.("AACH" or "Corporation"). It is a nonprofit public benefit, charitable corporation.organized and existing under :the laws of the.State of Oregon. It is part of the Asante Health. System CAsainte"or the "System"'). 1.2 PURPOSES AND MISSION. 1.21 P u r. p as e s . The purposes for. which the Corporation is organized, and operated shall be as provided in its Articles of Incorporation, as restated or amended. 12.2 '.Mission. AAC14 exists to provide quality healthcare services in a compassionate manner, valued;by the communities it.serves. 1.3 LOCATION. The principal office of the Corporation, shall be located at 280 Maple Street, Ashland, OR 97520. ARTICLE II MEMBER 2.1 MEMBER. The sole Member of the Corporation is Asante. Asante is a nonprofit public benefit' charitable corporation organized and existing under the laws of the State of Oregon. 2.2 ACTIONS BY MEMBER. Unless a,greater.number is required by its articles of incorporation, by its bylaws or by law, Asante may act, in its, capacity as sole Member of ARCH, through Asante's Board of Directors, either by a. majority vote at ,a meeting at which a,quorum is, present or. by a, consent without ,a meeting. or in any other manner authorized in the Bylaws of Asante, as restated or amended. 2.3 POWERS OF THE MEMBER. In addition to all matters required by the Articles of Incorporation or other provisions of these Bylaws which are required to be.approved by Asante, Asante shall at all times_ have voting rights to the fullest, extent allowed to the membership. of nonprofit ;corporations under the Oregon Nonprofit Corporation Act. Without limitation of the rights of Asante as the sole Member of the Corporation, Asante shall have the right to take 'the following 'actions with respect to this Corporation and of any corporation or other legal entity of which this Corporation is the sole or controlling member or shareholder, except as otherwise noted.below.' Page 1- RESTATED BYLAWS OF ARCH 2.3.1 'To adopt or change the mission, philosophy, or values; 2.3.2 To amend, restatei or repeal the Articles of Incorporation or Bylaws; 2.3.3, As to this Corporation, to fix the number of Directors, elect the Board of Directors and to remove such Directors at any time with or without cause; 2.3.4 To appoint and remove the Chief Executive Officer ("CEO") of the hospital operated by the Corporation and 'to 'remove such CEO, with or without cause, after requesting a recommendation from the Board of Directors; 2.3.5 To approve the acquisition of assets, the incurrence of indebtedness or the lease, sale, transfer, assignment, or encumbering of the assets, if the amount involved in any such transaction is in excess of an amount specified from time to time by resolution of Asante, and to approve the sale or transfer of other property; 2.3.6 To approve the dissolution; liquidation, consolidation or merger with another corporation or entity; 2.3.7 To approve on a consolidated system-wide basis the annual operating and capital budgets and approval of any deviations from such budget in excess of an amount or percentage specified from time to time by resolution of Asante; and 2.3.8 To appoint the certified public accountants after receiving the recommendation of the Board of Directors and to receive the annual audit report from such accountants. 2.4 MEETINGS. An annual meeting of Asante, in its capacity as sole member of AACH, shall be held each year at such time and date as the Board of Directors of Asante shall determine. Special meetings of Asante, in its capacity as sole member of AACH, may be called by the Board of Directors of Asante, or by the President or the Chair of the Board of Directors of Asante. 2.5 NOTICE OF MEETING. Notice of meetings of Asante as the sole member of the Corporation may be called by Asante in accordance with Asante's Bylaws. Asante's Bylaws are hereby incorporated in their entirety into these Bylaws. ARTICLE III BOARD OF DIRECTORS OF THE CORPORATION 3.1 POWER OF THE BOARD OF DIRECTORS. The Board of Directors (sometimes referred to as "Board") of AACH shall exercise general governance and control of the mission and business affairs of the Corporation and shall have and exercise all of the powers which may be exercised or performed by the Corporation, under the laws of the State of Oregon and these Bylaws, with due regard for the powers reserved to the Member of the Corporation as stated in Article H of these Bylaws. Page 2 - RESTATED BYLAWS OF AACH 3.2 COMPOSITION OF THE BOARD. The Board of Directors of the Corporation shall consist of the same individuals as those then currently serving on the Board of Directors of its sole Member, Asante. The individuals who are ex-officio members of the Asante Board shall be ex-officio members of the Board of Directors of the Corporation. Appointment, term, or removal of a, Board -of Director from the Corporation's sole Member, Asante, shall constitute appointment, term of office, or removal from such individual's service as a Board of Director of the Corporation without further action. In the event a Member of the Board of Directors of Asante shall resign, such resignation shall automatically cause the resignation of such Board of Director as a Director of the, Corporation. The tens of office of each Director of AACH shall be coextensive with his or her respective term of office as a Director of Asante. 3.3 VACANCIES. A vacancy on the Board of Directors shall exist upon the death or resignation of a Director, upon removal of any Director by Asante or upon the creation of an additional directorship. Asante may fill a vacancy on the Board of Directors in the manner and for the term provided herein for the election of Directors. 3.4 BOARD CHAIR. The Board Chair of the Board of Directors of the Corporation shall be the same individual then serving as the Board Chair of the Corporation's sole Member, Asante. Such Board Chair shall serve in such capacity so long as such individual is serving as the Board Chair of Asante. 3.5 MEETINGS AND PROCEDURAL RULES. 3.5.1 Annual Meeting. The annual meeting of the Board of Directors shall be held by December 31 of each year. Such meeting, shall be held at the principal office of the Corporation or at such place as may be designated from time to time by the Board Chair. The purposes of the annual meeting shall include, without ]imitation, electing officers as herein provided and transacting such other business as shall be necessary or desirable. 3.5.2 Regular Meetings of the Board. Regular meetings of the Board of Directors shall occur at such times as the Board shall from time to time determine. 3.5.3 Special Meetings of the Board. Special meetings of the Board of Directors may be called as provided in the Asante Bylaws, which provide in Article III Section 10.5 as follows: "Special meetings of the Board for any purpose or purposes shall be called by the Secretary upon request by the Board Chair, by the President and CEO, or by at least one-third (1/3) of the directors." 3.5.4 Notice of Board of Directors Meetings. Notice of all Board of Directors meetings shall be given in the same manner as provided in the Asante Bylaws, which provide in Article III, Section 10.7 as follows: "No notice shall be required of any regular or annual organization meeting which is held at a time and place fixed by these Bylaws or by a previous resolution of the Board Notice of the time and place of any other meeting shall be delivered personally,, communicated by electronic mail, telephone, or facsimile, or sent to each director by first-class mail, charges prepaid, addressed to the director at the director's address or contact number Page 3 - RESTATED BYLAWS OF AACH as it is shown on the records of the corporation, or, if it is not so shown on such records or is not readily ascertainable, to the place where the principal office of the corporation is located. If personally delivered or communicated by electronic mail, telephone, or facsimile, such notice shall be delivered at least twenty-four (24) hours prior to the meeting. If sent by mail, such notice shall be sent at least four (4) days prior to the meeting." 3.5.5 Quorum; Manner of Acting. A majority of the voting members of the Board shall constitute a quorum at any meeting of the Board The act of a majority of the directors present oft any meeting atv hbch a quorum is present shali'be the act of the Board. 3.5.6 Action by Unanimous Written Consent. Waiver of notice of any Board meeting or any action required to be: taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of:Directors, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the Directors entitled to vote with respect to the subject matter thereof. Any consent signed by all the Directors shall have the same effect as a unanimous vote. 3.5.7 Telephonic Meetings. Directors may participate in and act at any meeting of such Board by means of conference telephone, videoconference or similar communication equipment by which all persons participating in the meeting can speak to and hear each one another. Participation in such a meeting shall constitute presence in person at the meeting. ARTICLE IV ARCH ADVISORY BOARD AACH will form an AACH Advisory Board of community members which will consist of the persons on the Ashland Community Hospital Board of Directors immediately prior to the closing of the Affiliation Agreement dated June 4, 2013 among Asante, Ashland Community Healthcare Services, Ashland Community Hospital Foundation, and the City' of Ashland '("Affiliation Agreement"), and shall include the current chief of the AACH Medical Staff, up to two additional medical staff members and the Asante Chief Quality and Medical Officer. The Chair of the AACH Advisory Board shall become an ex-officio, voting member of the Asante Board and the AACH Board. The current Chief of the ARCH Medical Staff shall become an ex-officio, non-voting member. of the Asante Board and the AACH Board. The AACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at AACH, and for confirming credentialing and other decisions of the AACH Medical Staff. The AACH Advisory Board actions and minutes will be submitted to the Asante Board, which shall have the final approval authority. The AACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee at a time to be determined by the Asante Board. Page 4- RESTATED BYLAWS OF AACH ARTICLE V OFFICERS OF THE CORPORATION 5.1 OFFICERS. The officers of the. Corporation shall be the same individuals serving as'the officers of the Corporation's sole Member, Asante, without further action. In the event any such officer either resigns or is otherwise removed as an officer-of.Asante, such officer's office with the Corporation shall an ' tomatically terminate as of the effective date of their removal or resignation as an officer of Asante. The powers and duties of the officers shall be as set forth in the Asante Bylaws and as otherwise designated from time to time by the Board of Directors .of Asante, to the extent consistent. with law, the Articles of Incorporation of the Corporation and, these. Bylaws. ARTICLE VI. COMMITTEES; OF THE BOARD Except for the AACH Quality Committee and the AACH Appointment Committee, (i) the Corporation shall have the same committees;- committee members, and coterminous committee meetings as those committees established by the Corporation's sole Member, Asante, (ii) the Corporation's committees shall meet conterminously with, the Asante Board committees established pursuant to the Asante,Bylaws, and (iii) the Board committee charters and other rules for .functioning of such committees of the Corporation shall be identical to those of its sole Member; Asante. 6.1 Ouality Committee.for ARCH. 6. 1.1 General. The AACH Advisory Board, with additional,members, will function. as the Quality Committee for AACH, and will be the formal and official point of contact among the Board, management, and the Professional Staff of ARCH. The Advisory Board/Quality Committee will review matters relating to medical services provided at.AACH, including monitoring patient safety and quality of care as well as performance improvement matters. 6.1.2 Appointment. TheAACH' Advisory Board/Quality Committee will consist of members as provided in the Affiliation Agreement and these Bylaws. 6.1.3 Membership. The AACH Advisory Board/Quality Committee will consist of the following: •6.1.3.1 Up` to AACH..Advisory Board members who were previously Board.members of Ashland Community Hospital; 6.1.3.2 The Chief of Staff of the. hospital; Pages'- RESTATED BYLAWS Of ARCH 6.1.3.3 The Immediate='Past Chief of Staff or the Vice Chief of Staff of the hospital, 6.1.3.4 One (1) oc two ,(2) additional at-large members of the Professional Staff, of the hospital appointed by the AACH Board Chair; 6.13;5 The senior executive of the hospital; 6.13.6 The.Asante chief executive for quality;- 6.1,.3.7 The physician executive at the hospital as an optional member;, and 6. i.3.8 Three (3j menibers of the,AACH Board, one of whom is the ex.officio member of the AACH' Board as chair of the AACH Advisory Board%Quality Committee as defined in the. Affiliation. Agreement, and the two others are appointed by the AACH Board Chair. A member of the AACH Quality.Committee who is not a Professional Staff officer shall be designated as Chair. The ARCH Board Chair and the President.and CEO of Asante shall be notified of all.meetings and ',invited to attend. The President and CEO of Asante may appoint a member of the management staff to serve as an interim member of the committee during the time the position of a manager designated to serve is unfilled. With respectto;review of decisions made under the Fair Hearing Plan of the y member of the Quality Committee who has actively Professional Staff and other similar matters,'an participated in an investigation or prior decision of a :matter before the Quality Committee shall decline to act with respect to that matter at the Quality Committ ee or upon review of the Quality Committee decision, and, any committee, member who has acted.on a matter in a Quality Committee decision shall decline to.act with respect to that matter on any review of such Quality Committee decision. If necessary, additional Board members may be appointed to the Quality Committee to serve with respect to a particular "matter in order to constitute a quorum or otherwise constitute an appropriate body. 6.1.4 Meetings. The Quality Committee shall in general meet monthly and shall maintain a permanent.record,of'its activities. The minutes of the Committee shall be presented to the Board at or before its next meeting. The Quality Committee shall conduct joint meetings with other System hospital Quality Committees as appropriate-to conduct the committees' work at the System hospitals: 6.1.5 Roles and Responsibilities. 6.1.5.1 'The Quality Committee shall receive reports from the Professional Staff of the affiliated hospital :owmatters relating to quality of patient care, shall evaluate the services Page 6 - RESTATED BYLAWS OF AACH being provided by the Professional Staff and by the departments of the hospital, shall review audits and performance improvement and. other evaluation activities of the Professional Staff, and shall make recommendations to the Board concerning services provided in the hospital. 6.1:5.2 The Quality Committee shall oversee preparation for accreditation review of its hospital by the Det Norske Veritas Health Care Inc.'s (DNVHC) Accreditation Program, National Integrated Accreditation for Healthcare Organizations (NIAHO). 6.1:5.3 The Quality Committee shall work to develop a plan to evaluate quality of patient care, risk management,, performance improvement, and clinical resource utilization at the hospital and shall monitor and report to the Board on the results. 6.1.5:4 The Quality Committee shall make recommendations to the Board, and with respect to appropriate staff appointment and privileges matters, to the Appointment Committee of the hospital, as to appointment, reappointment, and termination of appointment to the appropriate Professional Staff; the granting, withholding, restricting and termination of privileges of appointees to the staff; the structure, procedures, and policies of the Professional Staff and the adoption, amendment, or repeal of the Professional Staff Bylaws; and actions on other matters arising from or with respect to the Professional Staff. Any recommendations of the Quality Committee with respect to matters involving adverse actions or the Fair Hearing Plan are advisory to the Board only. 6.1.5.5 The Quality Committee has authority to approve bylaws of the Auxiliary Service for its respective hospital and amendments thereto. 6.2 Appointment Committee for ARCH. 6:2.1 General. The Board delegates to the Appointment, Committee of AACH the authority to make decisions for the hospital with respect to Professional Staff appointment, reappointment, and renewal or modification of clinical privileges in the circumstances set forth below: 6.2.2 Appointment and Membership. The Appointment Committee shall consist of the members of the Quality Committee for the hospital who are also voting members of the AACH Board. The Chair of the Quality Committee, if serving as a member of the Appointment Committee for the hospital, shall hold that position for such Appointment Committee. 6.2.3 Meetings. The AACH Appointment Committee shall,in general meet monthly immediately following the AACH Advisory Board/Quality Committee meetings and shall maintain a permanent record of its activities. Two (2) members shall constitute a quorum. The minutes of each committee shall be presented to the Board at or before its next meeting. Page 7 - RESTATED BYLAWS OF AACH 6.2.4 Roles and Responsibilities. The Appointment Committee shall review and evaluate the qualifications. and competence of applicant practitioners and shall make decisions with respect to initial appointment and reappointment to the associated Professional Staff, and renewal or modification of clinical privileges as provided in this section. Decisions approving the recommendations of a Medical Executive Committee shall be effective when made by the Appointment Committee of the related hospital, except as provided below. Any decision by the Appointment Committee' that is adverse to an applicant. shall' be referred back to the Medical Executive Committee for further evaluation. All affirmative appointment and privileges decisions of the Appointment Committee shall be presented to the Board at its next regular meeting for ratification as appropriate. Decisions as to appointment, reappointment, and renewal or modification of clinical privileges are not effective until the Board has acted on the matter if, at the time of initial appointment for new applicants or since the time of themost recent appointment or reappointment for continuing appointees, any of.the following has occurred: 624.1 The applicant submits an incomplete application; 6.2.4.2 The Medical Executive Committee makes a final recommendation that is adverse or has limitations; 6.2.4.3 There is a current challenge or a previously successful challenge to licensure or registration; 6.2.4.4 The applicant has received an involuntary termination of medical staff membership at another organization; 6.2.4.5 The applicant has received an involuntary limitation, reduction, denial, or loss of clinical privileges; or 6.2.4.6 There has been either an unusual pattern of, or an excessive number of, professional liability actions resulting in final judgments against the applicant. ARTICLE VII PROFESSIONAL STAFF 7.1 ORGANIZATION AND FUNCTIONS. The physicians and other healthcare practitioners granted clinical privileges at AACH shall be organized into a separate Medical Staff or Professional Staff for AACH C AACH Professional Staff). The AACH Professional Staff is an integral part of AACH and Asante. Page 8 - RESTATED BYLAWS OF AACH The AACH Professional Staff shall review qualifications of physicians and other practitioners who provide care in AACH and shall make recommendations to. the Board as to appointment and reappointment, privileges, and corrective action with respect to such physicians and other practitioners. The AACH Professional Staff shall effectively review and make recommendations to the Board with respect to quality and safety of the care, treatment and services provided in AACH. The AACH Professional Staff shall have Professional Staff Bylaws which provide for a. Medical Executive Committee, departments, and other committees or groups as appropriate to carry out its functions, and which also provide for officers, department chairs, and other designated positions. The AACH Professional Staff Bylaws and amendments thereto shall become effective only after approval by the Board. The Bylaws shall provide a hearing and appeals process for matters affecting appointment, clinical privileges, and corrective action matters. The Board shall appoint to the AACH staff, in numbers not exceeding AACH's needs, qualified physicians and other practitioners. Appointment to the AACH staff is a prerequisite to the exercise of clinical privileges in AACH except as otherwise provided in the Professional Staff Bylaws. There shall also be provision for allied health professionals and other practitioners. Asante has established a Quality Committee for AACH as provided in Article V of the Asante Bylaws and Section 6.1 of these AACH Bylaws, and has also established an Appointment Committee for AACH in Section 6.2 of these AACH Bylaws and delegated to the Appointment Committee the authority to make decisions as to certain appointments as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. Authority granted to the President and CEO of Asante in Article VII of the Asante Bylaws and in the AACH Professional Staff Bylaws may be exercised by the President and CEO of Asante or by a member of management of the System designated by the President and CEO of Asante to exercise such authority with respect to AACH or a particular matter. 7.2 CONSTRUCTION OF BYLAWS. These Bylaws and the AACH Professional Staff Bylaws are intended to be compatible with the Asante Bylaws and should be construed accordingly. Should there be a conflict between the three sets of Bylaws or a question of interpretation as to the meaning of these Bylaws with respect to the AACH Professional Staff Bylaws, the Asante Bylaws, and the decision of the Asante Board shall be controlling. 7.3 ADMINISTRATION AND CARE OF PATIENTS. Practitioners appointed to the AACH Professional Staff have the authority and responsibility for the admission and care of their patients, subject to the limitations contained in these Bylaws, and in the Bylaws and related documents of the AACH Professional Staff, and to any other conditions of their appointment. Page 9 - RESTATED BYLAWS OF AACH 7.4 APPLICATIONS AND APPOINTMENT. Applications for appointment to the AACH Professional Staff shall be made in accord with the procedures established by the AACH Professional Staff Bylaws. Applications shall be in writing and shall contain all material and relevant information concerning the applicant's education, licensure and qualifications, practice history, and previous hospital and other experience. The applicant has the responsibility to provide complete information,, which shall be provided to the Medical Staff Office. After evaluation as provided in the AACH Professional Staff Bylaws, the recommendations of the Medical Executive Committee shall be submitted to,Board committees as provided in Article V of the Asante Bylaws and Article V of these ARCH Bylaws and to the Board. The privileges and appointment of each practitioner appointed to the staff shall be reviewed at least every two (2) years. 7.5 NOTICE OF APPOINTMENT. Staff appointees and applicants for staff appointment shall receive notice of the decision of the Board regarding the initial and later appointments and the clinical privileges granted in accord with the ARCH Professional Staff Bylaws. 7.6 HEARING PROCEDURES. A Professional Staff applicant or appointee who has been the subject of an adverse action by the Medical Executive. Committee or the Board regarding appointment, privileges, or corrective action and who files a request for hearing as provided in the AACH Professional Staff Bylaws shall be entitled to one hearing pursuant to the hearing procedures of those Bylaws. Written notice of the decision after the hearing shall be given to the practitioner. Hearing procedures shall be in accord with the provisions of the AACH Professional Staff Bylaws and the Health Care Quality Improvement Act of 1986, as amended. 7.7 BOARD REVIEW. The Board shall provide a process for an appeal of an adverse decision made at the AACH Professional Staff level in accord with procedures set forth in the AACH Professional Staff Bylaws. 7.8 SELECTION OF AACH PROFESSIONAL STAFF OFFICERS AND DEPARTMENT CHAIRS. The selection procedures, terms of office, and functions of the AACH Professional Staff officers, Department Chairs, and other officials of the AACH Professional Staff shall be as detailed in the. AACH Professional Staff Bylaws. 7.9 QUALITY OF PATIENT CARE. The Quality Committee of AACH shall conduct a continuing review and appraisal of activities of assessing, preserving and assuring the quality of patient care within the hospital as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws.. The findings of the Quality Committee in its quality assurance activities shall be reported to the President and CEO of Asante and the Board. 7.10 SUMMARY SUSPENSION. The AACH Professional Staff Bylaws shall designate persons who have the authority to summarily suspend the clinical privileges of a practitioner for Page 10 - RESTATED BYLAWS OF AACH cause in accord with the procedures in the AACH Professional Staff Bylaws. The President and CEO of Asante or 'designee shall promptly give .notice of such action in ;writing to the affected practitioner. Further proceedings with respect: to summary suspension shall be as provided in the AACH Professional Staff Bylaws. 7.1:1 PHYSICIANS EMPLOYEDBY AACH. 7.1,1.1 When any dispute arises between a physician employed by AACH and the hospital which is not covered by- the terms, of the physician's employment contract, it shall be govemed by this section of these-Bylaws. 7,11:2 A physician employed by ARCH in an administrative capacity with no clinical duties does not need to be appointed to the staff. 7.11.3 A physician employed by the: hospital who carries out both administrative and clinical responsibilities, or who. functions with the AACH.Professional.Staff in a_capacity involving the physician's professional capacity may perform such clinical or professional functions only after appointment to. the AACH, Professional, Staff. 7.11:4 Upon termination of the employment of a physician or other practitioner who has both administrative and clinical or professional responsibilities, the President and CEO of Asante or the senior executive of AACH shall determine- whether, the action is administrative only or whether it involves matters of professional competence or conduct. 7A 1.5 If the President and CEO of Asante or the senior executive of AACH determines that the reason for termination involves the. individual's 'professional competence or conduct, the President and CEO of.Asante,or the senior executive of AACH shall initiate corrective action;as provided in the AACH Professional Staff Bylaws. 7.11.6 If the President and CEO of Asapte or the senior executive of AACH determines that the reason for the action. is administrative and does not involve the practitioner's professional competence, conduct, staff appointment or privileges, AACH shall follow its usual personnel.policies. ARTICLE V I I I VOTING UPON STOCK OF OTHER CORPORATIONS Subject to the reserved rights set forth in Section 2.3, and unless otherwise ordered by the Board of Directors and subject to the direction, if any, given by the .Board of Directors, any officer of the Corporation shall have full power and authority on behalf of the Corporation to vote either in person or by proxy at any meeting of stockholders or members of any corporation, limited liability company, or other entity in which the Corporation may hold stock or other equity interests, otherwise have an opportunity to vote, and at such meeting may possess and Page 11- RESTATED BYLAWS OF AACH exercise all the-rights and powers incident, to the ownership of such stock or membership which, as the owner. thereof; ahe Corporation might have possessed and exercised-if present. ARTICLE IX CONFLICT OF INTEREST Any contract, or other transaction "of this Corporation in which :a :Director of the Corporation or a member of any Board committee,or subcommittee has a direct or indirect interest, as defined in the Oregon Nonprofit Corporation Act and in the policies of this Corporation, is a conflict of-interest transaction. A conflict, of interest transaction shall be valid if (a) ifis"fair.to the.Coiporatioin at the time it was:entered'into, (b)Jt is approved-by-the Board as:provided below, and (c) it complies with the Oregon Nonprofit Corporation Act: If :the material facts of the transaction and the Director's interest are disclosed or known to the Board, an approval as described in this paragraph is valid, notwithstanding the presence.and participation (but not vote) of the interested Director. Authorization, approval or ratification.of aconflict of.interesttransaction requires the affirmative vote.f a majority of the Directors on the'Board who have_no direct or.indirect interest in the transaction, so long as there is more than one such Director. It is the policy of the Board that all actual or possible conflicts of interest between AACH and a member of the Board or of a Board committee (to include a subcommittee) with respect to a matter to come before the Board or committee shall be reported to the Board Chair ordhe chair of the-committee, The Chair shall raise the issue of such conflict at a meeting to consider the matter, and if it is determined at the meeting that a. conflict exists, the member shall not vote with respect to such matter: The member may, however, participate in the discussion to. provide information, Each member of the Board or of a Board committee shall report to the appropriate Chair, any actual or possible conflict with respect to himself.or herself, and also with respect to other members, A Chair who becomes aware of an actual orpossible conflict shall. raise the issue for consideration at the meeting. ARTICLE X .INDEMNIFICATION 10.1 The Corporation shall defend, advance expenses on behalf of and indemnify any present or former director or officer for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred. by or asserted against the person'in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit- Corporation Act-are: met and providedthe actions do not violate any other state or federal law: 10.2 The Corporation shall have the power to indemnify; defend and advance expenses on be of any present.or former employee or agent of the. corporation for expenses, claims, liabilities,. indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the fiill extent :authorized by the.laws of Oregon provided the applicable standards of Page 12 - RESTATED BYLAWS OF AACH conduct of the, Oregon :Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.3 The Corporation will only pay for or reimburse expenses in advance of the final disposition of a proceeding upon receipt ofa written affirmation of the person's good faith belief that the person has met the-standards of conduct of the Oregon Nonprofit Corporation Act and any other applicable law and a written undertaking in accord with such Act to repay the expenses advanced' if it is ultimately determined that the, person did not meet the standard of conduct.. 10.4 Indemnification pursua nt to the foregoing authority shall not be deemed to 'be exclusive of any other rights to which such person may be entitled under any other bylaw, an. agreement, the Oregon Nonprofit Corporation Act or otherwise. 10.5 The repeal or modification of this article shall be prospective only and shall not . adversely affect any right or protection that is based upon this article and pertains to an act or omission that occurred prior to the time of such repeal or modification. 10.6 The Attorney General of Oregon shall be given written notice at least twenty (20) days prior to the indemnification of a director or an uncompensated officer. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall commence on October 1 and end on September 30 of each year. ARTICLE XII PROHIBITION AGAINST SHARING IN CORPORATE EARNINGS No Member, Director, officer; employee, committee member or other person connected or affiliated with the Corporation, and no other private individual, shall receive at any time any of the net earnings or pecuniary profit' from the operations of the Corporation, provided that the Corporation shall not prevent the payment to any such person of such reasonable compensation for services rendered to or for the Corporation in effecting any of its purposes as such compensation shall be fixed by the Board of Directors; and no such person or persons shall possess any proprietary right in or to the property of the Corporation or be entitled to share in the distribution of any of the corporate assets upon dissolution of the Corporation. ARTICLE NM DISSOLUTION OF THE CORPORATION Upon dissolution of the Corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the Corporation, dispose, of all of the assets of the corporation to Asante, its sole corporate Member, provided Asante is still in existence and qualifies as an exempt organization under the Internal Revenue Code of 1986, as amended (the "Code"). If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity that is Page 13 -RESTATED BYLAWS OF ARCH organized and operated exclusively for charitable, educational,. religious or scientific purposes and qualifies as an exempt organization under the Code (or the corresponding provision of any future United States Internal Revenue Law), ARTICLE MV INVESTMENTS Except as otherwise provided in the Articles of -Incorporation of the Corporation, the Corporation shall have the right toretain all -or any part of any securities or property acquired by it in whatever manner, and to invest and reinvest any funds held by it, according to the judgment of the Board of Directors. ARTICLE XV EXEMPT ACTIVITIES Notwithstanding any other provisions of these Bylaws, no Member, Director, officer, employee or agent of the Corporation shall take any action or,carry out any' activity by or on behalf of the Corporation. plot permitted to be taken or carried on without penalty by an organization exempt from federal taxation as now exists,or as may hereafter be amended. ARTICLE XVI AMENDMENTS No amendment of these Bylaws shall be effective without the written approval of the Member. In addition, the Board of Directors shall,regularly review these Bylaws, and recommend any revisions to these Bylaws to conform to applicable requirements of state or federal law and/or accreditation standards.. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 DEPOSITORIES. All Rinds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, financial institutions, mutual funds or other .depositories as the Board of Directors may designate. 17.2 CHECKS. All checks, drafts, or other orders for the payment of money issued in the name.of the Corporation shall be signed by such officer or officers or person or persons, whether or not officers of Corporation, in such manner as shall. from time to time be determined bythe Board of Directors. 17.3 CONTRACTS- AND INSTRUMENTS. Subject to any limitations contained in these Bylaws or by resolution of the :Board. of 'Directors, all deeds, mortgages, bonds and other contracts or. instruments of the Corporation shall be signed on behalf of the Corporation by the President/Chief Executive Officer ofAsame or.such . other officers as may be designated by the Board from time to time. Page 14- RESTATED BYLAWS Of AACH 17.4 AGENTS AND REPRESENTATIVES. The Board of Directors may appoint such agents and representatives of the Corporation with such powers and with the authority to perform such acts or duties on behalf of the Corporation, as the Board of Directors may deem. appropriate, consistent with these Bylaws, the Articles of Incorporation of the Corporation and applicable law. 17.5 ELECTRONIC COMMUNICATIONS. To the fullest extent permitted by law, the Member, Board of Directors and Board Committees may utilize electronic communications such as email, fax and other electronic communications for purposes of distributing notices of meetings, voting by ballot or otherwise; executing unanimous written consents as otherwise authorized by these Bylaws, and for all other legitimate purposes of communicating. BaO this day of August, 2013 Secretary of the Corporation Page 15 - RESTATED BYLAWS OF ARCH Exhibit C Mission Statement Asante Ashland Community Hospital exists to provide quality healthcare services in a compassionate manner; valued by the communities we serve. PDXDOCS:2008157.2 O PORTLAND, OREGON SEATTLE, WASHINGTON MILLER NASHLLI, VANCOUVER, WASHINGTON CENTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM July 31, 2013 Asante Ashland Community Hospital Foundation 2650 Sisldyou Blvd. 28o Maple Street Medford, OR 97504 Ashland, OR 97520 City of Ashland 20 East Main Street Ashland, OR 97520 Subject: Legal Opinion of Oregon Counsel to Ashland Community Healthcare Services Ladies and Gentlemen: We have acted as Oregon counsel to Ashland Community Healthcare Services, an Oregon nonprofit corporation (the "Hospital") in connection with that certain Affiliation Agreement (the "Affiliation Agreement") dated June 4, 2013, between Asante, an Oregon nonprofit corporation ("Asante"), the Hospital, Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation"), and City of Ashland, an Oregon municipal corporation (the "City"). Although we represent the Hospital from time to time in connection with specific transactions, we are not general counsel to the Hospital, and we did not participate in the formation or organization of the Hospital. The Hospital has requested that we deliver to you our opinion as to certain matters relating to the affiliation of the Hospital with Asante, as described in the Affiliation Agreement (the "Affiliation"). This opinion is delivered to you pursuant to Section 27.4.2.6 of the Affiliation Agreement. O PORTLAND, OREGON SEATTLE, WASHINGTON MILLER NASHLLP VANCOUVER, WASHINGTON CENTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM Asante Ashland Community Hospital Foundation City of Ashland July 31, 2013 Page 2 DOCUMENTS REVIEWED In rendering our opinion, we have examined a copy of the Affiliation Agreement and the following documents (together with the Affiliation Agreement, the "Documents Reviewed"): 1. A Certificate of the Hospital's Board Chair, dated July 31, 2013; 2. A copy of the Hospital's Articles of Incorporation, as amended, certified by the Oregon Secretary of State as of July?, 2013; 3. A copy of the Hospital's Amended and Restated Bylaws, dated effective February 27, 2013, certified by the Hospital's Board Chair as the complete, true, and correct bylaws of the Hospital as of July 31, 2013; 4. A copy of resolutions adopted by the Hospital's board of directors on May 22, 2013 and June, 2013, authorizing the execution, delivery, and performance of the Affiliation Agreement by the Hospital, which copy was certified by the Hospital's Board Chair as true, complete, and currently in effect as of July 31, 2013; and 5. A Certificate issued by the Oregon Secretary of State with respect to the existence of the Hospital, dated July Zg, 2013. RELIANCE WITHOUT INVESTIGATION Except to the extent the information constitutes a statement, directly or in practical effect, of any legal conclusion at issue, we have relied without investigation or analysis on the information contained in warranties and representations by the Hospital in the Affiliation Agreement and the information contained in the other Documents Reviewed. We have made no independent investigation with regard to such information. Except as specifically identified herein, in connection with this opinion letter, we have not been retained or engaged to perform, and we have not performed, any independent review or investigation of (1) any agreement or instrument to which the Hospital may be a party, by which the Hospital may be bound, or to which any property owned by the Hospital may be subject, or (2) any order of any governmental or public body or authority to which the Hospital may be subject. O PORTLAND, OREGON SEATTLE, WASHINGTON MILLER NASHLLP VANCOUVER, WASHINGTON CENTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM Asante Ashland Community Hospital Foundation City of Ashland July 31, 2013 Page 3 We assume that the Documents Reviewed, and the records upon which they are based, are accurate and complete. We disclaim any responsibility for changes that may have occurred from and after the respective dates of the Documents Reviewed. OPINIONS Subject to the qualifications stated herein, we are of the opinion that: 1. the Hospital is in existence and is duly authorized to transact business in Oregon; 2. the Hospital has all requisite corporate authority to undertake and perform the obligations of the Hospital under the Affiliation Agreement; and 3. the Hospital's board of directors has duly authorized the execution and delivery of the Affiliation Agreement and the performance of all actions contemplated by the Affiliation Agreement to be taken by the Hospital thereunder. LIMITATIONS None of the opinions herein expressed include any implied opinion and the opinions are specifically subject to and qualified by the following: 1. Regardless of the states in which members of this firm are licensed to practice, our opinion is limited to the laws of Oregon. 2. This opinion is provided to you as a legal opinion only, and not as a guaranty or warranty of the matters discussed herein. Our opinion is limited to the matters expressly stated herein, and no other opinions may be implied or inferred. 3. Without limiting any other disclaimers or limitations contained in this opinion, we express no opinion as to any matter whatsoever relating to: (a) the adequacy of the consideration for the Affiliation; (b) the accuracy or completeness of any financial, accounting, or statistical information furnished by the Hospital, or by its agents, employees, directors, officers, or others on its behalf, to Asante, the Foundation, or the City; O PORTLAND, OREGON SEATTLE, WASHINGTON MILLER NASHUP VANCOUVER, WASHINGTON CENTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM Asante Ashland Community Hospital Foundation City of Ashland July 31, 2013 Page 4 (c) the accuracy or completeness of any representations made by the Hospital; (d) the financial status of the Hospital; (e) the ability of the Hospital to meet its obligations under the Affiliation Agreement; (f) compliance with securities, pension and employee benefit laws and regulations (e.g., ERISA), zoning, land use, building, or environmental rules, regulations, laws, ordinances, or directives; (g) compliance with health and safety regulations, laws, ordinances, or directives, including the obtaining of any permit or governmental approval required in connection with the Affiliation; or (h) compliance with fiduciary duty requirements, antitrust and unfair competition laws and regulations, tax laws and regulations. 4. This opinion is rendered at the request of the Hospital as a requirement for closing of the Affiliation. This opinion does not establish any attorney- client relationship between this firm and any addressee. Nothing contained in this opinion shall be deemed to constitute a waiver of the attorney-client privilege between this firm and the Hospital. This opinion is rendered as of the date set forth above, and we disclaim any obligation to advise you of any changes in the circumstances, laws, or events that may occur after this date or to otherwise update this opinion. [Remainder of page intentionally left blank] O PORTLAND, OREGON SEATTLE, WASHINGTON MILLER NASHLLI VANCOUVER, WASHINGTON CENTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM Asante Ashland Community Hospital Foundation City of Ashland July 31, 2013 Page 5 This opinion has been rendered to you in connection with the transaction described herein solely for your information and is not to be quoted in whole or in part or otherwise referred to, used, delivered to, or relied upon by any person or entity other than you and your legal counsel. Very truly yours, filler Nas ?LP NOTICE OF RESIGNATION AS OFFICER To: Ashland Community Healthcare Services (the "Corporation") From: Alan DeBoer I hereby tender notice of my resignation from the corporate offices listed below: Secretary Treasurer and all other offices I may currently hold with the Corporation, effective upon the occurrence of both of the followmg- 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 'e;, Alan DeBoer I PDXDOCS:2005821.3 To: Ashland Community Healthcare Services (the "Corporation") From: Steve Miner I.hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 ( ' ~1 Steve Miner PDXDOCS:2005395.3 NOTICE OF RESIGNATION NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: Doug Diehl, M.D. I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which 1 serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 f~ - Doug iehl, M.D. PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: -Alan DeBoer I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that 1 may hold with the Corporation, effective upon the occurrence of both of the following: I . The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section_ 12.1 of the Agreement. Dated: July 31.2013` Alan DeBoer PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: Anne Golden I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 Anne Golden PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: Hal Townsend, M.D. I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 al To send, M.D. r PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare-Services (the "Corporation") From: Carol Christlieb I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: 1. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland` Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 e , c Li Ott Carol Christlieb PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: Dr. Saundra Theis I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: I . The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement'), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013~'I. e.l.G 4• ~'4r Dr. Saundra Theis PDXDOCS:2005395.3 Jul.23. 2013 11:5'1AM COMPASS PRINTING No. 1411 P.. 2 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") Y From: Doug Gentry '3>Ouk,LAf W - ~exn I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: I. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement'), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 ` J Doug Gentry 'Sptxt'.LAf U) - LV-AL 4 PUDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: John Delgado, M.D. I hereby tender notice of my resignation as a ,director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: I. The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement.. Dated: July 31, 2013 John Delgado; M.D. PDXDOCS:2005395.3 NOTICE OF RESIGNATION To: Ashland Community Healthcare Services (the "Corporation") From: Linda Butler I hereby tender notice of my resignation as a director of the Corporation, as a member of any committee of the Board of Directors of the Corporation upon which I serve, and from any office that I may hold with the Corporation, effective upon the occurrence of both of the following: I . The Closing Date, as that term is defined in the Affiliation Agreement (the "Agreement"), dated June 4, 2013, between the Corporation, Asante, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and City of Ashland, an Oregon municipal corporation; and 2. The effective date of the appointment of the new Board of Directors of the Corporation, as contemplated by Section 12.1 of the Agreement. Dated: July 31, 2013 Linda Butler PDXDOCS:2005395.3 Drescher & Womack Attorneys at Law Allen G. Drescher 21 S. Second Street - P.O. Box 760 drescheralaaollcom Ashland, Oregon 97520 Kraistofer J. Womack Tel: (541) 482-4935 Deanna Costen «omackesc u,gmail.com Fax: (541) 482-4941 Paralegal www.ashlandoregonlawyer.com June 18, 2013 Asante c/o Mr. Peter Stoloff Attorney at Law via email only: pstoloff c peterstoloff-law,com City of Ashland c/o Mr. David Lohman via email only: david,lolhinan(:c~ashland,or,us City Attorney Ashland Community Hospital c/o Mr. William Manne via email only: bill.manne(cr7millcrirash,com Attorney at Law Re: Opinion of Legal Counsel for Ashland Community Hospital Foundation Dear Peter, David and Bill: Pursuant to Section 27.4.3.4 of the Affiliation Agreement of our clients (the "Affiliation Agreement"), I am providing the following opinion of legal counsel. 1. I am the attorney for the Ashland Conununity Hospital Foundation ("ACH Foundation"). 2, ACH Foundation is an Oregon nonprofit corporation in good standing. 3. ACH Foundation has the corporate power and authority to enter into the Affiliation Agreement and the other agreements that are specified therein and to take such other actions as are contemplated to be taken by ACH Foundation thereunder. 4, ACH Foundation has been duly authorized, by its board of directors, to enter into, execute and deliver the Affiliation Agreement and such other agreements as are specified thereunder to be entered into by ACH Foundation as of the Closing Date (as defined therein) and has been authorized by its board of directors to perform all other actions contemplated to be taken by ACH Foundation thereunder. VelW,D urs, Allher CC. M s. Sandra Slattery, President ACH Foundation via email only Ms. Janet Troy, Executive Director ACH Foundation - via email only CITY OF -ASH LAN D LEGAL DEPARTMENT David H. Lohman. City Attorney Douglas M. McGeary, Asst City Attorney July 31, 2013 Kris Bechtold, Paralegal Asante. c/o Mr. Peter Stoloff Attorney at Law via email only: 12stoloff(@,Veterstoloff-law.com Ashland Community Hospital c/o Mr. William Marine via email only: bill.manne@iilillernash.com Ashland Community Hospital Foundation c/o Mr. Allen.Drescher Attorney at Law via email only: drescheral@aol.com Re: Opinion of Legal Counsel for City of Ashland Pursuant to Section 27.4.4.4 of Affiliation Agreement Dear Peter, Allen and Bill: In accordance with Section 27.4.4.4 of the Affiliation Agreement among our clients (the "Affiliation Agreement"), in my capacity as City Attorney for the City of Ashland, Oregon it is my opinion that: 1. The City of Ashland, Oregon ("City") is a municipal corporation duly organized, currently existing, and in.good standing.under Oregon law. 2. The City has the corporate power and the legal authority to enter into the Affiliation Agreement and the other agreements that are specified therein and to take such other actions as are contemplated to be taken by the City thereunder. 3. The City has been duly authorized by the Ashland City Council.to enter into; execute and deliver the Affiliation Agreement and such other agreements as are specified thereunder to be entered into by the City as of the Closing Date (as defined therein) and has been authorized by the Ashland City Council to perform all other actions contemplated to be taken by the City thereunder. r David H. Lo an City Attorney City of Ashland LEGAL DEPARTMENT Tel: 541-488-5350 david.lohman@ashland.or.us 20 East Main Street Fax: 541-552-2092 legalcontractorBashland.orm Ashland, Oregon 97520 TTY: 800-735-2900 bechtoldk@ashland.or.us iooA vm,.[omme eomem Jackson County Official Records 2013-02'5854 WARRANTY DEED R-WD 08!0112013 10:13:47 AM (FEE SIMPLE ON A CONDITION Stn=1 MORGANSS F SUBSEQUENT AND RIGHT OF ENTRY) $15.00 $11.00 $10,00 $8.00 $15,00 $59.00 I, Christine waiker, county clerk for Jackson County, Oregon, certify GRANTOR'S NAME AND ADDRESS: that the Instrument identifled herein was recorded in the clerk Q City of Ashland records. Christine Walker - County Clerk 20 East Main Street Ashland, OR 97.520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: David Lohman, City Attorney City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement, This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right 'of entry, if nut earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns, The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars Is None, However, the actual consideration consists .of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS.DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195,305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, a r W WARRANTY DEED 9 (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) ® GRANTOR'S NAME AND ADDRESS: L) City of Ashland 20 East Main Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: David Lohman, City Attorney City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation,, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed, pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None, However, the actual consideration consists i of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED'LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. DATED; The 30 day of -12013. CITY OF ASHLAND Bye~14 Dave Kanner, City Administrator Effective August 1, 2013 STATE OF OREGON ) ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on tha. day of Q ajL~ 2013 by Dave Kanner as City Administrator of the City of Ashland, an Oregon municipality, on behalf oLlfie City of shland. Notary P blic for Oregon My com fission expires: I V~ / OFFICIAL SEAL KIMBERLY L AYRE:S NOTARY PUBLIC-OREGON t cOMMISSION NO. 474826 MY COMMISSION EXPIRES MARCH 16, 2017 I r i i I EXHIBIT "A" PARCEL I: Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 31' West along said East -side-line, 202.00 feet to the northeast corner of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 0°3 P East along the west line of said Lot 70.0 feet to the northeast comer of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 9°31' West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ' ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. 'j ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range I East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of•WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City. ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of. the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest corner of said tract; thence North along the west line thereof 115.0 feet to the northwest comer of said tract; thence East 142.00 feet to a point 115.00 feet North of the place of beginning; thence South 115.00 feet to the place of beginning. Being a part of Lot 6 of WIMER'S SUBDIVISION to the City of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Situs Address: 278 & 280 Maple St, Ashland, OR 97520 i j ~I .J Jackson County Official Records 2013_025856 WARRANTY DEED R-WD 08!01/2013 10:13:47 AM (FEE SIMPLE ON A CONDITION Stn=1 MORGANSS SUBSEQUENT AND RIGHT OF ENTRY) $15.00 $11.00 $10.00 $s.00 $15.00 $59.00 I, Christine Walker, county Clerk for Jackson County, Oregon, certify V GRANTOR'S NAME AND ADDRESS: that the instrument identified herein was recorded In the Clerk City of Ashland records, Christine Walker -County Clerk 20 East Main Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO., David Lohman, City Attomey City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO; Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of .the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant, Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195,301 AND 195,305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS, BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) ® GRANTORS NAME AND ADDRESS. City of Ashland 20 East Main Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: David Lohman, City Attorney City of Ashland Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 City of Ashland, an Oregon municipality, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general, hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2043, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further. made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if, not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other, party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, i SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. - DATED: The 30 day of Ty ~y 2013. CITY OF ASHLAND Ely Dave Kanner, C' y dministrator Effective August 1, 2013 STATE OF OREGON ) ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the,-3 day of 2013 by Dave Kanner as City Administrator of the City of Ashland, an Oregon municipality, on behalf of t City of hland. o ary ublic or Oregon II My commissio expires: OFFICIAL SEAL KIMBERLY L AYRES NOTARY PttSLIC-OREGON COIMMISSIOi~ NO, 474826 MY cOMMI$WN ER~IRES MARCH i6, 2017 Y EXHIBIT "A" PARCEL V: Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89°53' West of and which line bears North 0°3 P West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Situs Address: 560 Catalina Dr, Ashland, OR 97520 I I i I I - Jackson County Official Records 2013_025861 WARRANTY DEED R-WD (FEE SIMPLE ON A CONDITION Stn=1 MORGANSS 08101/2013 10:13:47 AM ~p SUBSEQUENT AND RIGHT OF ENTRY) $15.00 $11.00 $10.00 $8.00 $15.00 $59.00 GRANTOR'S NAME AND ADDRESS: I, Christine Walker, county Clerk for Jackson County, Oregon; certify 0 Ashland Community Hospital Foundation that the Instrument identified herein was recorded in the clerk 280 Maple Street records. Christine Walker- County Clerk Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDiNO RETURN TO:' Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO. Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, In the following described property: See Exhibit "A" attached hereto and Incorporated hereln. This conveyance Is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this Instrument in compliance with the terms of that certain Affiliation Agreement dated the day of Z u n.l I_ , 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and If the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause In accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor all rights of the Grantee and its successors In Interest and assigns In the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, If not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance Is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record, The true consideration for this conveyance stated in terms of dollars Is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195,300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 6 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, j THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195,305 TO 196.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTION 0 7, CHAPTER 8, OREGON LAWS 2010. M UNII L FOUNDATION DATED; The day of 013. JAASHN CO - 4~/ By andra Slattery, Presi Effective August 1, 20 3 WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTORS NAME AND ADDRESS: 0• Ashland Community Hospital Foundation 280 Maple Street Ashland, OR 97520 @~m@f GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services. 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described- property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument In compliance with the terms of that certain Affiliation Agreement dated the day of To w 1=' , 2013, In which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant•to the terms of said Affiliation Agreement. On reentry by Grantor all rights of the Grantee and its successors In Interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing . condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns: The foregoing conveyance is subject to the following restrictive covenant; Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of.this instrument, The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. i BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195,301 AND 196.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTION 07, CHAPTER 8, OREGON LAWS 2010. DATED; The day of 013. ASHL N COM UNITY I L FOUNDATION By andra Slattery, Presi Effective August 1, 2013 Q i STATE OF OREGON } ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the;-day of 2013 by Sandra Slattery as president of Ashland Community Hospital Foundation, an Oregon nonprofit car ration, behalf of the corporation. ary Public r Oregon My commissio expires: i OFFICIAL SEAL tCIMC3 .RLY L AYRES NOTARY rat!gLIC-OREGON COMMISSION NO. 474826 MY COMMISSION EXPIRES MARCH 16, 2017 i i Z I . I it Page of Commencing at a point on the east line of Donation Land Claim No. 60 in Township 38 South, Range 1 West of the Willamette Meridian in Jackson County, Oregon, which point is 330 feet North of the Southeast corner of said Claim, thence South 84°00' West 395,1 feet to an Iron pin on the western right of way ilne of the relocated Pacific Highway No.. 99, thence North 52°41' West, along said right of way line, 412,80 feet to the true point of beginning; thence South 84°10' West 39.95 feet; thence North 05°50' West 4.06 feet; thence South 84°10' West 70.33 feet; thence South 05°50' f=ast 4.06 feet; thence South 84°10' West 37.90 feet to the northwest corner of the tract described in deed recorded as No. 94-25870 of the Official Records of Jackson County, Oregon; thence continue South 84°10' West 148,0 feet to the eastern right of way line of the Old Pacific Highway No. 99; thence North 25°36' West, along said right of way line, 98.85 feet to the northwest corner of the tract described in deed recorded as No. 93-21602 of said Official Records; thence North 78°07' East 208.14 feet to a point situated on aforesaid western right of way line, of said relocated Highway No. 99; thence South 52°41' East, along said right of way line, 168.10 feet, more or less, to the true point of beginning. Account; 381W23CA 700 1-027478-2 Situs Address; 209 North Pacific Hwy, Talent, Oregon 97540 1 i 1 '1c:~~~-c~~ GJ L~ Jackson County Official Records 2013-025857 WARRANTY DEED R -WD Stn=1 MORGANSS 08101/2013 10:13:47 AM (FEE SIMPLE ON A CONDITION $15.00 $11.00 $10.00 $8.00 $15,00 $59.00 I SUBSEQUENT AND RIGHT OF ENTRY ® GRANTOR'S NAME AND ADDRESS: I, Christine Walker, County Clerk for Jackson county, Oregon, certify U Ashland Community Hospital Foundation that the instrument identified herein was recorded In the Clerk 280 Maple Street records. Christine Walker- County Clerk k~ Ashland, OR 97520 T" GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 j AFTER RECORDWO RETURN Td: Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and Incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this Instrument in compliance with the terms of that certain Affiliation Agreement dated the day of To to iL 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee falls to do so, the Grantor may reenter and terminate the'estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance Is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement, On reentry by Grantor all rights of the Grantee and its successors in Interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement, After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, If not earlier exercised, shall terminate, and fee simple absolute title shall be vested In the Grantee and Its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument, The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration, i BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT I THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195,300, 195,301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER i 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010, THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS, BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT ° OR PARCEL, AS DEFINED IN ORS 92.010 OR. 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO II DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30,930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195,305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS O 7, CHAPTER 8, OREGON LAWS 2010. I DATED: Theeday of D13. A~JL,~,v COM NITY~ L FO NDATION By andra Slattery, Pr et, l ffective August 1, 2013 WARRANTY DEED (FEE SIMPLE ON. A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTOR'S NAME AND ADDRESS; ® Ashland Community Hospital Foundation 280 Maple Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except, as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and Incorporated herein, This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the day of T u ,J fr , 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the'estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance Is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, If not earlier exercised, shall terminate, and fee simple absolute title shall be vested In the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this Instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists i of other value given or promised which is the whole consideration. BEFORE SIGNING. OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195,300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010, THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SSECTIONS 0 7, CHAPTER 8, OREGON LAWS 2010. DATED: TheOYday of 013. ASHLA COMA NITY S L FO NDATION By andra Slattery, Fr 'dent CfAffective August 1, 2013 i STATE OF OREGON ) ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the ::I5 day of 2013 by Sandra Slattery as president of Ashland Community Hospital Foundation, an Oregon nonprofit co poration, n behalf of the corporation. Plab Notary Pu lic for Oregon OFFICIAL SEAL My'commission expires: ~Q KIMBERLY L AYRES NOTARY PUBLIC-OREGON COMMISSION NO. 474826 MY COMMISSION EXPIRES MARCH 16, 2017 lI, I I ' I i I i Ii I EXHIBIT A Page Of . d Commencing at a point 4.72 chains West of the Northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East, Willamette Meridian Jackson County, Oregon; thence South 0030' East 3,70 chains, more or less, to the North line of Maple Street, In the City of Ashland, Jackson County, Oregon; thence North 89°53' West, along the North line of said Maple Street, 462.13 feet, more. or less, to the East line of Chestnut Street, In said City, for the true point of beginning; thence North, along the East line of Chestnut Street, 120.0 feet; thence East, parallel with the North line of Maple Street, 60.0 'feet; thence South, parallel with the East line of dhestnut Street, 120.0 feet, to the North line of said Maple Street; thence West, along said North line, 60.0 feet, to the true point of beginning, Account: 1-005691-6 391 E05DB 1000 Situs Address: 317 Maple St, Ashland, OR 97520 I i Jackson County Official Records 2013-025858 rJ BARGAIN AND SALE DEED R-BSD 1i (FEE SIMPLE ON A CONDITION S Stntn==1 1 MORGANSS 08/01/2013 10:13:47 AM SUBSEQUENT AND RIGHT OF ENTRY) $15.00 $11.00 $10.00 $8.00 $15.00 $59.00 GRANTOR'S NAME AND ADDRESS; 1, Christine Walker, County Clerk for Jackson County, Oregon, certify Ashland Community Hospital Foundation that the instrument Identified herein was recorded in the Clerk U 280 Maple Street records. F... Ashland, OR 97520 Christine Walker- County Clerk GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 j AFTER RECORDING RETURN TO. Drescher & Womack PO Box 760 j Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, hereby grants, bargains and conveys to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, a fee simple on a condition subsequent and right of entry, in the following described property, See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this Instrument In compliance with the terms of that certain Affiliation Agreement dated the fourth day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and If the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Aff Illation Agreement. This conveyance is further made on the express condition that If Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the j estate hereby conveyed pursuant to the terms of said Affiliation Agreement, On reentry by.Grantor all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, If not i earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and Its successors and assigns, The foregoing conveyance Is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument, The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 196,300, 195.301 AND 195.305 TO 195,336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010, THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS, BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92,010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30,930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195,300, 195,301 AND 196,305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 866, OREGON LAWS 2009, AND SECTIONS 23,19 7, CHAPTER 8, OREGON LAWS 2010. DATED: The day of '2013, ASH OMMUNI Y HO .,J.T FOUNDATION By andra Slattery, Presl Effective August 1, 2013 I W L4_1 b~t2. b2, GGU BARGAIN AND SALE DEED ® (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTOR'S NAME AND ADDRESS. ® Ashland Community Hospital Foundation U 280 Maple Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 • AFTER RECORDING RETURN TO: Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, hereby grants, bargains and conveys to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, a fee simple on a condition subsequent and right of entry, in the following described property, See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in.the City of Ashland, Oregon, for a period of three years after the date of recordation of this Instrument In compliance with the terms of that certain Affiliation Agreement dated the fourth day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause In accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement, On reentry by Grantor all rights of the Grantee and its successors In interest and assigns in the estate hereby conveyed shall terminate In accordance with the terms of said Affiliation Agreement, After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shalt terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195,335 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT .OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 O 7, CHAPTER 8, OREGON LAWS 20.10. DATED: The_Td y of 2013. ASH OMMUNI Y HO FOUNDATION By andra Slattery, Presi ere' Effective August 1, 2013 I STATE OF OREGON } I } ss County of Jackson ) The foregoing Bargain and Sale Deed was acknowledged before me on the 64-day of 2013 by Sandra Slattery as president of Ashland Community Hospital Foundation, an Oregon non it corpora ion, on behalf of the corporation, OFFICIAL SEAL ary Publi for Oregon KIMBERIrY L AYRES My commiss on expires: NOTARY PUBLIC-OREGON COMMISSION NO. 474826 MY COMMISSION EXPIRES MARCH 16, 2017 I 1 Exhibit "A" PARCEL XI, Tract A: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 'I West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84100' VVest 395.9 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said line North 52°41' West 206.40 feet; thence South 840'10' West 396.05 feet to the Easterly side line of j the Old Pacific Highway No 99, for the true point of beginning; thence along said line North 25°36' West 50.0 feet; thence North 8411'10' East '100.0 feet; thence South 25136' East 50.0 feet; thence South 840'10' West 100.0 feet to the true point of beginning. ALSO: From a point on the East line of Donation Land Claim No 60, Township 38 South, Range 'l West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim; thence South 84000 West 395.9 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence South 84"10" West 495.9 feet to the Easterly side line of Old Pacific Highway No 99; thence along said line North 25136". West 200.0 feet; for the true point of beginning; ; thence North 25036' West 50.0 feet; r thence North 84°90' East'10.0 feet; thence South 25036; East 50.0 feet; thence South 84°90' West *100.0 feet, to the true point of beginning. ALSO, Commencing at a point on the East line of Donation Land Claim No 60, Township 38 South, Range '*l West, Willamette Meridian, Jackson County, Oregon, which point is 330.0 feet North of the Southeast corner of said Claim No 60; thence 84100 West 395,1 feet to an iron pin on the Westerly side line of the relocated Pacific Highway; thence along said highway tine North 5204'1' West206.40 feet; thence South 84010" West 246.05 feet to the true point of beginning; thence South 84°90' West 50.0 feet to the Southeast comer of tracts described in Volume 434 Page 247, Deed Records of Jackson County, Oregon; thence along the Easterly line of said tract, North 25036' West '100.0 feet to the Northeast corner thereof; thence North 84°10' East 50..0 feet; thence South 25036' East 100.0 feet to the true point of beginning. Account: '1-027484-9 38.1 W23CA '1300 Situs Address: 49 Talent Ave, Talent, Oregon 97540 I i I ~~-CJ~CJCJ~r Jackson County Official Records 2013-025859 J WARRANTY DEED R-WD 0810112013 10:13:47 AM (FEE SIMPLE ON A CONDITION Stn=1 MORGANSS l $15.00 $11.00 $10,00 $8.00 $15.00 $59.00 F ' SUBSEQUENT AND RIGHT OF ENTRY) GRANTORS NAME AND ADDRESS; I, Christine Walker, county clerk for Jackson county, Oregon; certify that the ecords instrument Identified herein was recorded In the Clerk C) Ashland Community Hospital Foundation r U 280 Maple Street Christine Walker - County Clerk F . Ashland, OR 97520 11 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TD: Drescher & Womack PO Box 760 Ashland, OR 97520 i SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, In the following described property: See Exhibit "A" attached hereto and incorporated herein, This conveyance Is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this Instrument In compliance with the terms of that certain Affiliation Agreement dated the day of Tu nJ E. , 2013, In which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee falls to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of. said Affiliation Agreement, This conveyance Is further made on the express i condition that If Asante activates its reversionary clause In accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement, On reentry by Grantor all rights of the Grantee and Its successors in interest and assigns In the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement, After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested In the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described. property to any other party prior to the expiration of three years after the date of recordation of this Instrument. The above described property is free from encumbrances, except those of record, The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists . of other value given or promised which Is the whole consideration. I BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 196,300,195-301 AND 195,305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010, THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, I! THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215,010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO ! INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195,300, 195,301 AND 195.306 TO 195,336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 71 CHAPTER 8, 7GON TAWS 201 , DATED: The~7d~a`y-of 13, ASHLAND CO MU XY P FOUNDATION y attery, Presi Effective August 1, 201 U i W WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) . GRANTOR'S NAME AND ADDRESS: C) Ashland Community Hospital Foundation U 280 Maple Street Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS. Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, In the following described property: See Exhibit "A" attached hereto and Incorporated herein. This conveyance Is made on the express condition that . Grantee operates a general hospital In the City of Ashland, .Oregon, for a period of three years after the date of recordation of this instrument In compliance with the terms of that certain Affiliation Agreement dated the day of Su M IL , 2013, In which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee falls to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that If Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor, all rights of the Grantee and Its successors in Interest and assigns i In the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement, After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, If not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant, Grantee shall not. transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists 'of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND '17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND S. Ej TIONS 7, CHAPTER 8, OREGON LAWS 201 . DATED: The day of 13. ASH D CO MU Y P FOUNDATION ` By, r attery, Presi Effective August 1, 201 STATE OF OREGON ) ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the,U day of 2013 by Sandra Slattery as president of Ashland Community Hospital Foundation, an Oregon nonprofit orporatio , on behalf of the corporation. C- fi 'U Notary P tic for Oregon OFFICIAL SEAL KIMBERLY L Mycommission ~ xpires: fU y ~t 4:• V w ~ Ry P, 1m: MY Cl;p,. a•4 ~Lh f6, 2011 OFFICIA KIMBERLY L SEAL NOTARY PUBLIC YRES COMMISSION Np RE'GON MY COMMISSION EXPIRES MARCH? 68 p 6 i 2 EXHIBITPage r of f . I ' Parcel No Two (2) of Partition Plat recorded October 2, 1990, as Partition Plat No. P-102-1990 of "Record of Partition Plats" In Jackson County, Oregon, and filed as Survey No. 12201 In the Office of the County Surveyor. 391 E05DB 2601 Account: 1-079073-6 Situs Address; 530 Catalina Or, Ashland, OR 97520 Jackson County Official Records 2013.025860 J WARRANTY DEED R-WD Stn=1 MORGANSS 08/01/2013 10:13::47 AM H (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY). $15.00 $11.00 $10.00 $8,00 $15.00 $59.00 F" IC GRANTOR'S NAME AND ADDRESS: I, Christine Walker, county clerk for Jackson County, Oregon, certify C Ashland Community Hospital Foundation that the Instrument Identified herein was recorded In the Clerk U 280 Maple Street records. Christine Walker - County Clerk Ashland, OR 97520 GRANTEE'S NAME AND ADDRESS: Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO: Drescher & Womack PO Box 750 Ashland, OR 9752D SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, which took title as ACH Foundation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an, Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. On reentry by Grantor all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration, BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300. 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT. THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR .PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30,930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS ;-TO 7, 9CHAPTER 8, OREGON LAWS 2JDZMMITY DATED: TheVAday of / 2013. ASH fOITAL OUND N BY ra Slattery, Pres' Effective August 1, 013 41 WARRANTY DEED (FEE SIMPLE ON A CONDITION SUBSEQUENT AND RIGHT OF ENTRY) GRANTOR'S NAME AND ADDRESS: 0 Ashland Community Hospital Foundation U 280 Maple Street Ashland, OR 97520 0 GRANTEE'S NAME AND ADDRESS; Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 AFTER RECORDING RETURN TO; Drescher & Womack PO Box 760 Ashland, OR 97520 SEND TAX STATEMENTS TO: Ashland Community Hospital 280 Maple Street Ashland, OR 97520 Ashland Community Hospital Foundation, an Oregon nonprofit corporation, which took title as ACH Foundation, Grantor, conveys and warrants to Ashland Community Healthcare Services, an Oregon nonprofit corporation, Grantee, free of encumbrances except as specifically set forth herein, a fee simple on a condition subsequent and right of entry, in the following described property: See Exhibit "A" attached hereto and incorporated herein. This conveyance is made on the express condition that Grantee operates a general hospital in the City of Ashland, Oregon, for a period of three years after the date of recordation of this instrument in compliance with the terms of that certain Affiliation Agreement dated the 4th day of June, 2013, in, which Grantor, Grantee and Asante, an Oregon nonprofit corporation, are among the parties, and if the Grantee fails to do so, the Grantor may reenter and terminate the estate hereby conveyed pursuant to the terms of said Affiliation Agreement. This conveyance is further made on the express condition that if Asante activates its reversionary clause in accordance with the terms of said Affiliation Agreement, the Grantor may reenter and terminate the estate hereby conveyed pursuant-to the terms of said Affiliation Agreement. On reentry by Grantor all rights of the Grantee and its successors in interest and assigns in the estate hereby conveyed shall terminate in accordance with the terms of said Affiliation Agreement. After the expiration of three years and six months following the date of recordation of this deed, the foregoing condition subsequent, and right of entry, if not earlier exercised, shall terminate, and fee simple absolute title shall be vested in the Grantee and its successors and assigns. The foregoing conveyance is subject to the following restrictive covenant: Grantee shall not transfer or convey the above described property to any other party prior to the expiration of three years after the date of recordation of this instrument. The above described property is free from encumbrances, except those of record. The true consideration for this conveyance stated in terms of dollars is None. However, the actual consideration consists of other value given or promised which is the whole consideration. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. THIS INSTRUMENT DOES NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED: LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS O 7, CHAPTER 8, OREGON LAWS 2010 DATED: The' day of 2013. ASH D C MM ITY 0 ITAL OUND N By ra Slattery, Pres' e Effective August 1, 013 i i li ) STATE OF OREGON ) ss County of Jackson ) The foregoing Warranty Deed was acknowledged before me on the&ay of 2013 by Sandra Slattery as president of Ashland Community Hospital Foundation, an Oregon nonprofit c ration, n behalf of the corporation. otary Public or OregoV My commissio expir : ((jJ I I II OFFICIAL SEAL ' K[N[ ERLY L AYRES v ` NOTARY pUBLIC-OREEGON my OMMS810N Ep RES MAR H 67 8201 17 i I i i i i EXHISIT°-A- Page_i-ofi I Commencing at the intersection of the northeasterly right of way line of North Main Street with the west boundary line of Donation Land Claim No. 40 Which bears South 00°02'57" West (deed record South 00°03' West) 951.86 feet distance from the accepted northwest corner of Donation Land Claim No. 40 in Section 5, Township 39 South, Range 1 East, Willamette Base and Meridian, Jackson County, Oregon; thence North 28°1013" West i (deed record North 28°12' West a distance of 326.2 feet) along the northeasterly right of way line of said North Main Street for a distance of 326.20 feet to a 1/2 x 24" galvanized iron pipe situated at the westerly corner of that tract of land as set forth In Volume 411, Page 113, Jackson County, Oregon, Deed Records, being the true point of beginning; thence leaving said right of way tine, North 61°41'47" East (deed record North 61140 East 200.00 feet) along the northwesterly boundary line of said Volume and Page, for a distance of 200.00 feet to a 112 x 24" galvanized iron pipe situated at the northerly corner thereof; thence North 28°10'13" West (deed record North 28°12' West, 45,55 feet) for a distance of 46.03 feet to a 1/2 x 24" galvanized Iron pipe situated in the westerly boundary line of Donation Land Claim No. 40; thence North 00°02'57" East along said westerly boundary line (deed record North 00°03' East, 61.90 feet) for a distance of 61.90 feet to a set 1/2 x 24" galvanized iron pipe; thence leaving said Claim line, South 61 °41'47" West (deed record South 61040 West, 229.30 feet) for a distance of 229.27 feet to a 112 x 24' galvanized Iron pipe situated in the northeasterly right of way line of North Main street; thence south 28°10'13" East along said right of way line (deed record South 28°12' East, 100.00 feet) for a distance of 100.51 feet to the point of beginning, EXCEPTING THEREFROM that portion conveyed to the State of Oregon by and through its Department of Transportation by deeds recorded May 19, 1995 as Document Nos. 95-13393 and 95-13394, Deed Records of Jackson County, Oregon. AND FURTHER EXCEPTING THEREFROM that portion lying and situated within the boundary of the following described parcel; Beginning at a point on the West line of Donation Land Claim No 40, Township 39 South, Range 1 East, Willamette Meridian, Jackson County, Oregon , South 0°03" West 270,0 feet from the Northwest corner of said claim (said point being the point of intersection of the Southerly right of way line of the Southern Pacific Company, formerly the Oregon and California Railroad Company, with the West line of said claim); thence along said railroad right of way as follows: South 46019' East 189 feet; thence South 42044' East 217.2 feet; South 39009 East 217.5 feet; thence South 60°57' West 276,15 feet to the Easterly line of tract described in Volume 265 Page 471 Jackson County, Oregon, Deed Records; thence North 28°12' West, along said Easterly line, 70.0 feet, to the most Northerly corner of said tract; thence South 61°48' West, along the Northerly line thereof, 200.0 feet, to the Easterly side line of North Main Street; thence North 28°12' West, along said line, 50.00 feet to the Southwest corner of tract described in Volume 33 Page 481, said Deed Records; thence North 61 °48' East 200.0 feet to the Southeast corner of said tract; thence North 2.8°12' West, along the Easterly line of said tract and Its Northerly extension, 233,0 feet, more or less, to the Northeasterly corner of tract described In Volume 288 Page 86, said Deed Records; thence West, along the North line of said tract, to Intersect the West line of said Donation Land Claim No 40; thence North,. along said line, to the point of beginning. i Account; 1-080638-7 391 E05AD 601 ~s~a UR `17 Zo Sltus Address; r4or~'W NtA, J Q-, ' Jackson County Official Records 2013-025862 R-E 08/01/2013 10:13:47 AM Stn=1 MORGANSS W AftC'Y r2COYd111g return t0: $50..00 $11.00 $10,00 $8.00 $15,00 $3,00 $97.00 I, Christine Walker, County Clerk for Jackson County, Oregon, certify j= Ashland Community Hospital that the instrument identified herein was recorded in the Clerk 280 Maple Street records. Christine Walker - County Clerk O Ashland, Oregon 97520 U F-- RECIPROCAL ACCESS EASEMENT THIS RECI ROCAL ACCESS EASEMENT (this "Easement"), is made as of 2013, by and between Ashland Community Healthcare Services, an Oregon nonprofit-corporation ("ACH"), and Ashland Community Hospital Foundation, an Oregon nonprofit corporation ("Foundation"). RECITALS A. ACH is the owner of the real property located in Jackson County, Oregon, described on the attached Exhibit A (the "ACH Property"). B. The Foundation is the owner of the real property located in Jackson County, Oregon' described on the attached Exhibit B (the "Foundation Property"), C. ACH desires to grant to the Foundation and the Foundation desires to grant to ACH reciprocal access easements on the terms described herein. NOW, THEREFORE, the parties agree as follows: 1. Grant of ACH Easement. ACH hereby grants, bargains, assigns, conveys, and transfers to the Foundation, a nonexclusive, perpetual access easement on, over, and across the area located on the portion of the ACH Property covered by the driveway area running from Talent Avenue to North Pacific Highway that is fifteen feet wide and depicted on the attached Exhibit C. (the "ACH Easement Area") exclusively for purposes of ingress and egress to and from the Foundation Property and to and from Talent Avenue and North Pacific Highway, by pedestrians and vehicles. Such easement rights are for the benefit of the Foundation and its officers, directors, beneficiaries, members, partners, managers, employees, agents, contractors, tenants, licensees, and invitees (collectively, the "Foundation Benefited Parties"), I ~ 2, Grant of Foundation Easement, The Foundation hereby grants, bargains, assigns, conveys, and transfers to ACH, a nonexclusive, perpetual.access easement on, over, and across the area located on the portion of the Foundation Property covered by the driveway area running from Talent Avenue to North Pacific Highway that is fifteen feet wide and depicted on the attached Exhibit C (the "Foundation Easement Area") exclusively for purposes of ingress and egress to and from the ACH Property and to and from Talent Avenue and North Pacific 1 j 1 PDXDOCS:2009039.3 After recording return to,, Ashland Community Hospital 280 Maple Street ® Ashland, Oregon 97520 U RECIPROCAL ACCESS EASEMENT THIS RECI ROCAL ACCESS EASEMENT (this "Easement"), is made as of , 2013, by and between Ashland Community Healthcare Services, an Oregon nonprofit corporation ( ACH and Ashland Community Hospital Foundation, an Oregon nonprofit corporation ("Foundation"). i RECITALS A. ACH is the owner of the real property located in Jackson County, Oregon, described on the attached Exhibit A (the "ACID Property"). B T t real located in he Foundation is the owner of he property Jackson County, Oregon, described on the attached Exhibit B (the "Foundation Property"). C. ACH desires to grant to the Foundation and the Foundation desires to grant to ACH reciprocal access easements on the terms described herein. NOW, THEREFORE, the parties agree as follows: i 1. Grant of ACH Easement, ACH hereby grants, bargains, assigns, conveys, and transfers to the Foundation, a nonexclusive, perpetual access easement on, over, and across the area located on the portion of the ACH Property covered by the driveway area running from Talent Avenue to North Pacific Highway that is fifteen feet wide and depicted on the attached Exhibit C (the "ACH Easement Area") exclusively for purposes of ingress and egress to and fi•om the Foundation Property and to and from Talent Avenue and North Pacific Highway, by pedestrians and vehicles. Such easement rights are for the benefit of the Foundation and its officers, directors, beneficiaries, members, partners, managers, employees, agents, contractors, tenants, licensees, and invitees (collectively, the "Foundation Benefited Parties"). 2. Grant of Foundation Easement. The Foundation hereby grants, bargains, assigns, conveys, and transfers to ACH, a nonexclusive, perpetual access easement on, over, and across the area located on the portion of the Foundation Property. covered by the driveway area runriing from Talent Avenue to North Pacific Highway that is fifteen feet wide and depicted on the attached Exhibit C (the "Foundation Easement Area") exclusively for purposes of ingress and egress to and from the ACH Property and to and froin Talent Avenue and North Pacific 1 , PDXDOCS:2009039.3 Highway, by pedestrians and vehicles. Such easement rights are for the benefit of ACH and its officers, directors, beneficiaries, members, partners, managers, employees, agents, contractors, tenants, licensees, and invitees (collectively, the "ACH Benefited Parties"). The ACH Benefited. Parties and the Foundation Benefited Parties are sometimes, as the context implies, referred to individually and sometimes referred to collectively as the "Benefited Parties." Collectively, the ACH Easement Area and the Foundation Easement Area are referred to as the "Easement Areas" or are individually referred to as the "Easement Area." 3. Restrictions and Obligations. 3.1 The Benefited Parties shall: 3.1.1 Use the Easement Areas in accordance with all applicable laws, ordinances, rules, regulations, and standards of all governmental agencies or entities; 3.1.2 Use the Easement Areas at such time and in such a manner so as not to unreasonably interfere with the use of the Easement Areas by the other Benefited Parties; 3.1.3 Use the Easement Areas at such time and in such manner so as not to unreasonably interfere with the use by ACH or the Foundation of their respective properties; 3.1.4 Not, nor permit its Benefited Parties to construct any building or other . improvement, store any property, or take any other action that blocks, obstructs, or interferes with flow or passage of vehicular or pedestrian traffic throughout the Easement Areas, except as is reasonably required for limited periods of time for periods of repair, restoration, or reconstruction of the Easement Area or improvements thereto located on such party's property; 3.1.5 Promptly repair, at such party's sole cost and expense, any damage, including damage to landscaping, paving, or other improvements, caused by such party or its Benefited Parties, to the Easement Areas or the other party's property; and 3.1.6 Pay when due all claims for labor and materials furnished, or alleged to have been furnished, to, for, or on behalf of such party in comlection.with any work on the Easement Areas. 4. Maintenance; Improvements. 43 Maintenance of the Easement Areas. Each party shall, at its sole cost. and expense, maintain the Easement Area located on its property, in a good, clean, and safe condition, including, but not limited to, all of the roadways, sidewalks, and landscaping. ACH shall have no responsibility for or be obligated in any way to repair any damage to the Easement Areas arising from any intentional, negligent or abnormal use by the Foundation or any of the Foundation Benefited Parties, and. such repairs shall be the sole responsibility of the Foundation and shall be repaired at the Foundation's sole expense. Further, the Foundation shall have no: responsibility for or be obligated in any way to repair any damage to the Easement Areas arising from any intentional, negligent or abnormal use by ACH or any of the ACH 2 PDXDOCS:2009039.3 4.' I . Benefited Parties, and such repairs shall be the sole responsibility of ACH and shall be repaired at ACH's sole expense. 4.2 Ordinary Maintenance. Maintenance of the Easement Areas includes normal road improvement and maintenance work to adequately maintain the Easement Areas and related drainage facilities to pen-nit all weather access, and includes prompt patching or filling of holes, treating for an extended life, repairing cracks, repairing and resurfacing roadbeds, gravelling, asphalting, grading, repairing and maintaining drainage structures, removing debris, maintaining: any signs, markers, striping, and lighting, if any, and other work reasonably necessary or proper to repair and preserve the roadway for all weather road purposes, and maintenance, repair,.or improvements required by law. Resurfacing or replacing of pavement in the Easement Areas shall be done with the same type of material originally installed or with a substitute material of equal or better quality, use, or durability to the original surfacing material. 4.3 Improvements. Except as provided in Section 3. 1, ACH shall have no right to improve or reconstruct the improvements in the Foundation Easement Area, and the Foundation shall have no. right to improve or reconstruct the improvements in the ACID Easement Area. 5. Taxes. ACH and the Foundation shall pay when due all real property taxes, assessments; and other charges with respect to the ACH Property and the Foundation Property, respectively, 6. Default. 6.1 Failure to Perform. In the event that a party fails to pay or perform any of its j obligations under this Easement, other than monetary obligations to the other party, or fails to comply with any covenant or restriction set forth herein (the "Defaulting Party"), and fails to cure the default or breach prior to the expiration of fifteen (15) days after notice of the default is given to the Defaulting Party by a party that is not the Defaulting Party (the "Non-Defaulting Party"), or fails to commence the cure of the default or breach and diligently prosecute such cure to completion without unreasonable delay, if such default or breach is of a nature that it cannot be cured within the 15-day period, then the Non-Defaulting Party shall have the right, but not the obligation, to cure such.default for the account of and at the expense of the Defaulting Party; provided, however, in the event of emergency conditions constituting default, the Non- Defaulting Party shall have the right to cure such default upon such advance notice as is reasonably possible under the circumstances or, if necessary, without advance notice, so long as. notice is given as soon as possible thereafter. Any notice provided shall specify with particularity the nature of the default claimed and shall set forth in detail the action which the. Non-Defaulting Party proposes to take in order to cure the claimed default. To effect any such cure, the Non-Defaulting Party shall have the right to enter upon the Defaulting Party's property to perform any necessary work or furnish any necessary materials or services to cure the default of the Defaulting Party. The Non-Defaulting Party shall be entitled to reimbursement from the Defaulting Party of all sums reasonably expended in perfonning such obligations, less any amounts the Non-Defaulting Party would have been required to pay under the terns of this Easement. . 6.2 Payments. If the Defaulting Party fails to pay any sum of money due to the other party within 15 days after receipt of a request for payment fiom a Non-Defaulting Party, the 3 PQXDOCS:2009039.3 Defaulting Party shall pay to the Non-Defaulting Party the costs incurred by such Non- Defaulting Party to cure the deficiency, plus interest thereon at the rate of 12 percent per annum from the date incurred until the date of repayment. In addition, a lien will be granted in favor of the Non-Defaulting Party against the property of the Defaulting Party in the amount of the sums owed, which lien may be foreclosed by suit, power of sale, or in any other manner pennitted by applicable law, including power of sale foreclosure. 6.3 Injunctive Relief. In the event of any breach or threatened breach of any provision of this Easement by any party, without limiting any other rights or remedies available at law or equity, the other party may bring an action for contribution, specific performance, or injunction. 6.4 Limitation. In no event shall an alleged breach by one party of its obligations under this Easement deprive that party of its use and enjoyment of its respective Easement Area unless and until a court of competent jurisdiction enters a decree limiting, temporarily restraining or permanently restraining or otherwise depriving the breaching party of its rights under this Easement or use and enjoyment of its applicable Easement Area. 7. Indemnification. ACH agrees to indemnify, defend and hold harmless the Foundation and its employees, officers, and directors, and the Foundation Benefited Parties from and against all liabilities, damages, claims, costs, losses, obligations, actions, suits, judgments, demands, fines, and expenses whatsoever, including reasonable attorney's fees and court costs, arising out of or in any way related to (a) use of the Easement Areas by ACH or any of the ACH Benefited Parties, (b) entry by ACH or any of the ACH Benefited Parties onto the Foundation Property, or (c) the acts or omissions of ACH or any of the ACH Benefited Parties. The Foundation agrees to indemnify, defend and hold harmless ACH and its employees, officers, and directors, and the ACH Benefited Parties from and against all liabilities, damages, claims, costs, losses, obligations, actions, suits, judgments, demands, fines, and expenses whatsoever, including reasonable attorney's fees and court costs, arising out of or in any way related to (a) use of the Easement Areas by the Foundation or any of the Foundation Benefited Parties, (b) entry by the Foundation or any of the Foundation Benefited Parties onto the ACH Property, or (c) the acts or omissions of the Foundation or any of the Foundation Benefited Parties. The terms of this Section 7 will survive the termination of this Easement. 8. Relocation. Each party to this Easement retains the right to relocate the portion of Easement Area located on such party's property, provided that such relocation is at the sole cost and expense of the party doing the relocating and further provided that following completion of the relocation the Easement Areas still constitute one, uninterrupted driveway. In connection with such relocation, the relocating party may record an amendment to this Easement specifying j the new location of the Easement Area. 9. Merger. In the event the ownership of the ACH Property and the Foundation Property comes under single ownership, this Easement and the easements granted herein shall be extinguished by operation of law and be of no further force or effect. 10. Modification and Amendment. No amendment, modification, or tennination of this Easement shall be effective until the written instrument setting forth its tenns has been executed 4 PDXDOCS:2009039,3 i and acknowledged by the parties hereto and recorded in the real property records of Jackson County, Oregon. 11. Effect of Easement. The rights and restrictions granted and reserved in this Easement shall be appurtenant to the ACH Property and the Foundation Property and shall be perpetual. The easements, benefits, burdens, obligations, and restrictions created in this Easement shall create covenants, benefits, and servitudes upon the ACH Property and the Foundation Property as set forth herein, and shall run with the land, and shall bind and inure to the benefit of ACH and the Foundation as well as each of their successors and assigns. There are no third=party beneficiaries to this Easement and only ACH and the Foundation, and each of their successors and assigns, may enforce the terms of this Easement. ACH and the Foundation reserve all rights of ownership and use of their respective properties to the extent such use does not unreasonably interfere with the rights granted herein. 12. Reservation in Deeds. The easements and covenants set forth in this Easement shall be deemed reserved or granted in a deed to any portion of the ACH Property or the Foundation Property, notwithstanding that such deed fails to reference this Easement or such reservation or grant. 13. Governing Law. This Easement shall be governed by and construed in accordance with. the laws of the state of Oregon. 14. Attorneys' Fees. In the event that any party brings an action to enforce its rights hereunder, including, but not limited to, at trial, on any appeal, or while enforcing its rights in any bankruptcy proceeding, the prevailing party in such action shall be entitled to receive all costs and reasonable attorney's fees in addition to any damages to which it is due by reason of such action. 15. Recording. This Easement shall be recorded by any party in the real property records of Jackson County, Oregon. 16. Entire Agreement. This Easement contains the entire agreement and understanding of the parties with respect to the Easement Areas. 17. Counterparts. This Easement may be executed in one or more counterparts, which when taken together, shall constitute one and the same original. 18. No Public Dedication. Nothing in this Easement shall be deemed to be a gift or dedication of any portion of the Easement Areas to the general public or for the general public or any public purpose. 19. Joint and Several. If at any time there is more than one owner of either the ACH Property or the Foundation Property, the obligations of all of the co-owners under this Easement: shall be joint and several. 5 r' PDXDOCS:2009039.3 ~I IN WITNESS WHEREOF, the undersigned has executed this Easement as of 2013, ACH: ASHLAND COMMUNITY HEALTHCARE SERVICES By: Name: Its: d ACH FOUNDATION: ASHLAND C M ITY ITAL FOUN TION ~ By: Nam Its: C f I i i 6 PDXDOCS:2009039.3 i i State of OREGON County of Jackson This instrument was acknowledged beforeinc on , 20132 by as of Ashland ommunity Healthcare Services. CIAL SISAL 6CI~ Y "YJZs 5 ' NOTAi)f 'ON Notary ublic for t to e of Oregon MY MMIS5 MARCH 6$ 07 :'XPI~IE EGON State of OR County of Jackson ~I This instrument was ackn wledged before me on 2013, by as of Ashland Community Hospital Foundation. L~~ j4j&J01Ah1Jr46a0 Notary P blie for the S Vat regon OFFICIAL SEAL LY I GYRES NOTAARY RY P UflLIC-OREGON . MY COMMISSION Ep R XOES M0ARCH7 &$207 I 7- PDXDOCS:2009039.3 1 1 j EXHIBIT A Legal Description of ACH Property I Commencing of a point on the east line of Donation Land Claim No, 60 in Township 38 South. Range I West of the Willamette Meridian in Jackson County, Oregon, which point is 330 feet North of the Southeast corner of said Claim, thence South 84`00' West 395.1 feet to an iron pin on the western right of way line of the relocated Pacific Highway No, 99, thence North 52'41' West, along said right of way line, 412.80 feet to the true point of beginning; thence South 84`10' West 39.95 feet; thence North 05'50' V'. est 4.06 feet; thence South 84"10"West 70.33 feet; thence South 05'50' East 4.06 feet; thence South 84'10' West 37,90 feet to the northwest corner of the tract described in deed recorded as No, 94-25870 of the Official Records of Jackson County, Oregon; thence continue South 84`10' ti; .pest 148.0 feet to the eastern right of way line of the Old Pacific Highway No. 99; thence North 25`36' West, along said right of Yay line, 95,85 feet to the northwest corner of the tract described in deed recorded as No. 93-21602 of said Official Records; thence North 78`07' East 208.14 feet. to a point situated on aforesaid :western right of way line, of said relocated Highway No. 99; thence South 52"41' East, along said right of way line. 163,10 feet, more or less: to the true point of beginning. Account: 381N123CA 700 1-027478-2 Sites Address: 249 North Pacific Hwy, Talent, Oregon 97540 A-1 PDXD0CS:2009039:3 5 . EXHIBIT B Legal Description of the Foundation Property Cornm6hcing'at a paint on the East line of Donation Land Claim No 60 in Township 38 South, Range 1 West of the Willamette Meridian in .Jackson Cot.inty, Oregon, which point is 330 {era( North of the Souther}st corner of paid Ciainn, thence Sot.tth 84000' t'Jest 395.1 feet to an iron pin on 'e western right-of-Nay line of the relocated Pacific Highway, thence North 52°41"West along said right-of-way line 344.0 feQt to the trots pomf. of beginning: thence South 84°10' West 179.47 feet; thence North 27143' West 50.71 teet; thence, North 84010' East 37.90 feet; thence North 05'150' Nest 4.06 feet; thence North 841110' East 70.33 feet:; th(ance South 05°50' East 4.06 ieef.; thence: worth 84°10' East 39.9 5 fc; oi. to a point situated on aforesaid western right-of'-way line or said Highway:1honcc South 521141' East along said right'-of-Way line 68.80 feet to ;he true point of beginning. 4 Accot.int: 381)N230A 800 1-027479-1 Situs Address: 205 North Pacific Hwy, Talent, Oregon 97540 I B-1 9 PDXDOCS:2009039.3 EXHIBIT C Diagram of the Easement Area tr {~s 7 Tt*Y, l dll I c n I vro a ~ ° cr a,r ~1 tl.1 _ - 43'3: 01 I r 7 b 44 r _ #1 AACH Horne Heafth & HOSPiee - 209 N Pacific Hljv s #2 ACH Family Practice--.49 Talent Ave ##3 Medieap Pharmacy (owned byAACH Foundation) W 205 N Pacific Hvvy 4 201 N Pacific Hw t Easement LNtLll>1,111RYWIrlJlllrfll1.1111111:/.131C1111t/rl,'!!I1111U[Lllllffl, C-1 1 ® PDXDOCS:2009039.3 by and between CITY OF ASHLAND ("Lessor") and ASHLAND COMMUNITY HEALTHCARE SERVICES ("Lessee") RECITALS A. Lessor and Lessee are parties to a Facilities Lease dated June 5, 1996 ("Lease") respecting those certain parcels of real property described on the attached Exhibit A, together with all facilities and other improvements located thereon, including but not limited to land improvements, buildings and fixed equipment (collectively, the "Premises"). B. Lessor and Lessee desire to terminate the Lease pursuant to the terms and conditions set forth in this Termination of Facilities Lease ("Agreement"). C. Immediately upon termination of the Lease, Lessor will convey its ownership of the Premises to Lessee. In consideration of the mutual promises, covenants and undertakings of the parties herein described, the parties hereby agree as follows: AGREEMENT The foregoing recitals are incorporated herein for all purposes as if fully set forth. 1. Termination. On the Effective Date (defined below) Lessor and Lessee hereby terminate the Lease, at which time the Lease shall be of no further force or effect. 2. Release. The parties release and forever discharge each other, their heirs, executors, administrators, and successors, from all claims, demands, damages, and/or liabilities of any nature whatsoever, concerning or arising out of the Lease except for the obligations set forth in this Agreement. 3. Attorney Fees. If any suit or action is filed by any party to enforce this Agreement or otherwise with respect to the subject matter of this Agreement, the prevailing party shall be entitled to recover reasonable attorney fees incurred in preparation or in prosecution or defense - - of such suit or action as fixed by the trial court, and if any appeal is taken from the decision of the trial court, reasonable attorney fees as fixed by the appellate court. PDXDOCS:2009389.2 together shall constitute one and the same instrument. 5. Applicable Law. This Agreement has been entered into in the State of Oregon. The parties agree that the laws of the State of Oregon shall be used in construing this Agreement and enforcing the rights and remedies of the parties. 6. Entire Agreement. This agreement constitutes the entire agreement between the parties with respect to termination of the Lease. Any prior conversations or writings are merged herein and extinguished. No subsequent amendment to this Agreement shall be binding upon Lessor or Lessee unless reduced to writing and signed. 7. Effective Date. The effective date of this Agreement shall be the date title to the Premises is transferred to Lessee (the "Effective Date"). If the Premises are not transferred on or before August 31, 2013, this Agreement will deemed void ab initio and of no force or effect. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. LESSOR: LESSEE: THE CITY OF ASHLAND ASHLAND COMMUNITY HEALTHCARE SERVICES By L F7 . By d, v c Its Its (,=r Date 1I Date STATE OF OREGON ) 2013 ss. COUNTY OF JACKSON- ) I certify that I know or have satisfactory evidence that _ - ` signed this instrument, on oat , stated that he or she was authorized to execute the instrument and acknowledged it as the of the City of Ashland to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary P blic - Skat o regon My Com ission(E Aires: STATE OF OREGON ) OFFICIAL SEAL Y ES Kli PUBLIC-OREGON NOTARY R't COMMISSION NO. 474826 MY COMMISSION EXPIRES MA--' 16, 2017 PDXD0CS:2009389.2 - t I certify that I know or have satisfactory evidence that signed this instrument, on oath stated that he or she was authorized to execute the instrument and acknowledged it as the ~ }Cc _ ` of Ashland Community Healthcare Services to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary ublic - S~Jlires of Orego }My Co mission : fCOFFICIAL SEAL KIMBE LY L AYRES NOTAR',V BLIC- RFGON CO MIS6iON NO. 474826 MY COMMISSION EXPIRES MARCH 16, 2017 PDXDOCS:2009389.2 391E05DB 2100 Beginning at the intersection of the North side-line of Lot 12 of WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, with the east side-line of Chestnut Street in said City; thence South 18' East along the dividing line between said Lot 12 and said Chestnut Street, 202.00 feet; thence South 89°53' East 412.00 feet, more or less, to the East side of said Lot 12; thence North 31' West along said East side-line, 202.00 feet to the northeast corner of said Lot 12; thence North 89°53' West 411.98 feet, more or less, to the place of beginning. EXCEPTING THEREFROM beginning at the northwest corner of Lot 8 of the WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon; thence South 0°31' East along the west line of said Lot 70.0 feet to the northeast corner of Lot 5 of Block 1 of the KERR SUBDIVISION in said City; thence North 89°53' West along the north line of said Lot 5, a distance of 79.31 feet; thence North 9°31' West 24.00 feet to the southerly right-of-way line of Catalina Drive in said City of Ashland; thence Northeasterly along said right-of-way 90.78 feet to the point of beginning. ALSO EXCEPTING THEREFROM that portion lying within Catalina Drive dedicated by Resolution recorded December 12, 1967 as No. 67-11703 of the Official Records of Jackson County, Oregon. ALSO the west 142.00 feet of Lot 7 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO Lots 1, 2, and 3 of the WIMER'S SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, Lot 4 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. ALSO, the West 142.00 feet of the following described property: Beginning at a point 396.00 feet South and 33.00 feet West of the northeast corner of the Northwest Quarter of the Southeast Quarter of Section 5, Township 39 South, Range 1 East of the Willamette Meridian in Jackson County, Oregon; thence West 330.00 feet; thence South 155.6 feet; thence East 330.00 feet; thence North 155.6 feet to the point of beginning. ALSO all portion of Lot 5 of WIMER'S SUBDIVISION in the City of Ashland, Jackson County, Oregon, lying West of line which is 191.0 feet North 89°53' West of and which line bears North 0°31' West parallel with the west line of Scenic Drive in said City. ALSO beginning at a point 188.00 feet West of the southeast corner of tract described in Volume 285, page 424 of the Deed Records of Jackson County, Oregon; thence West 142.00 feet to the southwest 11b.0U teet to the place of peginning. being a part of Lot b of wiiVitK'S SUbUiVNUN to the city of Ashland, Oregon. Account: 1-005713-4 391E05DB 2100 Situs Address: 278 & 280 Maple St, Ashland, OR 97520 Jackson County Physical Therapy 559 Scenic Dr, Ashland 391E05dB 2400 Lot Five (5) of WIMER SUBDIVISION to the City of Ashland, Jackson County, Oregon, according to the official plat thereof, now of record. EXCEPTING THEREFROM that portion of said Lot 5 lying West of a line which is 191.0 feet North 89953' West of and which line bears North 0931' West parallel with the west line of Scenic Drive in said City, as conveyed to the City of Ashland by deed recorded in Volume 488 Page 21 of the Deed Records of Jackson County. Account: 1-005714-2 391E05DB 2400 Bill of Sale For good and valuable consideration, the receipt of which is hereby acknowledged, Ashland Community Hospital Foundation("Seller") does hereby sell, assign, transfer, and convey to Ashland Community Healthcare Services ("Purchaser") all personal property owned by Seller and located on or in or used in connection with the Property (as that term is defined in the Purchase and Sale Agreement dated June 4, 2013, between Seller and Purchaser), and that is described in the Schedule attached hereto and incorporated herein by this reference. Seller hereby represents and warrants to Purchaser that Seller is the lawful owner of this personal property, that this personal property is free and clear of all liens, encumbrances, conditional sales contracts, security interests, and claims, and that Seller has all lawful right and authority to make this conveyance. DATED: L32013 SELLER: Ashland Co nity Hospital FoungRIT By Printed Name: S10_. Its: z Q Date Executed: V/ SrfI%'P,E pF ORE6orl ISS ¢ EffEr-Y1JL OA Av6uSt-l, 2013- OFFICIAL QIiEN 0 DRESCNER ✓VO?A PQ rc t,OtApr aUBLIC•OREOON ~ t3 L L C f /Z OIifGO N CONYISMSWN EXOPI F OCTOBER to lf18 r Mi R. en '~6/2a jC Schedule to Bill of Sale All tangible personal property located on the land or in the improvements described in Exhibits 9.2.1, 9.2.2, 9.2.3, 9.2.4, and 9.2.5 with no exceptions. Bill of Sale For good and valuable consideration, the receipt of which is hereby acknowledged, the City of Ashland ("Seller") does hereby sell; assign, transfer, and convey to Ashland Community Healthcare Services ("Purchaser') all personal property owned by Seller and located on or in or used in connection with the Property (as that term is defined in the Purchase and Sale Agreement dated June 4, 2013, between Seller and Purchaser), and that is described in the Schedule attached hereto and incorporated herein by this reference. Seller hereby represents and warrants to Purchaser that Seller is the lawful owner of this personal property, that this personal property is free and clear of all liens, encumbrances, conditional sales contracts, security interests, and claims, and that Seller has all lawful right and authority to make this conveyance. DATED: VO -Y 31 2013 SELLER: City of Ashland Printed.Name: ~A~JC (eAt306:k Its: C-tty hon,OiS ftAtoR Date Executed: Schedule to Bill of Sale All tangible personal property located on the land or in the improvements described in Exhibits 9.1A and 9.18 with no exceptions. DLEONG DATE (MM/DD/YYYY) EVIDENCE PROPERTY INSURANCE 7130/2013 THIS EVIDENCE OF PROPERTY INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE ADDITIONAL INTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST. AGENCY PHONE EM : (541) 779-1321 COMPANY AtC No _ Medford Office Lexington Insurance Company Paynewest Insurance, Inc. address 38 North Central Ave. Suite 100 Medford, OR 97501 (A No (541) 779-9187 RIESS. CODE: SUB CODE: AGENCY ASHLCOM-01 CUSTOMER ID INSURED LOAN NUMBER POLICY NUMBER 014498276 Asante Ashland Community Hospital EFFECTIVE DATE EXPIRATION DATE 280 Maple Street CONTINUED UNTIL Ashland, OR 97520 911/2012 9/1/2013 TERMINATED IF CHECKED THIS REPLACES PRIOR EVIDENCE DATED: PROPERTY INFORMATION LOCATION/DESCRIPTION Lac # 0, Bldg # 0, Blanket Building & Business Personal Property Loc # 1, Bldg # 1, 278 - 280 Maple Street, Ashland, OR 97520, Main Hospital Building L# 2, Bldg # 1, 287 Maple Street, Ashland, OR 97520, Medical Offices Loc # 3, Bldg # 1, 600 Chestnut Street, Ashland, OR 97520, On-Call facilities Loc # 4, Bldg # 1, 530-560 Catalina, Ashland, OR 97520, Medical Offices & Parking Lot SEE ATTACHED ACORD 101 { THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF PROPERTY INSURANCE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. COVERAGE INFORMATION COVERAGE i PERILS / FORMS _ AMOUNT OF INSURANCE DEDUCTIBLE Loc # 0, Bldg # 0 Blanket Building, Business Personal Property-Special Form, Repi Cost, 100% Coins 80,000,000 10,000 Earthquake, Earthquake Sprinkler Leakage 50,000,000 2 Flood 50,000,000 100,000 Loc # 1, Bldg # 1 Building- Special Form, Repl Cost, 100% Coins 50,000,000 10,000 Business Personal Property - Special Form, Repl Cost, 100% Coins 16,000,000 10,000 Tenants Improvements and Betterments-Special Form, Repi Cost, 100% Coins 15,000 10,000 Business Personal Property-Special Form, Repl Cost, 100% Coins 10,000 10,000 Business Interruption 3,000,000 48 Extra Expense 1,000,000 48 SEE ATTACHED ACORD 101 REMARKS (Including Special Conditions) _ _ Special Conditions: As their Interest May Appear CANCELLATION -SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. ADDITIONAL INTEREST NAME AND ADDRESS MORTGAGEE X ADDITIONAL INSURED LOSS PAYEE LOAN # AUTHORIZED REPRESENTATIVE The City of Ashland 1 20 E Main St wj"n4C4 q As and, OR 97520 ACORD 27 (2009112) ©1993-2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD AGENCY CUSTOMER ID: ASHLCOM-01 DLEONG LOC ACC)PIREV ADDITIONAL REMARKS SCHEDULE Page 1 of 1 AGENCY NAMED INSURED Medford Office Asante Ashland Community Hospital 280 Maple Street POUCY NUMBER Ashland, OR 97520 014498276 CARRIER N 7 AIC GODS EFFECTIVE DATE: 9/11/2012 ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: ACORD V FORM TITLE: EVIDENCE OF PROPERTY INSURANCE Locations: Loc # 5, Bldg # 1, 323 Maple Street, Ashland, OR 97520, Medical Office Storage (Vacant) Loc # 6, Bldg # 1, 1970 Ashland Street, Ashland, OR 97520, Home Health/Hospice Loc # 7, Bldg # 1, 540 YMCA Way, Ashland, OR 97520, Aquatic Physical Therapy Loc # 8, Bldg # 1, 101 Sunny St, Talent, OR 97540, Maintenance & Storage Loc # 9, Bldg # 1, 49 Talent Ave, Talent, OR 97540, Business Offices Loc # 10, Bldg # 1, 628 N. Main St., Ashland, OR 97520, Medical Office Loc # 11, Bldg # 1, 241 Maple St., Ashland, OR 97520, Medical Office-Storage(Vacant) Loc # 12, Bldg # 1, 731 N Main St., Ashland, OR 97520, Medical Office Loc # 13, Bldg # 1, 317 Maple St, Ashland, OR 97520, Medical Office-Storage (Vacant) Loc # 14, Bldg # 1, 209 N. Pacific Hwy, Talent, OR 97540, Vacant (future Home Health/Hospice) Coverage Information: Loc # 2, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $175,000.00, Deductible: $10,000.00 Business Personal Property Special Form, Repl Cost, 100% Coins, Amount of Insurance: $70,000.00, Deductible: $10,000.00 Loc # 3, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $215,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $15,000.00, Deductible: $10,000.00 Loc # 4, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $2,000,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Loc # 5, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $225,000.00, Deductible: $10,000.00 Loc # 6, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $150,000.00, Deductible: $10,000.00 Loc # 7, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $2,000.00, Deductible: $10,000.00 Loc # 8, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $75,000.00, Deductible: $10,000.00 Loc # 9, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $1,130,000.00, Deductible: $10,000.00 Loc # 10, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $250,000.00, Deductible: $10,000.00 Loc # 11, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $915,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $800,000.00, Deductible: $10,000.00 Loc # 12, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $1,000.00 Lac # 13, Bldg # 1 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $10,000.00, Deductible: $10,000.00 Loc # 14, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $360,000.00, Deductible: $10,000.00 ACORD 101 (2008/01) © 2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD DLEONG S-.. DATE (MMIDD/YYYY) EVIDENCE OF-PROPERTY INSURANCE 7/30/2013 THIS EVIDENCE OF PROPERTY INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE ADDITIONAL INTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST. AGENCY PHONE (541) COMPANY (A/C. No. Ext): 779-1321 Medford Office Lexington Insurance Company PayneWest Insurance, Inc. address 38 North Central Ave. Suite 100 Medford, OR 97501 aC No ):(541) 779-9187 ADDRIE5S: CODE: SUB CODE: AGENCY ASHLGOM-01 CUSTOMER ID INSURED LOAN NUMBER POLICY NUMBER 014498276 Asante Ashland Community Hospital EFFECTIVE DATE EXPIRATION DATE 280 Maple Street :jjTER" ONTINUED UNTIL Ashland, OR 97520 9/1/2012 911/2013 N ATED IF CHECKED -L _ - THIS REPLACES PRIOR EVIDENCE DATED: PROPERTY INFORMATION LOCATION/DESCRIPTION Loc # 0, Bldg # 0, Blanket Building & Business Personal Property Loc # 1, Bldg # 1, 278 - 280 Maple Street, Ashland, OR 97520, Main Hospital Building Loc # 2, Bldg # 1, 287 Maple Street, Ashland, OR 97520, Medical Offices Loc # 3, Bldg # 1, 600 Chestnut Street, Ashland, OR 97520, On-Call facilities Loc # 4, Bldg 1111, 530-560 Catalina, Ashland, OR 97520, Medical Offices & Parking Lot SEE ATTACHED ACORD 101 THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF PROPERTY INSURANCE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. COVERAGE INFORMATION COVERAGE / PERILS / FORMS AMOUNT OF INSURANCE DEDUCTIBLE Loc # 0, Bldg # 0 Blanket Building, Business Personal Property-Special Form, Repl Cost, 100% Coins 80,000,000 10,000 Earthquake, Earthquake Sprinkler Leakage 50,000,000 2 Flood 50,000,000 100,000 Loc # 1, Bldg # 1 Building- Special Form, Repl Cost, 100% Coins 50,000,000 10,000 Business Personal Property - Special Form, Repl Cost, 100% Coins 16,000,000 10,000 I Tenants Improvements and Betterments-Special Form, Repl Cost, 100% Coins 15,000 10,000 Business Personal Property-Special Form, Repl Cost, 100% Coins 10,000 10,000 Business interruption 3,000,000 48 Extra Expense 1,000,000 48 SEE ATTACHED ACORD 101 REMARKS Including Special Conditions Special Conditions: As their Interest May Appear w _ CANCELLATION C SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. ADDITIONAL INTEREST NAME AND ADDRESS MORTGAGEE ADDITIONAL INSURED LOSS PAYEE _ LOAN # AUTHORIZED REPRESENTATIVE Asante 2650 Siskiyou Blvd y1 J Medford, OR 97504 ACORD 27 (2009/12) ©1993-2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD AGENCY CUSTOMER ID: ASHLCOM-01 DLEONG LOC AC ADDITIONAL REMARKS SCHEDULE Page 1 of 1 AGENCY NAMED INSURED Medford Office Asante Ashland Community Hospital 280 Maple Street POLICY NUMBER Ashland, OR 97520 014498276 CARRIER v' NAIC CODE EFFECTIVE DATE: 9/1/2012 _ ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: ACORD 27 FORM TITLE: EVIDENCE OF PROPERTY INSURANCE Locations: Loc # 5, Bldg # 1, 323 Maple Street, Ashland, OR 97520, Medical Office -Storage (Vacant) Loc # 6, Bldg # 1, 1970 Ashland Street, Ashland, OR 97520, Home Health/Hospice Loc # 7, Bldg # 1, 540 YMCA Way, Ashland, OR 97520, Aquatic Physical Therapy Loc # 8, Bldg # 1, 101 Sunny St, Talent, OR 97540, Maintenance & Storage Loc # 9, Bldg # 1, 49 Talent Ave, Talent, OR 97540, Business Offices Loc # 10, Bldg # 1, 628 N. Main St., Ashland, OR 97520, Medical Office Loc # 11, Bldg # 1, 241 Maple St., Ashland, OR 97520, Medical Office-Storage(Vacant) Loc # 12, Bldg # 1, 731 N Main St., Ashland, OR 97520, Medical Office Loc # 13, Bldg # 1, 317 Maple St, Ashland, OR 97520, Medical Office-Storage (Vacant) Loc # 14, Bldg # 1, 209 N. Pacific Hwy, Talent, OR 97540, Vacant (future Home Health/Hospice) (Coverage Information: Loc # 2, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $175,000.00, Deductible: $10,000.00 Business Personal Property -Special Form, Repl Cost, 100% Coins, Amount of Insurance: $70,000.00, Deductible: $10,000.00 Loc # 3, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $215,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $15,000.00, Deductible: $10,000.00 Loc # 4, Bldg # 1 Building-Special Form, Repi Cast, 100% Coins, Amount of Insurance: $2,000,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Loc # 5, Bldg # 1 (Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $225,000.00, Deductible: $10,000.00 Loc # 6, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $150,000.00, Deductible: $10,000.00 Loc # 7, Bldg # 1 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $2,000.00, Deductible: $10,000.00 Loc # 8, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $75,000.00, Deductible: $10,000.00 Loc # 9, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $1,130,000.00, Deductible: $10,000.00 Loc # 10, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $250,000.00, Deductible: $10,000.00 Loc # 11, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $915,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $800,000.00, Deductible: $10,000.00 Loc # 12, Bldg # 1 Building-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $1,000.00 Loc # 13, Bldg # 1 Business Personal Property-Special Form, Repi Cost, 100% Coins, Amount of Insurance: $10,000.00, Deductible: $10,000.00 Loc # 14, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $360,000.00, Deductible: $10,000.00 L ACORD 101 (2008/01) © 2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD QQ _ DLEONG DATE (MM/DD/YYYY) EVIDENCE OF PROPERTY INSURANCE E~7/30/2013 THIS EVIDENCE OF PROPERTY INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE ADDITIONAL INTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST. AGENCY PHONE (541) 779-1321 COMPANY A/C No Ext Medford Office Lexington Insurance Company PayneWest Insurance, Inc. address 38 North Central Ave. Suite 100 Medford, OR 97501 FAX - A No :(541) 779-9187 ADDRIESS: CODE: SUB CODE: AGENCY ASHLCOM-01 CUSTOMER ID INSURED LOAN NUMBER POLICY NUMBER 014498276 Asante Ashland Community Hospital EFFECTIVE DATE EXPIRATION DATE 280 Maple Street CONTINUED UNTIL Ashland, OR 97520 9/1/2012 9/1/2013 TERMINATED IF CHECKED THIS REPLACES PRIOR EVIDENCE DATED: PROPERTY INFORMATION LOCATION/DESCRIPTION Loc # 0, Bldg # 0, Blanket Building & Business Personal Property Loc # 1, Bldg # 1, 278 - 280 Maple Street, Ashland, OR 97520, Main Hospital Building Loc # 2, Bldg # 1, 287 Maple Street, Ashland, OR 97520, Medical Offices Loc # 3, Bldg # 1, 600 Chestnut Street, Ashland, OR 97520, On-Call facilities Loc # 4, Bldg # 1, 530-560 Catalina, Ashland, OR 97520, Medical Offices & Parking Lot SEE ATTACHED ACORD 101 THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF PROPERTY INSURANCE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. COVERAGE INFORMATION COVERAGE/PERILS/FORMS AMOUNT OF INSURANCE DEDUCTIBLE Loc # 0, Bldg # 0 Blanket Building, Business Personal Property-Special Form, Repl Cost, 100% Coins 80,000,000 10,000 Earthquake, Earthquake Sprinkler Leakage 50,000,000 2 Flood 50,000,000 100,000 Loc # 1, Bldg # 1 Building- Special Form, Repl Cost, 100% Coins 50,000,000 10,000 Business Personal Property - Special Form, Repl Cost, 100% Coins 16,000,000 10,000 Tenants Improvements and Betterments-Special Form, Repl Cost, 100% Coins 15,000 10,000 Business Personal Property-Special Form, Repl Cost, 100% Coins 10,000 10,000 Business Interruption 3,000,000 48 Extra Expense 1,000,000 48 SEE ATTACHED ACORD 101 REMARKS (Including Special Conditions) Special Conditions: As their Interest May Appear CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. ADDITIONAL INTEREST NAME AND ADDRESS MORTGAGEE X ADDITIONAL INSURED LOSS PAYEE LOAN # AUTHORIZED REPRESENTATIVE Ashland Community Hospital Foundation 280 Maple St Ashland, OR 97520 1-4 ACORD 27 (2009112) © 1993-2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD AGENCY CUSTOMER ID: ASHLCOM-01 DLEONG LOC M A ADDITIONAL REMARKS SCHEDULE Page 1 of 1 AGENCY NAMED INSURED Medford Office Asante Ashland Community Hospital 280 Maple Street POLICY NUMBER Ashland, OR 97520 014498276 CARRIER NAIC CODE EFFECTIVE DATE: 9/1/2012 ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: ACORD 27 FORM TITLE: EVIDENCE OF PROPERTY INSURANCE Locations: Loc # 5, Bldg # 1, 323 Maple Street, Ashland, OR 97520, Medical Office -Storage (Vacant) Loc # 6, Bldg # 1, 1970 Ashland Street, Ashland, OR 97520, Home Health/Hospice Loc # 7, Bldg # 1, 540 YMCA Way, Ashland, OR 97520, Aquatic Physical Therapy Loc # 8, Bldg # 1, 101 Sunny St, Talent, OR 97540, Maintenance & Storage Loc # 9, Bldg # 1, 49 Talent Ave, Talent, OR 97540, Business Offices Loc # 10, Bldg # 1, 628 N. Main St., Ashland, OR 97520, Medical Office Loc # 11, Bldg # 1, 241 Maple St., Ashland, OR 97520, Medical Office-Storage(Vacant) Loc # 12, Bldg # 1, 731 N Main St., Ashland, OR 97520, Medical Office Loc # 13, Bldg # 1, 317 Maple St, Ashland, OR 97520, Medical Office-Storage (Vacant) Loc # 14, Bldg # 1, 209 N. Pacific Hwy, Talent, OR 97540, Vacant (future Home Health/Hospice) Coverage Information: Loc # 2, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $175,000.00, Deductible: $10,000.00 Business Personal Property -Special Form, Repl Cost, 100% Coins, Amount of Insurance: $70,000.00, Deductible: $10,000.00 Loc # 3, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $215,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $15,000.00, Deductible: $10,000.00 Loc # 4, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $2,000,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Loc # 5, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $225,000.00, Deductible: $10,000.00 Loc # 6, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $150,000.00, Deductible: $10,000.00 Loc # 7, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $2,000.00, Deductible: $10,000.00 Loc # 8, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $75,000.00, Deductible: $10,000.00 Loc # 9, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $1,130,000.00, Deductible: $10,000.00 Loc # 10, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $250,000.00, Deductible: $10,000.00 Loc # 11, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $915,000.00, Deductible: $10,000.00 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $800,000.00, Deductible: $10,000.00 Loc # 12, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $900,000.00, Deductible: $1,000.00 Loc # 13, Bldg # 1 Business Personal Property-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $10,000.00, Deductible: $10,000.00 Loc # 14, Bldg # 1 Building-Special Form, Repl Cost, 100% Coins, Amount of Insurance: $360,000.00, Deductible: $10,000.00 ACORD 101 (2008101) © 2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD CERTIFICATE OF CITY ADMINISTRATOR OF THE CITY OF ASHLAND, OREGON The undersigned, David Kanner, hereby certifies as follows: L I am the City Administrator of the City of Ashland, Oregon ("City"). 2. I make this certification pursuant-to Section 27.4.4.1 of that certain Affiliation Agreement among Asante, the City of Ashland, Ashland Community Healthcare Services, and the Ashland Community Hospital Foundation (the "Affiliation Agreement'). 3. To the best of my knowledge, the representations and warranties made by City in the Affiliation Agreement remain accurate and complete as of the closing date (the "Closing Date"), as defined in the Affiliation Agreement. 4.1 To the best of my knowledge, City has complied with and performed the covenants and conditions precedent set forth in the Affiliation Agreement, as of the Closing Date. Dated: This 3l day of 1U UL-Y 2013. David Kanner, CA y Administrator City of Ashland, Oregon PDXDOCS:2008285.2 i CERTIFICATE OF CITY RECORDER OF THE CITY OF ASHLAND, OREGON The undersigned, Barbara Christensen, hereby certifies as follows: 1. I am the City Recorder of the City of Ashland, Oregon ("City"). 2. I make this certification pursuant to Section 27.4.4.2 of that certain Affiliation Agreement among Asante, the City of Ashland, Ashland Community Healthcare Services (the "Hospital"), and the Ashland Community Hosp~tal Foundation (the "Affiliation Agreement"). 3. To the best of my knowledge, the actions and transactions of the City contemplated or required by the Affiliation Agreement, including the conveyance of two parcels of real property pursuant to Section 9. 1, have'! been completed as of the closing date (the "Closing Date"), as defined in the Affiliation Agreement. 4. Attached as Exhibit A is a copy of all resolutions of the Ashland City Council approving the actions and transactions of the City contemplated or requi~ed by the Affiliation Agreement, including without limitation the conveyance Of the two parcels of real property to the Hospital as of the Closing Date and th~ granting of the license described in Section 9.4 of the Affiliation Agreement. Dated: Thi day of 2013. a Barbara Christensen, City Recorder City of Ashland, Oregon i i i i i i P®XDOCS:2608281.2 i I EXHIBIT "A" RESOLUTION NO. 2013-15 A RESOLUTION AUTHORIZING MAYOR AND CITY ADMINISTRATOR SIGNATURE OF AN AFFILIATION AGREEMENT BETWEEN ASANTt, ASHLAND COMMUNITY HOSPITAL, THE ASHLAND COMMUNITY HOSPITAL FOUNDATION AND THE CITY OF ASHLAND AND AUTHORIZING THE CITY ADMINISTRATOR TO SIGN DOCUMENTS NECESSARY TO CLOSE THE AFFILIATION TRANSACTION RECITALS: A. The City of Ashland is the sole corporate member in the Ashland Community Hospital (ACH) corporation and the owner of the real property upon which Ashland Communit~ Hospital is located. B. The City and the ACH corporation have determined that it is no longer financially viable for the hospital to operate as an independent community hospital. C. With the City's approval, the ACH Board of Directors conducted a national solicitation foil proposals from larger health care organizations with the goal of affiliating with such an organization, thereby accessing the resources necessary to remain in operation as a general hospital. D. Pursuant to that solicitation, the City, the ACH Beard of Directors and the Ashland Community Hospital Foundation entered into a period of exclusive negotiation with Asanfe of Medford, OR, which negotiation has produced an affiliation agreement whereby Asante will become the sole corporate member of the ACH corporation. E. The affiliation agreement requires that the City shall deliver to the other parties to the agreement a resolution of the City Council approving the execution of the agreement. THE CITY OF ASHLAND RESOLVES AS FOLLOWS SECTION I. The City Council of the City of Ashland, Oregon, approves the Affiliation Agreement between Asante, the City, the ACH Board of Directors and the Ashland Community Hospital Foundation. SECTION 2 The Mayor and the City Administrator are authorized to sign said Affiliation Agreement. SECTION 3 The City Administrator and the City Attorney are directed to provide all exhibits, schedule, documents required by the Affiliation Agreement and to effect all transfers and conveyancols required by the Affiliation Agreement. Page 1 of 2 PDXDOCS:20i68281.2 ASANTE PRESIDENT/CHIEF EXECUTIVE OFFICER'S CERTIFICATE This Certificate is delivered pursuant, to Section 27.4.1.1 of that certain Affiliation Agreement dated as of June 4, 2013 (the "Affiliation Agreement") among Asante, an Oregon nonprofit corporation ("Asante"), Ashland Community Healthcare Services, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and the City of Ashland, an Oregon municipal corporation. Capitalized terms that are used but not otherwise defined herein have the meanings given in the Affiliation Agreement. The undersigned hereby certifies as follows: I. I am the President and Chief Executive Officer of Asante, and as such, I am authorized to execute and deliver this Certificate on behalf of Asante; 2. To my knowledge, the representations and warranties of Asante as set forth in the Affiliation Agreement are accurate and complete in all material respects on and as of the Closing Date as defined in the Affiliation Agreement; and 3. To my knowledge, Asante has performed in all material respects its covenants, agreements and obligations required by the Affiliation Agreement to be performed or complied with by Asante prior to or as of the Closing Date of the Affiliation Agreement. IN WITNESS WHEREOF, I have executed this Certificate as of this 3 1 day of .Tw 2013. Name: Roy Vinyard Title: President and Chief Executive Officer ASANTE CHIEF FINANCIAL OFFICER'S CERTIFICATE This Certificate is delivered pursuant to Section 27.4.1.2 of that certain Affiliation Agreement dated as of June 4, 2013 (the "Affiliation Agreement') among Asante, an Oregon nonprofit corporation ("Asante"), Ashland Community Healthcare Services, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and the City of Ashland, an Oregon municipal corporation. Capitalized terms that are used but not otherwise defined herein have the meanings given in the Affiliation Agreement. The undersigned hereby certifies as follows: 1. I am the Chief Administrative and Finance Officer of Asante, and as such I am duly authorized to execute and deliver this Certificate on behalf of Asante. 2. The financial representations and warranties of Asante as set forth in Section 33.4 and its subsections of the Affiliation Agreement were true and correct as of the Execution Date and are true and correct as of the Closing Date as though made on and as of the Closing Date. 3. Asante has performed in all material respects all of its covenants and agreements required to be performed by it under Sections 37 and 41 of the Affiliation Agreement at or before the Closing Date. IN WITNESS WHEREOF, I have executed this Certificate as of this 3 day of ply 2013. Name: Patrick Hocking Title: Chief Administrative and Finance Officer ASANTE SECRETARY'S CERTIFICATE This Certificate is delivered pursuant to Section 27.1.2 and Section 27.4.1.3 of that certain Affiliation Agreement dated as of June 4, 2013 (the "Affiliation Agreement") among Asante, an Oregon nonprofit corporation ("Asante"), Ashland Community Healthcare Services, an Oregon nonprofit corporation, Ashland Community Hospital Foundation, an Oregon nonprofit corporation, and the City of Ashland, an Oregon municipal corporation. Capitalized terms that are used but not otherwise defined herein have the meanings given in the Affiliation Agreement. The undersigned hereby certifies as follows: I. I am the Secretary of Asante, and as such I am authorized to execute and deliver this Certificate on behalf of Asante. 2. Attached hereto as Exhibit A is a true, correct, and complete copy of the Resolutions adopted by the Board of Directors of Asante (the "Board") relating to the Affiliation Agreement, duly adopted unanimously by the Board on June 3, 2013 and such resolutions constitute all of the resolutions adopted by the Board in connection with Asante's execution, delivery and performance of the Affiliation Agreement and any other documents, instruments, and agreements contemplated thereby. The attached resolutions are in full force and effect on the date hereof and have not in any way beenamended, modified, repeated, revoked or rescinded. 3. Each person who, as an officer of Asante, an Oregon nonprofit corporation, signed (i) the Affiliation Agreement, and (ii) any other document or documents delivered in connection therewith, was duly elected or appointed, qualified and acting as such officer at the respective times of the signing and delivery thereof and was duly authorized to execute such documents on behalf of Asante, and the signature of each person appearing below in such document is such officer's genuine signature: Name Title Sienature William D. Thorndike Board Chair Roy Vinyard President and Chief , Executive Officer Patrick Hocking Chief Administrative and Finance Officer ~1'GIr- [CERTIFICATION ON NEXT PAGE] IN WITNESS WHEREOF, I have executed this Secretary's Certificate as of this 3 day of J-1'k /9 , 2013. Name: Ray C Title: Secretky EXHIBIT A TO SECRETARY'S CERTIFICATE [Asante Board Resolutions] RESOLUTION OF THE BOARD OF DIRECTORS OF ASANTE June 3, 20]3 AFFILIATION WITH CITY OF ASHLAND, ASHLAND COMMUNITY HEALTHCARE SERVICES, AND THE ASHLAND COMMUNITY HOSPITAL FOUNDATION WHEREAS the board of directors (the "Board') of Asante (the "Corporation) has been presented with an Affiliation Agreement, attached as Exhibit (the "Affiliation Agreement"), describing a proposed affiliation (the "Affiliation") among the Corporation, Ashland Community Healthcare Services, an Oregon nonprofit corporation ("ACH"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community . Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation would cease to exist, (ii) Asante would become the sole member of the Corporation; and (iu) the Foundation and the City will convey to Asante certain assets owned by the Foundation and the City, respectively, related to the ACH's operations; and WHEREAS the Board has determined that the Affiliation (i) will promote community health in the City of Ashland, Jackson County, and surrounding areas, and fulfill a community need in furtherance of the Corporation's Mission; and (ii) is in the best interests of the Corporation and the communities served by the Corporation. NOWTHEREFORE it is RESOLVED that the Board hereby directs that the Affiliation Agreement be submitted for review and approval by the City, and recommends that the City, as ACH's sole member, approve the Affiliation Agreement; and RESOLVED FURTHER that, subject to approval of the Affiliation Agreement by the City, in its capacity as ACH's sole member, and the Foundation, the Board hereby approves the Affiliation Agreement and authorizes the Corporation and the Corporation's officers to negotiate, execute, deliver, and perform the transactions contemplated thereby. EXECUTION AND DELIVERY RESOLVED FURTHER that William D. Thomdike, as Board Chair of the Corporation, and Roy Vinyard, as the President/CEO of the Corporation, are each authorized and directed to execute and deliver the Affiliation Agreement on behalf of the Corporation. ADDITIONAL AGREEMENTS RESOLVED FURTHER that the officers of the Corporation are further authorized and directed to negotiate, execute, deliver, and perform on behalf of the Corporation such other agreements, instruments, and documents as necessary or appropriate to effect the transactions contemplated by the Affiliation Agreement. FURTHER ACTIONS RESOLVED FURTHER that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary or advisable to (i) facilitate the transactions contemplated by the Affiliation Agreement, (ii) cause the Corporation to perform its obligations under the Affiliation Agreement and the agreements authorized above, (iii) prepare, execute, and file such certificates; forms, agreements, or other documents as may be necessary or appropriate in connection with the transactions contemplated by such agreements and the resolutions, and (iv) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. The undersigned, in his capacity as Secretary of the Corporation, certifies that the above resolutions were duly adopted by the Corporation's board of directors, at a meeting of the board held on June 3, 2013. ~j---/~~ Ray Cox, Sec etary 7 Asante Statement per Section 14.3 of the Affiliation Agreement 1. Six current employees of ACH previously worked at Asante and were terminated from their employment at Asante with "not eligible for rehire" provisions. These six employees will be losing their positions at ACH as a result of the Affiliation. They are not being offered severance. Rather, they have been given two weeks notice of termination of employment at the close of business on July 31, 2013, and will receive ten days of pay. 2. In addition, six employees of ACH have had their jobs eliminated as a result of the Affiliation, effective July 31, 2013. They have been given severance notices and they will receive a week of severance per year of service. 3. Three ACH employees in HIM have chosen not to continue their employment at ACH after July 31, 2013. Two of the three employees will receive severance. The one HIM employee who will not receive severance was a temporary manager in HIM. This employee chose to terminate his/her employment with ACH, rather than work through July 31, 2013 to be eligible for severance. Given the temporary status of this employee, the amount of severance would have been quite small. 4. There will be no other terminations before Closing as a result of the Affiliation. ACH Board Chair's Certificate The undersigned, Anne Golden, Board Chair of Ashland Community Healthcare Services, an Oregon nonprofit corporation (the "Corporation"), delivers this ACH Board Chair's Certificate pursuant to Section 27.4.2.1 of the Affiliation Agreement (the "Affiliation Agreement"), dated as of June 4, 2013, by and among the Corporation, Asante, an Oregon nonprofit corporation, the City of Ashland, an Oregon municipal corporation, and Ashland Community Hospital Foundation, an Oregon nonprofit corporation. Capitalized terms used but not defined in this ACH Board Chair's Certificate have the meanings provided in the Affiliation Agreement. The undersigned, in her capacity as Board Chair of the Corporation, certifies to the best of her knowledge that: I . All representations and warranties of the Corporation set forth in the Affiliation Agreement continue to be accurate and complete as of the Closing Date; and 2. Except for the approval of the Affiliation by the Centers for Medicare and Medicaid Services and the Oregon Health Authority, the Corporation has performed each of the covenants and conditions precedent required to be performed by the Corporation on or prior to the Closing Date. [remainder ofpage intentionally left blank] PDXDOCS:2008216.1 IN WITNESS WHEREOF, the undersigned has executed this ACH Board Chair's Certificate effective as of the Closing Date. Anne Golden, Board Chair Signature Page to ACH Board Chair's Certificate- . PDXDOCS:2008216.1 ACH Secretary's Certificate The undersigned, Alan DeBOer, Secretary of Ashland Community Healthcare Services, an Oregon nonprofit corporation (the "Corporation"), delivers this ACH Secretary's Certificate pursuant to Section 27.4.2.3 of the Affiliation Agreement (the "Affiliation Agreement"), dated as of June 4, 2013, by and among the Corporation, Asante, an Oregon nonprofit corporation, the City of Ashland, an Oregon municipal corporation, and Ashland Community Hospital Foundation, an Oregon nonprofit corporation. Capitalized terms used but not defined in this ACH Treasurer's Certificate have the meanings provided in the Affiliation Agreement. The undersigned, in his capacity as Secretary of the Corporation, certifies to the best of his knowledge that attached as Exhibit A are true and complete copies of the resolutions adopted by the Corporation's board of directors on May 22, 2013, June 19, 2013, and July 2013, which resolutions were duly adopted, have not subsequently been amended or rescinded, and which remain in full force and effect. [remainder ofpage intentionally left blank.] PDXDOCS:2008224.1 IN WITNESS WHEREOF, the undersigned has executed this ACH Secretary's Certificate effective as of the Closing Date. Alan DeBoer, Secretary -Signalure Page to ACH Secretary's Certificate- PDXDOCS:2008224.1 Exhibit A Resolutions Adopted May 22, 2013 AFFILIATION WITH ASANTE WHEREAS the board of directors (the "Board") of Ashland Community Healthcare Services (the "Corporation") has been presented with an Affiliation Agreement, attached as Exhibit A (the "Affiliation Agreement"), describing a proposed affiliation (the "Affiliation") between the Corporation, Asante, an Oregon nonprofit corporation ("Asante"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation would cease to exist, (ii) Asante would become the sole member of the Corporation; and (iii) the Foundation and the City will convey to the Corporation certain assets owned by the Foundation and the City, respectively, related to the Corporation's operations; and WHEREAS the Board has determined that the Affiliation (i) will promote community health in the City of Ashland and Jackson County and fulfill a community need in furtherance of the Corporation's charitable purposes and missions; and (ii) is in the best interests of the Corporation and the communities served by the Corporation. NOW THEREFORE it is RESOLVED that the Board hereby directs that the Affiliation Agreement be submitted for review and approval by the City, and recommends that the City, as Corporation's sole member, approve the Affiliation Agreement; and RESOLVED FURTHER that, subject to approval of the Affiliation Agreement by the City, in its capacity as Corporation's sole member, the Board hereby approves the Affiliation Agreement and authorizes the Corporation and the Corporation's officers to negotiate, execute, deliver, and perform the transactions contemplated thereby. EXECUTION AND DELIVERY RESOLVED FURTHER that Anne Golden, as Board Chair of the Corporation, and Doug Diehl, M.D., as Board Chair Elect of the Corporation, are each authorized and directed to execute and deliver the Affiliation Agreement on behalf of the Corporation. ADDITIONAL AGREEMENTS RESOLVED FURTHER that the officers of the Corporation are further authorized and directed to negotiate, execute, deliver, and perform on behalf of the Corporation such other agreements, instruments, and documents as necessary PDXDOCS:2008224.1 or appropriate to effect the transactions contemplated by the Affiliation Agreement. FURTHER ACTIONS RESOLVED FURTHER that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary or advisable to (i) facilitate the transactions contemplated by the Affiliation Agreement, (ii) cause the Corporation to perform its obligations under the Affiliation Agreement and the agreements authorized above, (iii) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the transactions contemplated by such agreements and the resolutions, and (iv) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. PDXDOCS:2008224.1 Resolutions Adopted June 19, 2013 RATIFICATION OF AUTHORIZING RESOLUTIONS WHEREAS at its meeting on May 22, 2013, the board of directors (the "Board") of Ashland Community Healthcare Services (the "Corporation") was presented with, and approved, the final form of the Affiliation Agreement, describing a proposed affiliation (the "Affiliation") between the Corporation, Asante, an Oregon nonprofit corporation ("Asante"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation will cease to exist, (ii) Asante will become the sole member of the Corporation; and (iii) the Foundation and the City will convey to the Corporation certain assets owned by the Foundation and the City, respectively, related to the Corporation's operations; and WHEREAS the Board desires now to confirm and ratify its approval and adoption of the above-described Affiliation Agreement and resolutions authorizing the Corporation to enter into the Affiliation. NOW THEREFORE it is RESOLVED that the Board hereby adopts, approves, and ratifies its adoption of the resolutions of the Board attached as Annex A. PDXDOCS:2008224.1 Annex A Authorizing Resolutions AFFILIATION WITH ASANTE WHEREAS the board of directors (the "Board") of Ashland Community Healthcare Services (the "Corporation") has been presented with an Affiliation Agreement, attached as Exhibit A (the "Affiliation Agreement"), describing a proposed affiliation (the "Affiliation") between the Corporation, Asante, an Oregon nonprofit corporation ("Asante"), the City of Ashland, an Oregon municipal corporation and sole member of the Corporation (the "City"), and the Ashland Community Hospital Foundation, an Oregon nonprofit corporation (the "Foundation") under which (i) the City's sole membership interest in the Corporation would cease to exist, (ii) Asante would become the sole member of the Corporation; and (iii) the Foundation and the City will convey to the Corporation certain assets owned by the Foundation and the City, respectively, related to the Corporation's operations; and WHEREAS the Board has determined that the Affiliation (i) will promote community health in the City of Ashland and Jackson County and fulfill a community need in furtherance of the Corporation's charitable purposes and missions; and (ii) is in the best interests of the Corporation and the communities served by the Corporation. NOW THEREFORE it is RESOLVED that the Board hereby directs that the Affiliation Agreement be submitted for review and approval by the City, and recommends that the City, as Corporation's sole member, approve the Affiliation Agreement; and RESOLVED FURTHER that, subject to approval of the Affiliation Agreement by the City, in its capacity as Corporation's sole member, the Board hereby approves the Affiliation Agreement and authorizes the Corporation and the Corporation's officers to negotiate, execute, deliver, and perform the transactions contemplated thereby. EXECUTION AND DELIVERY RESOLVED FURTHER that Anne Golden, as Board Chair of the Corporation, and Doug Diehl, M.D., as Board Chair Elect of the Corporation, are each authorized and directed to execute and deliver the Affiliation Agreement on behalf of the Corporation. PDXDOCS:2008224.1 ADDITIONAL AGREEMENTS RESOLVED FURTHER that the officers of the Corporation are further authorized and directed to negotiate, execute, deliver, and perform on behalf of the Corporation such other agreements, instruments, and documents as necessary or appropriate to effect the transactions contemplated by the Affiliation Agreement. FURTHER ACTIONS RESOLVED FURTHER that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary or advisable to (i) facilitate the transactions contemplated by the Affiliation Agreement, (ii) cause the Corporation to perform its obligations under the Affiliation Agreement and the agreements authorized above, (iii) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the transactions contemplated by such agreements and the resolutions, and (iv) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. PDXDOCS:2008224.1 Resolutions Adopted July 24, 2013 RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS WHEREAS in connection with the affiliation between Ashland Community Healthcare Services (the "Corporation") and Asante ("Asante"), pursuant to the Affiliation Agreement, dated June 4, 2013 (the "Affiliation Agreement"), by and among the Corporation, Asante, the City of Ashland (the "City"), and the Ashland Community Hospital Foundation, the Corporation is required to adopt the Restated Articles of Incorporation, attached as Exhibit A, and the Restated Bylaws, attached as Exhibit B; NOW THEREFORE it is RESOLVED that, subject to and effective upon the Closing, as that term is defined in the Affiliation Agreement, the Board hereby approves the Restated Articles of Incorporation, attached as Exhibit A and directs that they be submitted for approval by the City as the Corporation's sole member, and recommends that the City approve them; and RESOLVED FURTHER that, subject to and effective upon Closing, the Board hereby approves the Restated Bylaws, attached as Exhibit B. EXECUTION RESOLVED that upon Closing, Anne Golden, as Board Chair of the Corporation, Doug Diehl, M.D., as Board Chair Elect of the Corporation, and Alan DeBoer, as Secretary of the Corporation, are each individually authorized to execute the Restated Articles of Incorporation and Restated Bylaws on behalf of the Corporation. ASANTE MISSION STATEMENT WHEREAS pursuant to Section 2.3 of the Affiliation Agreement, the Corporation has agreed to adopt Asante's mission statement, effective upon Closing; NOW THEREFORE it is RESOLVED that, subject to and effective upon the Closing, the Corporation hereby adopts the mission statement of Asante, in the form attached as Exhibit C. FURTHER ACTIONS RESOLVED that the officers of the Corporation be, and each of them acting alone is, authorized and directed, for and on behalf of the Corporation, to take or cause to be taken any and all actions as such officers may deem necessary PDXDOCS:2008224.1 or advisable to (i) prepare, execute, and file such certificates, forms, agreements, or other documents as may be necessary or appropriate in connection with the approval, execution, and filing of the Restated Articles of Incorporation and Restated Bylaws, and (ii) otherwise carry out the purposes and intent of the foregoing resolutions, the performance of any such acts and the execution and filing or delivery by such officers of any such certificates, forms, agreements, or other documents before or after the date hereof conclusively evidencing the Board's approval thereof. PDXDOCS:2008224.1 Exhibit A Restated Articles of Incorporation See attached. PDXDOCS:2008224.1 RESTATED ARTICLES OF INCORPORATION OF ASHLAND COMMUNITY HEALTHCARE SERVICES Pursuant to ORS 65.451 and ORS 65.437, the Board of Directors hereby amends and restates the Articles of Incorporation of Ashland Community Healthcare Services. ARTICLE I The name of the corporation is Ashland Community Healthcare Services. Its duration shall be perpetual. This corporation is a public benefit corporation. ARTICLE II 1. The corporation is organized and shall be operated exclusively for charitable, educational and scientific purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of such purposes, the corporation is empowered to exercise all rights and powers conferred by the laws of the State of Oregon upon nonprofit corporations, including: a. To establish, own, operate, manage and maintain for charitable purposes, hospitals, and other health care services, arrangement for the provision of medical and surgical services, educational, and health care facilities and programs as may be deemed advisable for the advancement of health care and the betterment of the general health of the residents of Ashland, Oregon and the surrounding geographic service area; b. To provide scientific research, educational, charitable and such other activities, services and programs related to its health care facilities and services; C. To engage in other charitable works which are consistent with the objectives of the corporation and the mission and values of Asante, an Oregon nonprofit corporation, as appropriate; and d. To engage in any lawful activity for which corporations may be organized under the Oregon Nonprofit Corporation Act, provided that such activities (a) have been authorized by the corporation's board of directors; (b) are consistent with the foregoing purposes; and (c) are not inconsistent with the provisions of these restated articles of incorporation. Notwithstanding any other provision of these Articles, the corporation shall not carry on any activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under section 501(c)(3) of the Code or (b) by a corporation contributions to which are deductible under section 170(c)(2) of the Code. PDXDOCS:2008224.1 2. The corporation shall not carry on propaganda, or otherwise attempt to influence legislation, to such extent as would result in the loss of exemption under section 501(c)(3) of the Code, and the corporation shall not directly or indirectly participate in, or intervene in (including the publication or distribution of statements), any political campaign on behalf of or in opposition to any candidate for public office. 3. No part of the net earnings, income or assets of this corporation shall inure to the benefit of any person having a personal and private interest in the activities of the corporation, except that the corporation may pay reasonable compensation for services rendered and make payments and distributions in furtherance of the purposes set forth in this Article. ARTICLE III The sole member of the corporation shall be Asante, an Oregon nonprofit public benefit corporation. Asante shall have voting rights to the fullest extent allowed to the membership of nonprofit corporations under the Oregon Nonprofit Corporation Act. ARTICLE IV The corporation shall have no capital stock and no shares of stock in the corporation shall be issued. The corporation shall not engage in any activity which is prohibited under the Oregon Nonprofit Corporation Act, as it may be amended from time to time. The corporation shall not engage in any activity which would cause the corporation to be defined as a private foundation within the meaning of section 509(a) of the Code. ARTICLE V Upon dissolution of the corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the corporation, dispose of all of the assets of the corporation to Asante, its sole corporate member, provided Asante is still in existence and qualifies as an exempt organization under the Code. If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity which is organized and operated exclusively for charitable, educational, religious or scientific purposes and qualifies as an exempt organization under the Code (or the corresponding provision of any future United States Internal Revenue Law). ARTICLE VI No director or uncompensated officer shall be personally liable to the corporation or its members for monetary damages for conduct as a director or officer, provided that this Article shall not eliminate the liability of a director or officer for any act or omission for which such elimination of liability is not permitted under the Oregon Nonprofit Corporation Act (the "Act"). No amendment to the Act that further limits the acts or omissions for which elimination of liability is permitted shall affect the liability of a director or uncompensated officer for any act or omission which occurs prior to the effective date of the amendment. PDXDOCS:2008224.1 ARTICLE VII The corporation may indemnify to the fullest extent not prohibited by law any person who is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative, investigative, or other (including an action, suit or proceeding by or in the right of the corporation), by reason of the fact that the person is or was a director or officer, employee or agent of the corporation or a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the corporation, or serves or served at the request of the corporation as a director, officer, employee or agent, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust or other enterprise. This Article shall not be deemed exclusive of any other provisions for indemnification or advancement of expenses of directors, officers, employees, agents and fiduciaries included in any statute, bylaw, agreement, general or specific action of the Board of Directors or other document or arrangement. ARTICLE VIII The power to alter, amend, restate or repeal the Articles of Incorporation and Bylaws of the corporation shall be vested exclusively by the affirmative action of the sole member of the corporation, provided that such alternation, amendment, restatement or repeal has been proposed or concurred in by a majority of the corporation's Board of Directors at a board meeting called for that purpose. ARTICLE IX The name and address of the corporation's registered agent is Asante, c/o Chief Administrative and Finance Officer, 2650 Siskiyou Blvd., Medford, OR 97504. ARTICLE X The corporation shall be managed by a Board of Directors. The Board of Directors shall consist of the same individuals as those then currently serving on the Board of Directors of the corporation's sole member, Asante. These Restated Articles of Incorporation supersede the Articles of Incorporation currently on file with the Secretary of State and all amendments and supplements thereto. DATED: 2013 ASHLAND COMMUNITY HEALTHCARE SERVICES Chair of the Board of Directors PDXDOCS:2008224.1 CITY OF ASHLAND Mayor PDXDOCS:2008224.1 Exhibit B Restated Bylaws See attached. PDXDOCS:2008224.1 RESTATED BYLAWS OF ASHLAND COMMUNITY HEALTHCARE SERVICES DBA ASANTE ASHLAND COMMUNITY HOSPITAL August 1, 2013 ARTICLE I THE CORPORATION IN GENERAL 1.1 NAME AND DESCRIPTION. The name of the corporation shall be Ashland Community Healthcare Services dba Asante Ashland Community Hospital ("AACH" or "Corporation"). It is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. It is part of the Asante Health System ("Asante" or the "System"). 1.2 PURPOSES AND MISSION. 1.2.1 Purposes. The purposes for which the Corporation is organized and operated shall be as provided in its Articles of Incorporation, as restated or amended. 1.2.2 Mission. AACH exists to provide quality healthcare services in a compassionate manner, valued by the communities it serves. 1.3 LOCATION. The principal office of the Corporation shall be located at 280 Maple Street, Ashland, OR 97520. ARTICLE II MEMBER 2.1 MEMBER. The sole Member of the Corporation is Asante. Asante is a nonprofit public benefit charitable corporation organized and existing under the laws of the State of Oregon. 2.2 ACTIONS BY MEMBER. Unless a greater number is required by its articles of incorporation, by its bylaws or by law, Asante may act, in its capacity as sole Member of AACH, through Asante's Board of Directors, either by a majority vote at a meeting at which a quorum is present or by a consent without a meeting or in any other manner authorized in the Bylaws of Asante, as restated or amended. 2.3 POWERS OF THE MEMBER. In addition to all matters required by the Articles of Incorporation or other provisions of these Bylaws which are required to be approved by Asante, Asante shall at all times have voting rights to the fullest extent allowed to the membership of nonprofit corporations under the Oregon Nonprofit Corporation Act. Without limitation of the rights of Asante as the sole Member of the Corporation, Asante shall have the right to take the following actions with respect to this Corporation and of any corporation or PDXDOCS:2008224.1 other legal entity of which this Corporation is the sole or controlling member or shareholder, except as otherwise noted below: 2.3.1 To adopt or change the mission, philosophy, or values; 2.3.2 To amend, restate, or repeal the Articles of Incorporation or Bylaws; 2.3.3 As to this Corporation, to fix the number of Directors, elect the Board of Directors and to remove such Directors at any time with or without cause; 2.3.4 To appoint and remove the Chief Executive Officer ("CEO") of the hospital operated by the Corporation and to remove such CEO, with or without cause, after requesting a recommendation from the Board of Directors; 2.3.5 To approve the acquisition of assets, the incurrence of indebtedness or the lease, sale, transfer, assignment, or encumbering of the assets, if the amount involved in any such transaction is in excess of an amount specified from time to time by resolution of Asante, and to approve the sale or transfer of other property; 2.3.6 To approve the dissolution, liquidation, consolidation or merger with another corporation or entity; 2.3.7 To approve on a consolidated system-wide basis the annual operating and capital budgets and approval of any deviations from such budget in excess of an amount or percentage specified from time to time by resolution of Asante; and 2.3.8 To appoint the certified public accountants after receiving the recommendation of the Board of Directors and to receive the annual audit report from such accountants. 2.4 MEETINGS. An annual meeting of Asante, in its capacity as sole member of AACH, shall be held each year at such time and date as the Board of Directors of Asante shall determine. Special meetings of Asante, in its capacity as sole member of AACH, may be called by the Board of Directors of Asante, or by the President or the Chair of the Board of Directors of Asante. 2.5 NOTICE OF MEETING. Notice of meetings of Asante as the sole member of the Corporation may be called by Asante in accordance with Asante's Bylaws. Asante's Bylaws are hereby incorporated in their entirety into these Bylaws. ARTICLE III BOARD OF DIRECTORS OF THE CORPORATION 3.1 POWER OF THE BOARD OF DIRECTORS. The Board of Directors (sometimes referred to as "Board") of AACH shall exercise general governance and control of the mission and business affairs of the Corporation and shall have and exercise all of PDXDOCS:2008224.1 the powers which may be exercised or performed by the Corporation under the laws of the State of Oregon and these Bylaws, with due regard for the powers reserved to the Member of the Corporation as stated in Article II of these Bylaws. 3.2 COMPOSITION OF THE BOARD. The Board of Directors of the Corporation shall consist of the same individuals as those then currently serving on the Board of Directors of its sole Member, Asante. The individuals who are ex-officio members of the Asante Board shall be ex-officio members of the Board of Directors of the Corporation. Appointment, term, or removal of a Board of Director from the Corporation's sole Member, Asante, shall constitute appointment, term of office, or removal from such individual's service as a Board of Director of the Corporation without further action. In the event a Member of the Board of Directors of Asante shall resign, such resignation shall automatically cause the resignation of such Board of Director as a Director of the Corporation. The term of office of each Director of AACH shall be coextensive with his or her respective term of office as a Director of Asante. 3.3 VACANCIES. A vacancy on the Board of Directors shall exist upon the death or resignation of a Director, upon removal of any Director by Asante or upon the creation of an additional directorship. Asante may fill a vacancy on the Board of Directors in the manner and for the term provided herein for the election of Directors. 3.4 BOARD CHAIR. The Board Chair of the Board of Directors of the Corporation shall be the same individual then serving as the Board Chair of the Corporation's sole Member, Asante. Such Board Chair shall serve in such capacity so long as such individual is serving as the Board Chair of Asante. 3.5 MEETINGS AND PROCEDURAL RULES. 3.5.1 Annual Meeting. The annual meeting of the Board of Directors shall be held by December 31 of each year. Such meeting shall be held at the principal office of the Corporation or at such place as may be designated from time to time by the Board Chair. The purposes of the annual meeting shall include, without limitation, electing officers as herein provided and transacting such other business as shall be necessary or desirable. 3.5.2 Regular Meetings of the Board. Regular meetings of the Board of Directors shall occur at such times as the Board shall from time to time determine. 3.5.3 Special Meetings of the Board. Special meetings of the Board of Directors may be called as provided in the Asante Bylaws, which provide in Article III Section 10.5 as follows: "Special meetings of the Board for any purpose or purposes shall be called by the Secretary upon request by the Board Chair, by the President and CEO, or by at least one-third (1/3) of the directors." 3.5.4 Notice of Board of Directors Meetings. Notice of all Board of Directors meetings shall be given in the same manner as provided in the Asante Bylaws, which provide in Article III, Section 10.7 as follows: "No notice shall be required of any regular or annual organization meeting which is held at a time and place fixed by these Bylaws or by a previous PDXDOCS:2008224.1 resolution of the Board. Notice of the time and place of any other meeting shall be delivered personally, communicated by electronic mail, telephone, or facsimile, or sent to each director by first-class mail, charges prepaid, addressed to the director at the director's address or contact number as it is shown on the records of the corporation, or, if it is not so shown on such records or is not readily ascertainable, to the place where the principal office of the corporation is located. If personally delivered or communicated by electronic mail, telephone, or facsimile, such notice shall be delivered at least twenty-four (24) hours prior to the meeting. If sent by mail, such notice shall be sent at least four (4) days prior to the meeting." 3.5.5 Quorum; Manner of Acting. A majority of the voting members of the Board shall constitute a quorum at any meeting of the Board. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. 3.5.6 Action by Unanimous Written Consent. Waiver of notice of any Board meeting or any action required to be taken at a meeting of the Board of Directors, or any other action which may be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the actions so taken, is signed by all the Directors entitled to vote with respect to the subject matter thereof. Any consent signed by all the Directors shall have the same effect as a unanimous vote. 3.5.7 Telephonic Meetings. Directors may participate in and act at any meeting of such Board by means of conference telephone, videoconference or similar communication equipment by which all persons participating in the meeting can speak to and hear each one another. Participation in such a meeting shall constitute presence in person at the meeting. ARTICLE IV AACH ADVISORY BOARD AACH will form an AACH Advisory Board of community members which will consist of the persons on the Ashland Community Hospital Board of Directors immediately prior to the closing of the Affiliation Agreement dated June 4, 2013 among Asante, Ashland Community Healthcare Services, Ashland Community Hospital Foundation, and the City of Ashland ("Affiliation Agreement"), and shall include the current chief of the AACH Medical Staff, up to two additional medical staff members and the Asante Chief Quality and Medical Officer. The Chair of the AACH Advisory Board shall become an ex-officio, voting member of the Asante Board and the AACH Board. The current Chief of the AACH Medical Staff shall become an ex-officio, non-voting member of the Asante Board and the AACH Board. The AACH Advisory Board will have specific responsibility for monitoring patient safety and quality of care at AACH, and for confirming credentialing and other decisions of the AACH Medical Staff. The AACH Advisory Board actions and minutes will be submitted to the Asante Board, which shall have the final approval authority. The AACH Advisory Board will become the Asante Ashland Community Hospital Quality Committee at a time to be determined by the Asante Board. PDXDOCS:2008224.1 ARTICLE V OFFICERS OF THE CORPORATION 5.1 OFFICERS. The officers of the Corporation shall be the same individuals serving as the officers of the Corporation's sole Member, Asante, without further action. In the event any such officer either resigns or is otherwise removed as an officer of Asante, such officer's office with the Corporation shall automatically terminate as of the effective date of their removal or resignation as an officer of Asante. The powers and duties of the officers shall be as set forth in the Asante Bylaws and as otherwise designated from time to time by the Board of Directors of Asante, to the extent consistent with law, the Articles of Incorporation of the Corporation and these Bylaws. ARTICLE VI COMMITTEES OF THE BOARD Except for the AACH Quality Committee and the AACH Appointment Committee, (i) the Corporation shall have the same committees, committee members, and coterminous committee meetings as those committees established by the Corporation's sole Member, Asante, (ii) the Corporation's committees shall meet conterminously with the Asante Board committees established pursuant to the Asante Bylaws, and (iii) the Board committee charters and other rules for functioning of such committees of the Corporation shall be identical to those of its sole Member, Asante. 6.1 Quality Committee for AACH. 6. 1.1 General. The AACH Advisory Board, with additional members, will function as the Quality Committee for AACH, and will be the formal and official point of contact among the Board, management, and the Professional Staff of AACH. The Advisory Board/Quality Committee will review matters relating to medical services provided at AACH, including monitoring patient safety and quality of care as well as performance improvement matters. 6.1.2 Appointment. The AACH Advisory Board/Quality Committee will consist of members as provided in the Affiliation Agreement and these Bylaws. 6.1.3 Membership. The AACH Advisory Board/Quality Committee will consist of the following: 6.1.3.1 Up to four (4) AACH Advisory Board members who were previously Board members of Ashland Community Hospital; 6.1.3.2 The Chief of Staff of the hospital; PDXDOCS:2008224.1 6.1.3.3 The Immediate Past Chief of Staff or the Vice Chief of Staff of the hospital; 6.1.3.4 One (1) or two (2) additional at-large members of the Professional Staff of the hospital appointed by the AACH Board Chair; 6.1.3.5 The senior executive of the hospital; 6.1.3.6 The Asante chief executive for quality; 6.1.3.7 The physician executive at the hospital as an optional member; and 6.1.3.8 Three (3) members of the AACH Board, one of whom is the ex officio member of the AACH Board as chair of the AACH Advisory Board/Quality Committee as defined in the Affiliation Agreement, and the two others are appointed by the AACH Board Chair. A member of the AACH Quality Committee who is not a Professional Staff officer shall be designated as Chair. The AACH Board Chair and the President and CEO of Asante shall be notified of all meetings and invited to attend. The President and CEO of Asante may appoint a member of the management staff to serve as an interim member of the committee during the time the position of a manager designated to serve is unfilled. With respect to review of decisions made under the Fair Hearing Plan of the Professional Staff and other similar matters, any member of the Quality Committee who has actively participated in an investigation or prior decision of a matter before the Quality Committee shall decline to act with respect to that matter at the Quality Committee or upon review of the Quality Committee decision, and any committee member who has acted on a matter in a Quality Committee decision shall decline to act with respect to that matter on any review of such Quality Committee decision. If necessary, additional Board members may be appointed to the Quality Committee to serve with respect to a particular matter in order to constitute a quorum or otherwise constitute an appropriate body. 6.1.4 Meetings. The Quality Committee shall in general meet monthly and shall maintain a permanent record of its activities. The minutes of the Committee shall be presented to the Board at or before its next meeting. The Quality Committee shall conduct joint meetings with other System hospital Quality Committees as appropriate to conduct the committees' work at the System hospitals. 6.1.5 Roles and Responsibilities. 6.1.5.1 The Quality Committee shall receive reports from the Professional Staff of the affiliated hospital on matters relating to quality of patient care, shall evaluate the services PDXDOCS:2008224.1 being provided by the Professional Staff and by the departments of the hospital, shall review audits and performance improvement and other evaluation activities of the Professional Staff, and shall make recommendations to the Board concerning services provided in the hospital. 6.1.5.2 The Quality Committee shall oversee preparation for accreditation review of its hospital by the Det Norske Veritas Health Care Inc.'s (DNVHC) Accreditation Program, National Integrated Accreditation for Healthcare Organizations (NIAHO). 6.1.5.3 The Quality Committee shall work to develop a plan to evaluate quality of patient care, risk management, performance improvement, and clinical resource utilization at the hospital and shall monitor and report to the Board on the results. 6.1.5.4 The Quality Committee shall make recommendations to the Board, and with respect to appropriate staff appointment and privileges matters, to the Appointment Committee of the hospital, as to appointment, reappointment, and termination of appointment to the appropriate Professional Staff, the granting, withholding, restricting and termination of privileges of appointees to the staff, the structure, procedures, and policies of the Professional Staff and the adoption, amendment, or repeal of the Professional Staff Bylaws; and actions on other matters arising from or with respect to the Professional Staff. Any recommendations of the Quality Committee with respect to matters involving adverse actions or the Fair Hearing Plan are advisory to the Board only. 6.1.5.5 The Quality Committee has authority to approve bylaws of the Auxiliary Service for its respective hospital and amendments thereto. 6.2 Appointment Committee for AACH. 6.2.1 General. The Board delegates to the Appointment Committee of AACH the authority to make decisions for the hospital with respect to Professional Staff appointment, reappointment, and renewal or modification of clinical privileges in the circumstances set forth below. 6.2.2 Appointment and Membership. The Appointment Committee shall consist of the members of the Quality Committee for the hospital who are also voting members of the AACH Board. The Chair of the Quality Committee, if serving as a member of the Appointment Committee for the hospital, shall hold that position for such Appointment Committee. 6.2.3 Meetings. The AACH Appointment Committee shall in general meet monthly immediately following the AACH Advisory Board/Quality Committee meetings and shall maintain a permanent record of its activities. Two (2) members shall constitute a quorum. The minutes of each committee shall be presented to the Board at or before its next meeting. PDXDOCS:2008224.1 6.2.4 Roles and Responsibilities. The Appointment Committee shall review and evaluate the qualifications and competence of applicant practitioners and shall make decisions with respect to initial appointment and reappointment to the associated Professional Staff, and renewal or modification of clinical privileges as provided in this section. Decisions approving the recommendations of a Medical Executive Committee shall be effective when made by the Appointment Committee of the related hospital, except as provided below. Any decision by the Appointment Committee that is adverse to an applicant shall be referred back to the Medical Executive Committee for further evaluation. All affirmative appointment and privileges decisions of the Appointment Committee shall be presented to the Board at its next regular meeting for ratification as appropriate. Decisions as to appointment, reappointment, and renewal or modification of clinical privileges are not effective until the Board has acted on the matter if, at the time of initial appointment for new applicants or since the time of the most recent appointment or reappointment for continuing appointees, any of the following has occurred: 6.2.4.1 The applicant submits an incomplete application; 6.2.4.2 The Medical Executive Committee makes a final recommendation that is adverse or has limitations; 6.2.4.3 There is a current challenge or a previously successful challenge to licensure or registration; 6.2.4.4 The applicant has received an involuntary termination of medical staff membership at another organization; 6.2.4.5 The applicant has received an involuntary limitation, reduction, denial, or loss of clinical privileges; or 6.2.4.6 There has been either an unusual pattern of, or an excessive number of, professional liability actions resulting in final judgments against the applicant. ARTICLE VII PROFESSIONAL STAFF 7.1 ORGANIZATION AND FUNCTIONS. The physicians and other healthcare practitioners granted clinical privileges at AACH shall be organized into a separate Medical Staff or Professional Staff for AACH ("AACH Professional Staff'). The AACH Professional Staff is an integral part of AACH and Asante. PDXDOCS:2008224.1 The AACH Professional Staff shall review qualifications of physicians and other practitioners who provide care in AACH and shall make recommendations to the Board as to appointment and reappointment, privileges, and corrective action with respect to such physicians and other practitioners. The AACH Professional Staff shall effectively review and make recommendations to the Board with respect to quality and safety of the care, treatment and services provided in AACH. The AACH Professional Staff shall have Professional Staff Bylaws which provide for a Medical Executive Committee, departments, and other committees or groups as appropriate to carry out its functions, and which also provide for officers, department chairs, and other designated positions. The AACH Professional Staff Bylaws and amendments thereto shall become effective only after approval by the Board. The Bylaws shall provide a hearing and appeals process for matters affecting appointment, clinical privileges, and corrective action matters. The Board shall appoint to the AACH staff, in numbers not exceeding AACH's needs, qualified physicians and other practitioners. Appointment to the AACH staff is a prerequisite to the exercise of clinical privileges in AACH except as otherwise provided in the Professional Staff Bylaws. There shall also be provision for allied health professionals and other practitioners. Asante has established a Quality Committee for AACH as provided in Article V of the Asante Bylaws and Section 6.1 of these AACH Bylaws, and has also established an Appointment Committee for AACH in Section 6.2 of these AACH Bylaws and delegated to the Appointment Committee the authority to make decisions as to certain appointments as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. Authority granted to the President and CEO of Asante in Article VII of the Asante Bylaws and in the AACH Professional Staff Bylaws may be exercised by the President and CEO of Asante or by a member of management of the System designated by the President and CEO of Asante to exercise such authority with respect to AACH or a particular matter. 7.2 CONSTRUCTION OF BYLAWS. These Bylaws and the AACH Professional Staff Bylaws are intended to be compatible with the Asante Bylaws and should be construed accordingly. Should there be a conflict between the three sets of Bylaws or a question of interpretation as to the meaning of these Bylaws with respect to the AACH Professional Staff Bylaws, the Asante Bylaws, and the decision of the Asante Board shall be controlling. 7.3 ADMINISTRATION AND CARE OF PATIENTS. Practitioners appointed to the AACH Professional Staff have the authority and responsibility for the admission and care of their patients, subject to the limitations contained in these Bylaws, and in the Bylaws and related documents of the AACH Professional Staff, and to any other conditions of their appointment. PDXDOCS:2008224.1 7.4 APPLICATIONS AND APPOINTMENT. Applications for appointment to the AACH Professional Staff shall be made in accord with the procedures established by the AACH Professional Staff Bylaws. Applications shall be in writing and shall contain all material and relevant information concerning the applicant's education, licensure and qualifications, practice history, and previous hospital and other experience. The applicant has the responsibility to provide complete information, which shall be provided to the Medical Staff Office. After evaluation as provided in the AACH Professional Staff Bylaws, the recommendations of the Medical Executive Committee shall be submitted to Board committees as provided in Article V of the Asante Bylaws and Article V of these AACH Bylaws and to the Board. The privileges and appointment of each practitioner appointed to the staff shall be reviewed at least every two (2) years. 7.5 NOTICE OF APPOINTMENT. Staff appointees and applicants for staff appointment shall receive notice of the decision of the Board regarding the initial and later appointments and the clinical privileges granted in accord with the AACH Professional Staff Bylaws. 7.6 HEARING PROCEDURES. A Professional Staff applicant or appointee who has been the subject of an adverse action by the Medical Executive Committee or the Board regarding appointment, privileges, or corrective action and who files a request for hearing as provided in the AACH Professional Staff Bylaws shall be entitled to one hearing pursuant to the hearing procedures of those Bylaws. Written notice of the decision after the hearing shall be given to the practitioner. Hearing procedures shall be in accord with the provisions of the AACH Professional Staff Bylaws and the Health Care Quality Improvement Act of 1986, as amended. 7.7 BOARD REVIEW. The Board shall provide a process for an appeal of an adverse decision made at the AACH Professional Staff level in accord with procedures set forth in the AACH Professional Staff Bylaws. 7.8 SELECTION OF AACH PROFESSIONAL STAFF OFFICERS AND DEPARTMENT CHAIRS. The selection procedures, terms of office, and functions of the AACH Professional Staff officers, Department Chairs, and other officials of the AACH Professional Staff shall be as detailed in the AACH Professional Staff Bylaws. 7.9 QUALITY OF PATIENT CARE. The Quality Committee of AACH shall conduct a continuing review and appraisal of activities of assessing, preserving and assuring the quality of patient care within the hospital as provided in Article V of the Asante Bylaws and Article VI of these AACH Bylaws. The findings of the Quality Committee in its quality assurance activities shall be reported to the President and CEO of Asante and the Board. 7.10 SUMMARY SUSPENSION. The AACH Professional Staff Bylaws shall designate persons who have the authority to summarily suspend the clinical privileges of a practitioner for PDXDOCS:2008224.1 cause in accord with the procedures in the AACH Professional Staff Bylaws. The President and CEO of Asante or designee shall promptly give notice of such action in writing to the affected practitioner. Further proceedings with respect to summary suspension shall be as provided in the AACH Professional Staff Bylaws. 7.11 PHYSICIANS EMPLOYED BY ARCH. 7.11.1 When any dispute arises between a physician employed by AACH and the hospital which is not covered by the terms of the physician's employment contract, it shall be governed by this section of these Bylaws. 7.11.2 A physician employed by AACH in an administrative capacity with no clinical duties does not need to be appointed to the staff. 7.11.3 A physician employed by the hospital who carries out both administrative and clinical responsibilities, or who functions with the AACH Professional Staff in a capacity involving the physician's professional capacity may perform such clinical or professional functions only after appointment to the AACH Professional Staff. 7.11.4 Upon termination of the employment of a physician or other practitioner who has both administrative and clinical or professional responsibilities, the President and CEO of Asante or the senior executive of AACH shall determine whether the action is administrative only or whether it involves matters of professional competence or conduct. 7.11.5 If the President and CEO of Asante or the senior executive of AACH determines that the reason for termination involves the individual's professional competence or conduct, the President and CEO of Asante or the senior executive of AACH shall initiate corrective action as provided in the AACH Professional Staff Bylaws. 7.11.6 If the President and CEO of Asante or the senior executive of AACH determines that the reason for the action is administrative and does not involve the practitioner's professional competence, conduct, staff appointment or privileges, AACH shall follow its usual personnel policies. ARTICLE VIII VOTING UPON STOCK OF OTHER CORPORATIONS Subject to the reserved rights set forth in Section 2.3, and unless otherwise ordered by the Board of Directors and subject to the direction, if any, given by the Board of Directors, any officer of the Corporation shall have full power and authority on behalf of the Corporation to vote either in person or by proxy at any meeting of stockholders or members of any corporation, limited liability company, or other entity in which the Corporation may hold stock or other equity interests, otherwise have an opportunity to vote, and at such meeting may possess and PDXDOCS:2008224.1 exercise all the rights and powers incident to the ownership of such stock or membership which, as the owner thereof, the Corporation might have possessed and exercised if present. ARTICLE IX CONFLICT OF INTEREST Any contract or other transaction of this Corporation in which a Director of the Corporation or a member of any Board committee or subcommittee has a direct or indirect interest, as defined in the Oregon Nonprofit Corporation Act and in the policies of this Corporation, is a conflict of interest transaction. A conflict of interest transaction shall be valid if (a) it is fair to the Corporation at the time it was entered into, (b) it is approved by the Board as provided below, and (c) it complies with the Oregon Nonprofit Corporation Act. If the material facts of the transaction and the Director's interest are disclosed or known to the Board, an approval as described in this paragraph is valid, notwithstanding the presence and participation (but not vote) of the interested Director. Authorization, approval or ratification of a conflict of interest transaction requires the affirmative vote of a maj ority of the Directors on the Board who have no direct or indirect interest in the transaction, so long as there is more than one such Director. It is the policy of the Board that all actual or possible conflicts of interest between AACH and a member of the Board or of a Board committee (to include a subcommittee) with respect to a matter to come before the Board or committee shall be reported to the Board Chair or the chair of the committee. The Chair shall raise the issue of such conflict at a meeting to consider the matter, and if it is determined at the meeting that a conflict exists, the member shall not vote with respect to such matter. The member may, however, participate in the discussion to provide information. Each member of the Board or of a Board committee shall report to the appropriate Chair any actual or possible conflict with respect to himself or herself, and also with respect to other members. A Chair who becomes aware of an actual or possible conflict shall raise the issue for consideration at the meeting. ARTICLE X INDEMNIFICATION 10.1 The Corporation shall defend, advance expenses on behalf of and indemnify any present or former director or officer for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. 10.2 The Corporation shall have the power to indemnify, defend and advance expenses on behalf of any present or former employee or agent of the corporation for expenses, claims, liabilities, indebtedness, penalties, damages or injuries incurred by or asserted against the person in such capacity to the full extent authorized by the laws of Oregon provided the applicable standards of conduct of the Oregon Nonprofit Corporation Act are met and provided the actions do not violate any other state or federal law. PDXDOCS:2008224.1 10.3 The Corporation will only pay for or reimburse expenses in advance of the final disposition of a proceeding upon receipt of a written affirmation of the person's good faith belief that the person has met the standards of conduct of the Oregon Nonprofit Corporation Act and any other applicable law and a written undertaking in accord with such Act to repay the expenses advanced if it is ultimately determined that the person did not meet the standard of conduct. 10.4 Indemnification pursuant to the foregoing authority shall not be deemed to be exclusive of any other rights to which such person may be entitled under any other bylaw, an agreement, the Oregon Nonprofit Corporation Act or otherwise. 10.5 The repeal or modification of this article shall be prospective only and shall not adversely affect any right or protection that is based upon this article and pertains to an act or omission that occurred prior to the time of such repeal or modification. 10.6 The Attorney General of Oregon shall be given written notice at least twenty (20) days prior to the indemnification of a director or an uncompensated officer. ARTICLE XI FISCAL YEAR The fiscal year of the Corporation shall commence on October 1 and end on September 30 of each year. ARTICLE XII PROHIBITION AGAINST SHARING IN CORPORATE EARNINGS No Member, Director, officer, employee, committee member or other person connected or affiliated with the Corporation, and no other private individual, shall receive at any time any of the net earnings or pecuniary profit from the operations of the Corporation, provided that the Corporation shall not prevent the payment to any such person of such reasonable compensation for services rendered to or for the Corporation in effecting any of its purposes as such compensation shall be fixed by the Board of Directors; and no such person or persons shall possess any proprietary right in or to the property of the Corporation or be entitled to share in the distribution of any of the corporate assets upon dissolution of the Corporation. ARTICLE XIII DISSOLUTION OF THE CORPORATION Upon dissolution of the Corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the Corporation, dispose of all of the assets of the corporation to Asante, its sole corporate Member, provided Asante is still in existence and qualifies as an exempt organization under the Internal Revenue Code of 1986, as amended (the "Code"). If, at the time of dissolution, Asante is not an exempt organization under the Code, or is no longer in existence, the Board of Directors shall dispose of all the corporate assets to an entity that is organized and operated exclusively for charitable, educational, religious or scientific purposes and PDXDOCS:2008224.1 qualifies as an exempt organization under the Code (or the corresponding provision of any future United States Internal Revenue Law). ARTICLE XIV INVESTMENTS Except as otherwise provided in the Articles of Incorporation of the Corporation, the Corporation shall have the right to retain all or any part of any securities or property acquired by it in whatever manner, and to invest and reinvest any funds held by it, according to the judgment of the Board of Directors. ARTICLE XV EXEMPT ACTIVITIES Notwithstanding any other provisions of these Bylaws, no Member, Director, officer, employee or agent of the Corporation shall take any action or carry out any activity by or on behalf of the Corporation not permitted to be taken or carried on without penalty by an organization exempt from federal taxation as now exists or as may hereafter be amended. ARTICLE XVI AMENDMENTS No amendment of these Bylaws shall be effective without the written approval of the Member. In addition, the Board of Directors shall regularly review these Bylaws and recommend any revisions to these Bylaws to conform to applicable requirements of state or federal law and/or accreditation standards. ARTICLE XVII MISCELLANEOUS PROVISIONS 17.1 DEPOSITORIES. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, financial institutions, mutual funds or other depositories as the Board of Directors may designate. 17.2 CHECKS. All checks, drafts, or other orders for the payment of money issued in the name of the Corporation shall be signed by such officer or officers or person or persons, whether or not officers of Corporation, in such manner as shall from time to time be determined by the Board of Directors. 17.3 CONTRACTS AND INSTRUMENTS. Subject to any limitations contained in these Bylaws or by resolution of the Board of Directors, all deeds, mortgages, bonds and other contracts or instruments of the Corporation shall be signed on behalf of the Corporation by the President/Chief Executive Officer of Asante or such other officers as may be designated by the Board from time to time. 17.4 AGENTS AND REPRESENTATIVES. The Board of Directors may appoint such agents and representatives of the Corporation with such powers and with the authority to PDXDOCS:2008224.1 perform such acts or duties on behalf of the Corporation as the Board of Directors may deem appropriate, consistent with these Bylaws, the Articles of Incorporation of the Corporation and applicable law. 17.5 ELECTRONIC COMMUNICATIONS. To the fullest extent permitted by law, the Member, Board of Directors and Board Committees may utilize electronic communications such as email, fax and other electronic communications for purposes of distributing notices of meetings, voting by ballot or otherwise, executing unanimous written consents as otherwise authorized by these Bylaws, and for all other legitimate purposes of communicating. Dated this day of August, 2013 Secretary of the Corporation PDXDOCS:2008224.1 Exhibit C Mission Statement Asante Ashland Community Hospital exists to provide quality healthcare services in a compassionate manner, valued by the communities we serve. PDXDOCS:2008224.1 ACH Treasurer's Certificate The undersigned, Alan DeBoer, Treasurer of Ashland Community Healthcare Services, an Oregon nonprofit corporation (the "Corporation"), delivers this ACH Treasurer's Certificate pursuant to Section 27.4.2.2 of the Affiliation Agreement (the "Affiliation Agreement"), dated as of June 4, 2013, by and among the Corporation„ Asante, an Oregon nonprofit corporation, the City of Ashland, an Oregon municipal corporation, and Ashland Community Hospital Foundation, an Oregon nonprofit corporation. Capitalized terms used but not defined in this ACH Treasurer's Certificate have the meanings provided in the Affiliation Agreement. The undersigned, in his capacity as Treasurer of the Corporation, certifies to the best of his knowledge that: 1. All financial representations and warranties of the Corporation set forth in Section 32.4 of the Affiliation Agreement continue to be accurate and complete as of the Closing Date; and 2.. Except for the approval of the Affiliation by the Centers for Medicare and Medicaid Services and the Oregon Health Authority, the Corporation has performed each of the covenants set forth in Section 36 of the Affiliation Agreement and conditions precedent required to be performed by the Corporation on or prior to the Closing Date. [remainder of page intentionally left blank] PDXDOCS:2008219.1 IN WITNESS WHEREOF, the undersigned has executed this ACH Treasurer's Certificate effective as of the Closing Date. i Alan DeBoer, Treasurer -Signature Page to ACH Tmasarer's Certificate PDXDOCS:20D8219.1 CERTIFICATE OF VICE PRESIDENT OF DEVELOPMENT OF ASHLAND COMMUNITY HOSPITAL FOUNDATION The undersigned, Janet Troy, hereby certifies as follows: 1. I am the Vice President of Development of Ashland Community Hospital Foundation ("ACH Foundation'). ACH Foundation does not have an executive director. I perform the functions that would otherwise be performed by an executive director of ACH Foundation. 2. 1 make this certification pursuant to Section 27.4.3.1 of that certain Affiliation Agreement. among Asante, the City of Ashland, Ashland Community Hospital and ACH Foundation (the "Affiliation Agreement'). 3. To the best of my knowledge, the representations and warranties made by ACH Foundation in the Affiliation Agreement remain accurate and complete as of the closing date (the "Closing Date"), as defined in the Affiliation Agreement. 4. To the best of my knowledge, ACH Foundation has complied with and performed the covenants and conditions precedent set forth in the Affiliation Agreement, as of the Closing Date. Dated: This 3 day of 2013. j roy, Vice Presider of Development d Community Hospital Foundation Ashland Community Hospital Foundation Secretary's Certificate The undersigned, Jut, A* AL sr4J , Secretary of Ashland Community Hospital Foundation, an Oregon nonprofit corporation ("ACH Foundation"), delivers this Secretary's Certificate pursuant to Section 27.1.4 of the Affiliation Agreement (the "Agreement"), dated as of June 2013, between ACH Foundation, Asante, Ashland Community Hospital, and the City of Ashland. The term, "Execution Date" shall mean the date of execution of the Agreement as defined therein. The undersigned, as Secretary of ACH Foundation, certifies that: 1. I am the duly elected and acting Secretary of ACH Foundation. 2. Attached hereto is 'a true and complete copy of a resolution duly adopted by the ACH Foundation board of directors on May 21, 2013, authorizing and approving the execution of the Agreement, the performance of all actions to be taken on behalf of ACH Foundation pursuant to the Agreement, and the completion of all transactions contemplated therein, which resolution has not subsequently been amended or rescinded, and which remains in full force and effect as of the Execution Date. IN WITNESS WHEREOF, the undersigned has executed this Secretary's Certificate effective as of the Execution Date. Julie A. usta , Secretary Ashland o unity Hospital Foundation -Signature. Page to Secretary's.Cerfiftcafe- PDXDOCS:2004320.1 Annex A Resolutions See attached. PDXDOCS:2004320.1 ASHLAND COMMUNITY HOSPITAL FOUNDATION MINUTES OF MEETING OF BOARD OF DIRECTORS The following resolution was adopted by the Board of Directors of the Ashland Community Hospital Foundation at a meeting of the Board of Directors held on the 21 day of May, 2013 at which a quorum was present: RESOLUTION AUTHORIZING AFFILIATION AGREEMENT BETWEEN ASANTE, ASHLAND COMMUNITY HOSPITAL, THE ASHLAND COMMUNITY HOSPITAL FOUNDATION AND THE CITY OF ASHLAND AND AUTHORIZING THE PRESIDENT OF THE FOUNDATION TO SIGN DOCUMENTS NECESSARY TO CLOSE THE AFFILIATION TRANSACTION RECITALS: The Ashland Community ' Hospital Foundation ("ACH Foundation") entered into a Letter of Intent with Asante ("Asante"), Ashland Community Hospital ("ACH") and the City of Ashland ("City") for the purpose of negotiating an agreement that will allow the affiliation of ACH with Asante. Pursuant to the Letter of Intent, an Affiliation Agreement (the "Affiliation Agreement") has been drafted. THE BOARD OF DIRECTORS THEREFORE RESOLVES AS FOLLOWS SECTION I The Board of Directors of the Ashland Community Hospital Foundation approves the Affiliation Agreement between Asante, the City, ACH and ACH Foundation. SECTION 2 The President of ACH Foundation is authorized to sign the Affiliation Agreement on behalf of ACH Foundation. SECTION 3 The Executive Director of ACH Foundation is directed to provide to Asante all exhibits, schedules and documents required by the Affiliation Agreement to be provided by ACH Foundation to Asante. sEcTION 4 The President of ACH Foundation is authorized to sign, on behalf of ACH Foundation, any and all documents necessary to close the Affiliation Agreement transaction, including documents necessary for the conveyance of real property, once such documents have been reviewed and approved as to form by the attorney for ACH Foundation. The foregoing resolution was adopted by the unanimous vote of the Board of Directors of the Ashland Community Hospital Foundation on the 21 day of May, 2013. Julie A. stad, ecretary Ivanov, Sharon From: RightEax E-mail vGateway <RightFax@MillerNash.com> Sent: Tuesday, July 09, 2013 3:44 PM To: ivanov, Sharon Subject: Your fax has been successfully sent to Internal Revenue Service, Exempt Organizations Determinatiio at 1-513-263-4330. 3 Your I:u has twee succe4srully,ccni to l denial Revenue Servicc, h:X'cmpi 0iWutizations Determinatio at 1-513- Acco nit: 18751043 -1 ilnc: 719120133:37:2-1 PNM Sell( to 1-513-263-1,330 %%ri:h renxitc ID 51,3 263 41330' Result: (013:351,0/0) SUcceSS1b1 Send Pagc record: 1 - 7 1,1111"ed time: 06:0:3 oil channel ® PORTLAND, OREGON 3400 U.S. Bancorp Tower SEATTLE, WASHINGTON 111 S.W. Fifth Avenue MILLERNASHLrR CENTRAL wnsHlNGroN Portland, Oregon 924.9 CENTTRARAL L OREGON omcE 507..2224.5855856 ATTORNEYS AT LAW W W W.MILLERNASH.COM rA[ 503.224.0155 William S. Manne, P.C. Admitted in Oregon and Washington bi Il.ma nne@mi Ilemash.com (503) 205-2584 direct line July 9, 2013 VIA FACSIMILE 513-263-4330 Internal Revenue Service Exempt Organizations Determinations Room 4024 Post Office Box 25o8 Cincinnati, Ohio 45201 Subject: Request for Form CP-575 Dear Sir or Madam: We represent Ashland Community Healthcare Services, doing business as Asante Ashland Community Hospital, EIN 93-1213059• The purpose of this letter is to respectfully request that you fax and mail to me, on an expedited basis, Form CP-575 to indicate that the assumed business name registration of Asante Ashland Community Hospital is attached to the EIN of Ashland Community Healthcare Services (93-1213059). (Copies of the State of Oregon Secretary of State's Acknowledgment and the aforementioned assumed business name registration are enclosed for your convenience.) Also enclosed is my Tax Information Authorization, Form 8821. Form CP-575 is required for Ashland Community Healthcare Services to file Form 855A With the Centers for Medicare and Medicaid Services (CMS). This is an urgent matter and we appreciate your most prompt response. Please fax and mail Form CP-575 to my attention as soon as possible. My fax number is 503-224-0155 (as shown above). Should you have any questions whatsoever, please do not hesitate to contact me immediately. PDXDOCS:2007510.2 PORTLAND. 69E6oN ` SEATTLE, WASH INGTON MILLER NASHEEP CENTRAL VANCOUVER, wASeiNC*oN CENTRTRAL OREGON ATTORNEYS AT LAW WWW.MILLERNASH.COM Internal Revenue Service July 9, 2013 Page 2 Thank you very much for your anticipated assistance. Very truI yours ~Q r William S. Manne, .C. PDXDOCS:2007510.2 F. 8821 a.ow -m Onll Tax Information Authorization For Oft Vre Only M1urvutY (Rev. 0ctober2012) ► Information about Form 8821 and Its Instructions is at www.trs.gov/7wmB821. 'L'^~ Department of the Treasury ► Do. not sign this form "Less all applicable lines have been eompieted. rat°°" InI¢mal aI Ft" Revenue Service ► To request a copy or transcript of your tax return, use Form 4506, 4508-7, or 45067-EZ. fi11hn w.. 1 Taxpayer information. Taxpayer must sign and date this form on line 7. Taxpayp name and address hype or poop Taxpayer idenUlicatm number(s) 93.1213059 Daytime telephone number Plan number (U appGCade) Ashland Community Healthcare Services 541 2014003 2 Appointee. If you wish 10 name more than one appointee, attach a list to this form. Name and address CAF No. 8005.330088 PTIN !!RIM!" William S. Marine Telephone No. 503.205.2564 111 SW Fifth Avenue, Suite 3400 - Fax No. 507.224-0155 _ _ _ _ Portland, OR 97204 Check if new: Address ❑ Tele hone No. ❑ Fax No. ❑ 3 Tax matters. The appointee is authorized to inspect and/or receive confidential tax information for the tax matters listed on this line. 00 not use Form 8821 to request copies of tax returns. Tvpe) rax (b) (p) (d) pncoma. Employment, Payroll, Excise. Estate, Tax Form Number Yearfs) or Period(s) Specific Tax Matters (see intr.) Gift, Civil Penalty, etc.) (sea Inslructlons) (1040, 941, 720, etc.) (see the Instructions for line 3) Income Employment CP-575 2012 2013 Form CP-575 4 Specific use not recorded on Centralized Authorization File (CAF). If the tax information authorization is for a specific use not recorded on CAF, check this box. See the instructions. If you check this box, skip lines 5 and 6 . . . . . . ► ❑Q 5 Disclosure of tax information (you must check a box online Sa or 5b unless the box online 4 is checked): a If you want copies of tax Information, notices, and other written communications sent to the appointee on an ongoing basis, check this box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► ❑ Note. Appointees will no longer receive forms, publications and other related materials with the notices. b If you do not want any copies of notices or communications sent to your appointee. Check this box . ► ❑ 6 Retention/revocation of tax information authorizations. This tax information authorization automatically revokes all prior authorizations for the same tax matters you listed on line 3 above unless you checked the box on line 4. If you do not want to revoke a prior tax information authorization, you must attach a copy of any authorizations you want to remain in effect and Check this box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ► ❑ To revoke this tax information authorization, see the instructions. 7 Signature o1 taxpayer. If signed by a corporate officer, partner, guardian, executor, receiver, administrator, trustee, or party other than the taxpayer, I certify that I have the authority to execute this torn with respect to the tax matters and tax periods shown on line 3 above. ► IF NOT SIGNED AND DATED, THIS TAX INFORMATION AUTHORIZATION WILL BE RETURNED. ► T SIGN THIS FORM IF I BLANK OR INCOMPLETE. ~a~.~ Date Anne Golden Board Chair Print Name This (e apdkable) 0 F-1 11 ❑ PIN rumper for electronic signature For Privacy Act and Paperwork Reduction Act Notice, see instructions. Cat. No. 11596P Form 8821 (Rev. 10-20 12) Form 8821 Item 2 Appointee (Additional name) Ronald A. Shellan Miller Nash LLP 111 SW Fifth Avenue, Suite 3400 Portland, Oregon 97204 CAF No. 8000-21786R PTIN P01586407 Telephone No. 503-205-2541 Fax No. 503-224-0155 THIS PAGE INTENTIONALLY LEFT BLANK Jul. 3. 2013 10:150 No. 0801 P. 1/2 Secretary of State Corporation Division Registry Number: 948514-91 255 Capitol Street NE, Suite 151 Type: ASSUMED BUSINESS NAME Salem; OR 97310-1327 N i Phone:(503)986.2200 w w.fifinginoregon.com Next Renewal Date: 07/03/2015 MARVIN HAAS 280 MAPLE STREET ASHLAND OR 97520 NOTE: Assumed Business Names are required to renew every two years. Acknowledgment Letter The document you submitted was recorded as shown below. Please review and verify the information listed for accuracy. Document APPLICATION FOR REGISTRATION Filed On 07/03/2013 Name ASANTE ASHLAND COMMUNITY HOSPITAL Principal Place of Business Authorized Representative 280 MAPLE STREET MARVIN HAAS ASHLAND OR 97520 280 MAPLE STREET ASHLAND OR 97520 Registrant ASHLAND COMMUNITY HEALTHCARE... ALL COUNTIES OESHAR ACK 07x0312013 Jul. 3. 2013.10:15A No: 0801 P. 2/2 ,..MI Pxtcr F Stololf, P. C, nv.vuvv j Assumed Boslness Name • Now Realstratton I a.n.iery orauls. COrpwaloneiidwi• US COPWSLNE, SUM lsl•sabm 0R9T110.1327.blblM.w,fMrpbOlxpen oon+-vMrq:lSMJ 08x4700 FILED q~ JUL 03 2013 RfiaISTRY NUMOER: OREGON Fw WiT vn o SECRETARY OF STATE M ftcom Ka MN 0 ro0cn R.NsadelaaM1e (Pt.{to-102400,xe"1Wnl.aen onltl, lalm a WbIO)'evubON.IntlWpV addttxu.. Wemullwrsese lelsi e0onb e9 per,tel vponl.wwganall+dl ee pallN en earMebaxe. Fq elAOe the CrBr Pleave Type or P4h%Leoiby In Black Ink Attach Addltonal Sh"I It Necessary, I) AaeUNEO BVSRIEes NaNE: p'oea«glslemd) - Asants Ashland Community Hospital 1Ax1 Repbua8 name, , qorsix a0np mMO M m.y ab. aaes toe 908110 WOW. ne8110 WOW. 1 ~ma IAsy alnW resY14.M 4 oMn"es Of Of10 gR Won roe¢on Wouma//leppi apaiMtnsltliMalla repisuam for tw"= for Maim aimva. gaNmmsofapayawnpex0en 4on09 ot wka0riord0Alb ma0na oval bvzrnnf, 2) DBa CRipTk)N OFBUOSrtsS: (gamey bWnea adMh) 4) WNon AOmORQe.DTo REPRESeNiyNe0votaR9: hospital; healthcare Marvin Haas 3) PRiNcipAi PLAcEoFBusiNEeal(Amesa,Uyci*.71p) a) MAOM4 AooREss or Aumowgb RCER6S6NFAme: 28. 0 Maps Street 280 Maple Street Ashland, OR 97520 Ashland, OR 97520 6) Namts OF OwN"a(Ree1STItOTS) AND PUBLICLY AYAM6LE AODRBSSES:(Last then srd steel a001ase of %,M p&ean a ably wheW Cond,awtV ect ouxAess onda ow as4aa/W bldraaj rome.) ( UWh a saMAJO Chest Itnomuy.) Name, Swol AddnaT, City, State, YIP we Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 7) Coutirfal O Baker ❑ Cxook O Harney ❑ Lako O Morrow ❑ Union O Benton O Luny O Hood RNer O Lane ❑ Mullpomah O Wallowa V) ALI, COUNTIES ❑ Clockpmas ❑ Deschutes ❑ Jackson ❑ t)ncoln ❑ Polk O Wesw (Slatewlda) ❑ Galsop ❑ Douglas O Jef(luson O Linn ❑ Sherman O Washington ❑ Columble 0 GlElam 0 Josephine O Meiheux O Tillamook O Wheeler O Caos ❑ Omni O Klamath O Merlon Q umatnla ❑ Yamhitl 8), FIECUVION/SIONATVRa(a): (Aa.„"yy,epetNita mpg itpn.) By my slgnaturo, t declam"en avlhatxed auibor(y, Vol INL 6Mp has been avemined by me and is, to the best of my knbwlWps and bone/. Uve, correct. and eompiele. Making raise stalameAta In Ws doWmenl to aOnel Via tow and maybe panali"d by fin", Onvdsanmem or both, Signatuye: ( NnIed Nsme: Marvin Haas CoNrAOT NAME:(ro,aw~v aveaemxv(h b:s/A.w t FEES . ASANTE ASHLAND COMUNITY HOSPIT f ,VAetra+r F0 IIIIIIIl11111111111111111111111111111111 = Fr ~~.~N~alaAyxw.~..~pe,,..ea~4M~~R~~~ {II 94851491-14460278 NE1iASG ' Jun. 26. 2013 2:50PM Peter F StoIoff, P. C. No. 0300 P. 3 Assumed Business Name - New Registration Secretary of Stale - Corporelion Division • 255 Capdol SI. NE. Sidle 151 - 3918m, ON 97310.1327 -hltpX*WW,R "InOregon oom -Phonx (603)9W-7,200 FILED JUL 0 3 2013 RV016TRr NUMBER. OREGON For oftiee use o SECRETARY OF STATE In accordance with Oregon Revised Statute 192.410.192.490, all InfOmmlion on this form is pub" amiable, lndudhq addresses. we must release tMs Info madon to all pardes upon request and It v!l be posted on our webslle. For elks Use on1V Please Type or Print Legibly In Black Ink. Attach Additional Sheet it Necessary. 1) ASaUNED BUSINESS NAME: (To be regislered) AsanLe 6shland Community Hospital Registration or 66N of e name On not granl exclusive Fights or Inleresla In Met narno, A name may be available for reytslretion: however, someone else may hold a prior right lo that name, or the name may be too almllor to another, and may mWl In a case d tepal action brought sgsinsl the replstrad for dilution or unfair competition of someone eke's buslneaa. 2) DESCRIPTION OF BUSINESS: (Primary business famth 4) Wito IS AUTHORIZED To REPRESENT7NE OWNERS: hospital, healthcare (Authorized Rep'ei"'`'li"a)(One m only) Marvin Haas 3) PRINCIPAL PLACE OF BUSINESS: (Address, city, 41a(e, zip) 6) MAILWGAwitE9S oKAUTHomme REPRESENTATIVE: 280 aDe Street 280 Maple Street Ashland, OR 97520 Ashland, OR 97520 6) NAME3 OF OWNERS (RFc;wrRANTs) AND PUBLICLY AVAILABLE ADDRESSES: (List name and street address of each person or entity Who will conduct ortrenood business under Me assumed business name.) (Attach a separate sheet If necessary.) Name, Street Address, City, Stale, Zip Code Ashland Community Healthcare Services 280 Maple Street Ashland, OR 97520 7) Coultmes: Q Baker ❑ Crook Q Harney ❑ Lake ❑ Morrow ❑ Union Q Benton ❑ Curry O Hood River ❑ Lane ❑ Multnomah ❑ Wallowa ® ALL COUNTIES ❑ Clackamas ❑ Deschutes ❑ Jackson ❑ Uncoln ❑ Polk ❑ Wasco (Statewide) Q Clalsop ❑ Douglas ❑ Jefferson ❑ Linn ❑ Sherman ❑ Washington ❑ Columbia ❑ Gilliam C~ Josephine ❑ Malheur ❑ Tillamook ❑ Wheeler 0 Coos ❑ Grant Q Klamath ❑ Marion ❑ Umatilla ❑ YarnNo B) EXECUTION/SIaNATURe(s): (MI ownaWfogislranls must alp(L) By my signature. I declare as an authorized authority, (hat IAIs Ming has been examined by me and Is, to the best o(my knovAedue and beAef. Irue, corms. and complete. Making false stalements in this dowmenl Is agalns( the low and may be penalized by fines, imprisonment or both. Signature: Printed Name: Marvin Haas CONTACT NAME: (To reso-,ve goestlons with 0,ia ra,- I FEES ASANTE ASHLAND COMMUNITY HOSPIT R&qA ~casslrer~ IS Pmcaft fees are rw*o a ift, pisses make ducks>yaele b ^Corporalbei blvlibn' Free own am s+a7a* al r.3ra!rKT,! xr rcm. ataig Yr 9►shiea Name SOeGh program. 94851491-14460278 NLWREG