MARKETING SERVICES AGREEMENT

 

This Marketing Services Agreement is entered into as of the 23rd day of January,
2015 by and between Mesa Pharmacy, Inc., a California corporation (“Client”) and
Products for Doctors, Inc., a California corporation (“Consultant”).

 

Article I — Marketing Services

 

1.1 Marketing Services. Consultant will provide the following marketing services
for the benefit of Client (the “Services”):

 

(a) Consultations with Client on the preparation of marketing materials
(“Marketing Materials”), which will include descriptions of the compounded
medication offerings of Client (“Products”), Client’s general business
operations, health plan and payor arrangements, contact information and other
information provided by Client necessary to provide a profile that Consultant
deems satisfactory to use in connection with the other Services to be provided.

 

(b) Direct marketing to physicians who may elect to prescribe Products to their
patients (“Prospects”).

 

(c) Market research to identify opportunities for marketing the Products to
Prospects.

 

(d) Consultations with Client on new product opportunities and product
development.

 

(e) Promotion of Client and the Products at conferences and seminars attended by
Prospects.

 

(f) Periodic reports of marketing activities, including numbers of meetings and
contacts with Prospects and appearances at conferences and meetings.

 

The Services shall be provided in a professional fashion, consistent with
prevailing industry standards. Consultant shall devote such time and effort to
providing the Services as is reasonably necessary to comply with the terms of
this Agreement; provided that Consultant shall determine the time allocated to
providing the Services and the manner in which the Services are provided.

 

1.2 Exclusions. Nothing in Section 1.1 shall be interpreted as requiring or
providing that Consultant shall:

 

(a) Pay or furnish any inducement, discount, rebate or other compensation to any
person or entity for the purpose of inducing prescriptions or orders for
Products by Prospects.

 

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(b) Make any commitments or representations on behalf of Client except as
reflected in the Marketing Materials.

 

(c) Assume any responsibility for the accuracy of any descriptions of Products
or Client’s services in any Marketing Materials as Consultant shall be entitled
to rely on Client to provide accurate information in the preparation of the
Marketing Materials.

 

(d) Make any contacts or engage in any activity that could constitute promotion
of Client or its Products to any person who is not a Prospect with professional
responsibilities to patients to exercise judgment with respect to any decision
to prescribe Products.

 

(e) Make any use of intellectual property of Client, including trademarks, logos
and artwork, whether in the Marketing Materials or otherwise, except as
expressly directed by Client.

 

1.3 Compliance with Law. Consultant will, in providing the Services, comply with
laws applicable to its business, maintain an internal compliance program
acceptable to Client and comply with the terms of compliance programs maintained
from time to time by Client, which are made known to Consultant by Client in
writing. The parties will execute a Business Associate Addendum, in the form
attached as Exhibit A, to address any protected health information to which
Consultant may require access to perform its duties under this Agreement.

 

Article II — Client Duties

 

2.1 Provision of Information. Client shall produce, at its own cost and expense,
the Marketing Materials and advise Consultant of any changes in the information
provided in the Marketing Materials or to be used in presentations to Prospects.
Client hereby warrants and represents to Consultant that all information in the
Marketing Materials will be accurate and contain no misstatement or misleading
information that would constitute a violation of applicable law. Consultant is
not authorized to amend or modify the Marketing Materials from the form in which
they are approved by Client.

 

2.2 Operation of Client’s Business. Client will operate its business in
accordance with any representations made to Consultant pursuant to Section 2.1.

 

2.3 Compliance with Law and Licensure. Client shall be responsible for
compliance with all laws related to the operation of its business and maintain
all licenses necessary for the sales and shipment of Products.

 

2.4 Cooperation. Client shall cooperate with Consultant as requested, including
having a representative of Client, with appropriate authority to make
presentations and commitments on behalf of Client, present at meetings with
Prospects.

 

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2.5 Non-Solicitation. During the terms of this Agreement, Client shall not,
directly or indirectly, (i) solicit orders from any doctor referred by
Consultant or other Consultant customer that has been referred to Client without
Consultant’s written approval. (ii) solicit any sales agents of Consultant
without Consultant’s written approval.

 

Article III — Compensation

 

3.1 Compensation. In consideration of the provision of the Services Client shall
pay to Consultant a marketing fee as provided in Exhibit B (“Compensation”)

 

3.2 Adjustments to Compensation. Not later than sixty (60) days prior to each
Renewal Date of this Agreement, as defined in Section 4.2, Consultant shall have
the right to propose an adjustment to the rate of Compensation. If such proposed
adjustments are not acceptable to Client, Consultant shall be entitled to
terminate this Agreement on not less than thirty (30) days’ notice, effective as
of the end of the then current term of this Agreement.

 

3.3 Principles of Compensation. The parties intend that the compensation due
under this Agreement shall be consistent with applicable laws. The compensation
set forth herein is based on an agreement of the parties as to the fair market
value for the Services. The parties have made such investigation as is necessary
to satisfy themselves as to the appropriateness of the levels of compensation.
To the extent that any change in law, regulation or judicial interpretation of
applicable law would render any element of compensation hereunder to be illegal,
upon the request of either party, the parties shall confer promptly to negotiate
an adjustment to the relevant element of compensation or modification of the
Services to conform to the law. If the parties are unable to agree upon an
adjustment to compensation or modification of the Services, then either party
may give notice of termination of this Agreement in accordance with Section 6.3.

 

3.4 Expenses and Taxes. Consultant shall be responsible for the payment of all
expenses that it incurs in the provision of the Services and all taxes, whether
based on income, payroll or otherwise, that may be imposed on the Compensation
paid to Consultant under this Agreement. Client shall have no obligation to
reimburse or pay any expenses on behalf of the Consultant.

 

Article IV — Term

 

4.1 Effective Date and Initial Term. This Agreement shall be effective as of the
date first written above (the “Effective Date”) and terminate on July 23, 2016,
representing a term of approximately eighteen months (the “Initial Term”).

 

4.2 Renewal Terms. Not less than sixty (60) days prior to July 23, 2016,
Consultant shall have the right to propose a renewal of this Agreement for an
additional one (1) year term (the “Renewal Term”) and specify any adjustment to
Compensation for such renewal term, as provided in Section 3.2. Client shall
have thirty (30) days to accept or decline the proposed renewal; provided that
the failure to accept the Renewal Term within the thirty (30) day response
period Client shall be deemed to have declined the proposed renewal term and
this Agreement shall terminate as of the end of the then current term.

 

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Article V — Confidentiality

 

The parties understand and acknowledge that during the term of this Agreement
they may receive or have access to information of a proprietary and confidential
nature concerning the other party or the subject matter of this Agreement.
“Confidential Information” shall mean all information designated in writing by a
party to be confidential and all information concerning a party that is not
otherwise publicly available, including but not limited to contents of any of
the Products, computer codes, software applications, customer names, and pricing
information. The parties shall use Confidential Information of the other solely
for the purposes of this Agreement and enforce appropriate restrictions on their
authorized employees or agents who need to know such information to carry out
the terms of this Agreement. Upon the termination of this Agreement, each party
will deliver to the other party any Confidential Information of the other,
whether delivered or created pursuant to this Agreement. No party shall retain
any of the other party’s Confidential Information, and upon written request,
shall certify in writing to the return or destruction of such Confidential
Information. This covenant concerning Confidential Information shall survive the
termination of this Agreement for a period of two (2) years. The parties hereto
agree that Prospects that did not previously do business with Client prior to
January 23, 2015 are the confidential and proprietary information of solely the
Consultant and constitute trade secrets of the Consultant under the California
Uniform Trade Secrets Act.

 

Article VI — Termination

 

6.1. Termination for Cause by Either Party. Except as provided in Sections 6.2
and 6.3, either party may terminate this Agreement for cause upon written notice
to the other party specifying the nature of the alleged breach of this
Agreement. For purposes of this Agreement, “cause” shall be construed to mean a
material breach of an obligation to be performed hereunder, that is not cured
within thirty (30) days or for which reasonable steps to cure are not undertaken
and diligently and continuously pursued if such cure cannot reasonably be
achieved during such thirty (30) day period.

 

6.2. Bankruptcy. Either party may terminate this Agreement effective immediately
upon written notice, if the other party files a petition in bankruptcy, is
adjudicated bankrupt, or takes advantage of the insolvency laws of any
jurisdiction, makes an assignment for the benefit of creditors, is voluntarily
or involuntarily dissolved, or has a receiver, trustee, or other court officer
appointed with respect to its property.

 

6.3 Violation of Law. Either party may terminate this Agreement immediately upon
written notice, if the other party is determined by a governmental authority to
be operating in violation of any law that governs this Agreement unless the
parties are unable to negotiate an adjustment to the compensation or
modification to the Services in accordance with Section 3.3 to conform to the
requirements of the law and address all legal obligations related to the
violation.

 

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6.4 Effects of Termination. Upon termination of this Agreement, as provided
herein, neither party shall have any further obligations hereunder except for
(a) obligations accruing prior to the date of termination, and (b) obligations,
promises, or covenants contained herein that are expressly made to extend beyond
the Term of this Agreement, including, without limitation, confidentiality
obligations. The termination of the Agreement shall not relieve either party of
duties or obligations to promptly account for and pay to the other all amounts
due under this Agreement through the date of such termination; provided that in
the event of a termination in accordance with Section 6.3, the parties’
obligations shall be limited by conformity to applicable law, i.e., neither
party shall be entitled to performance of any obligation or payment of any
amount that would constitute a violation of law. By way of clarification and
notwithstanding any provisions herein or in any exhibits hereto to the contrary,
if for any reasons this Agreement is terminated or is not renewed, all
obligations under this Agreement to pay Compensation, including, without
limitation, with respect to the provisions under Exhibit B, shall continue and
remain in full force and effect with respect to all orders or prescriptions for
Products from Prospects that (i) were received by the Client on or prior to the
effective date of termination or expiration of this Agreement and (ii) are
received by the Client for the 12 month period commencing on the effective date
of termination or expiration of this Agreement.

 

Article VII — Indemnification

 

7.1 Indemnification of Consultant. Client shall indemnify and hold harmless
Consultant, its shareholders, directors, officers, agents, members, managers and
employees and their respective successors and assign (“Consultant Indemnified
Parties”) from all cost, loss or expense (including reasonable attorneys’ fees)
which the Consultant Indemnified Parties may suffer as a result of the breach by
Client of this Agreement or any violation of law by Client which affects the
Consultant Indemnified Parties.

 

7.2 Indemnification of Client. Consultant shall indemnify and hold harmless
Client, its shareholders, directors, officers, agents, members, managers and
employees and their respective successors and assigns (“Client Indemnified
Parties”) from all cost, loss or expense (including reasonable attorneys’ fees)
which the Client Indemnified Parties may suffer as a result of the breach by
Consultant of this Agreement or any violation of law by Consultant which affects
the Client Indemnified Parties.

 

7.3 Procedure for Indemnification. Upon notice of any claim by an Indemnified
Party (whether a Consultant Indemnified Party or a Client Indemnified Party)
under this Article VII, the other party shall assume the defense of such
Indemnified Party with counsel reasonably acceptable to such indemnified party..
If the party obligated to provide indemnification fails to assume the defense
within such period of time as is necessary to avoid prejudice to the legal
position of the Indemnified Party, the Indemnified Party shall be entitled to
engage counsel and defend such claim at the expense of the other party.

 

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Article VIII — Dispute Resolution

 

8.1. Party Negotiations. The parties will attempt to resolve all claims,
disputes or questions arising under or related to this Agreement by negotiation
conducted by duly authorized representatives. A party that is aware of an issue
arising under this Agreement shall give prompt written notice to the other party
of such matter.

 

8.2. Venue Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules, including the Optional Rules for Emergency
Measures of Protection, and judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The Arbitration shall
be conducted in Orange County, California.

 

Article IX — General Provisions

 

9.1. Governing Law. This Agreement and all rights and remedies arising hereunder
or related hereto shall be governed by and construed and enforced in accordance
with the laws of the State of California, without regard to choice of law.

 

9.2. Relationship of the Parties. For purposes of this Agreement and all
Services to be provided hereunder, the parties shall be and shall be deemed to
be independent contractors and not or employees of the other party. Consultant
has no authority as an agent of Client except to the extent specified in this
Agreement. Consultant will not make any statements, representations, warranties
or other commitments of any kind which are binding on Client, except as may be
expressly provided for herein or otherwise authorized in writing.

 

9.3. Entire Agreement and Waiver. This Agreement contains the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
all prior and contemporaneous agreements, arrangements, negotiations and
understandings between the parties relating to the subject matter hereof. There
are no other understandings, statements, promises or inducements, oral or
otherwise contrary to the terms of this Agreement. No representations,
warranties, covenants or conditions, express or implied, whether by statute or
otherwise, other than as set forth herein, have been made by any party hereto.
No waiver of any term, provision or condition of this Agreement whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
shall constitute, a waiver of any other provision hereof, whether or not
similar, nor shall such waiver constitute a continuing waiver, and no waiver
shall be binding unless executed in writing by the party making the waiver.

 

9.4. Amendment. No supplement, modification or amendment of this Agreement shall
be binding or enforceable unless executed in writing by duly authorized
representatives of the parties hereto.

 

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9.5. Assignment. This Agreement and rights and duties hereunder may not be
assigned by either party without the prior written consent of the other party;
provided that either party may assign this Agreement to an entity that is owned,
controlled by or under common control with such party without the consent of the
other.

 

9.6. Severability. Should any provision of this Agreement be declared by a court
of competent jurisdiction to be invalid, void, or unenforceable at law or in
equity, it is the express intention of the parties hereto that such part, term,
or provision shall be construed in such manner as to provide for the enforcement
thereof to the maximum extent and in the broadest scope permitted under law and
all remaining parts, terms and provisions shall remain in full force and effect
and shall in no way be invalid or impaired or affected thereby.

 

9.7. No Third Party Beneficiaries. Nothing in this Agreement, whether express or
implied is intended to confer upon any person other than the parties hereto,
their respective representatives, and permitted assigns, any rights or remedies
under or by reason of this Agreement.

 

9.8 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. For purposes of this Agreement, an
electronic or digital image of a signature shall be treated as an original.

 

9.9. Construction of Agreement. This Agreement is a negotiated document, based
on input by both parties and shall not be construed against a party on the
theory that the party was responsible for the language being construed. Every
provision of this Agreement shall be construed as though the parties
participated equally in the drafting of the language of the provision. Any legal
rule of construction that a document is to be construed against the drafting
party shall not be applicable and is expressly waived by the parties.

 

9.10. Notices. All notices, requests and other communications hereunder shall be
in writing and shall be deemed to have been given only if mailed, certified
return receipt request, or if sent by a well-recognized private delivery service
or if personally delivered to, or if sent by fax with the original thereby sent
by a means specified in this Section 9.10:

 

If to Consultant:

Products for Doctors
27001 La Paz, Suite 348, Mission Viejo, CA 92691
Attn: Richard J. Valenta

 Fax: (888) 438-7274

 

If to Client:

Mesa Pharmacy, Inc.
18013 Sky Park Cir, Suite D
Irvine, CA 92614
Attn: President
Fax: (949) 955-2925

 

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All notices, requests and other communications shall be deemed received on the
date of acknowledgment or other evidence of actual receipt in the case of
certified mail, courier delivery or personal delivery or in the case of fax
delivery, upon the date of fax receipt provided the original is delivered within
two (2) business days. Any party hereto may designate different or additional
parties for the receipt notice, pursuant to notice given in accordance with the
foregoing.

 

9.11. Survival. The following provisions of this Agreement shall survive the
termination or expiration of this Agreement and shall remain in full force and
effect: Article V (Confidentiality), Article VI (Termination), Article VII
(Indemnification), Article VIII (Dispute Resolution), Article (IX)(General
Provisions), and Exhibit B (Compensation).

 

IN WITNESS WHEREOF, the parties to this Agreement have executed and delivered
this Agreement on the date first above written.

 

  MESA PHARMACY, INC.         By: /s/ Edward Kurtz   Title: Chief Executive
Officer         PRODUCTS FOR DOCTORS, INC.         By: /s/ James Bradford  
Title: Chief Executive Officer

  

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EXHIBIT A

BUSINESS ASSOCIATE ADDENDUM

 

This Business Associate Addendum (“Addendum”) supplements and is made a part of
the underlying Marketing Services Agreement by and between Mesa Pharmacy, Inc.
(“Covered Entity”) and Products for Doctors (“Business Associate”), (each a
“Party” and collectively, the “Parties”), dated as of January 23, 2015 (the
“Agreement”).

 

RECITALS

 

WHEREAS, the Parties have entered into the Agreement, to which this Addendum is
appended, under which Business Associate has agreed to provide certain services
to Covered Entity.

 

WHEREAS, under the terms of the Agreement, Covered Entity shall provide, and
Business Associate shall have access to, certain information some of which may
constitute Protected Health Information (“PHI”) and Electronic Protected Health
Information (“ePHI”).

 

WHEREAS, the Parties desire to protect the individual privacy and provide for
the security and confidentiality of the PHI and ePHI disclosed to Business
Associate by Covered Entity or generated by Business Associate on behalf of
Covered Entity in accordance with the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191 ) (“HIPAA”) and its accompanying
privacy and security regulations (“HIPAA Regulations”), Health Information
Technology for Economic and Clinical Health Act, enacted as part of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5), and its attendant
regulations and guidance (“HITECH Act”), and other applicable laws.

 

WHEREAS, consistent with Section 1.3 of the Agreement, the Parties desire to set
forth the terms under which Business Associate is required to handle any PHI and
ePHI disclosed to it by Covered Entity, or created or received on behalf of
Covered Entity.

 

WHEREAS, as part of the HIPAA Regulations, Covered Entity is required to obtain
“satisfactory assurances” from Business Associate that it will appropriately
handle and safeguard any PHI disclosed to it by Covered Entity or generated by
it on behalf of Covered Entity and that Business Associate will implement
safeguards that “reasonably and appropriately’’ protect the confidentiality,
integrity, and availability of any ePHI that it creates, receives, maintains, or
transmits on behalf of Covered Entity. Accordingly, the Parties enter into this
Addendum governing Business Associate’s use and disclosure of PHI and Business
Associate’s implementation of safeguards to reasonably and appropriately protect
the confidentiality, integrity, and availability of ePHI.

 

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In consideration of the mutual promises below and the exchange of information
pursuant to this Addendum, the Parties agree as follows:

 

1. Definitions:

 

a. Data Aggregation. “Data Aggregation” shall have the same meaning given to
such term in 45 C.F.R. § 164.501 and shall include the combining of PHI received
or created by Business Associate to permit data analyses relating to Health Care
Operations of Covered Entity.

 

b. Designated Record Set. “Designated Record Set” shall have the same meaning
given to such term in 45 C.F.R. § 164.501 and shall include patients’ medical or
billing records or any Covered Entity of records which contains PHI that are
maintained, in whole or in part, by or for Covered Entity.

 

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

 

d. Health Care Operations. “Health Care Operations” shall have the meaning set
out in its definition at 45 C.F.R. § 164.501, as such provision is currently
drafted and as it is subsequently updated, amended or revised.

 

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

 

f. Privacy Rule. “Privacy Rule” shall mean the Standards for Privacy of
Individually Identifiable Health Information at 45 C.F.R. part 160 and part 164,
Subparts A and E.

 

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

 

h. Required by Law. “Required by Law” shall have the same meaning as the term
“required by law” in 45 C.F.R. § 164.103.

 

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

 

j. Security Rule. “Security Rule” shall mean the Standards for Security of
Electronic Protected Health Information at 45 C.F.R. part 160 and part 164,
Subparts A and C.

 

Any other terms used in this Addendum, but not otherwise defined, shall have the
same meaning as those terms in the Privacy Rule, Security Rule, or any other
HIPAA Regulations existing now or promulgated in the future.

 

2. Limits on Use and Disclosure of PHI: Except as otherwise specified herein,
Business Associate may use and disclose PHI only as necessary to perform its
obligations under the terms of the Agreement. All other uses and disclosures not
specifically permitted or required by this Addendum or as required by state or
federal law are strictly prohibited.

 

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3. Privacy Rule Obligations and Activities of Business Associate: With regard to
the use and/or disclosure of PHI, Business Associate shall:

 

a. Not use or further disclose PHI other than as permitted or required by this
Addendum or as Required by Law;

 

b. Use appropriate safeguards to prevent the use or disclosure of PHI other than
as provided for by this Addendum;

 

c. Mitigate, to the extent practicable, any harmful effect that is known to
Business Associate of a use or disclosure of PHI by Business Associate in
violation of the requirements of this Addendum;

 

d. Report to Covered Entity’s designated privacy officer or other designated
administrator or officer, within a reasonable period of time, any use and/or
disclosure of the PHI that is not permitted or required by the terms of this
Addendum and of which Business Associate becomes aware;

 

e. Require that any and all agents, including subcontractors, that create,
receive, maintain or transmit PHI on behalf of Business Associate for services
provided to Covered Entity agree, in writing, to adhere to the same restrictions
and conditions on the use and disclosure of PHI that apply throughout this
Addendum to Business Associate with respect to such PHI;

 

f. Upon request of Covered Entity, provide access to PHI maintained by Business
Associate on behalf of Covered Entity in a Designated Record Set to Covered
Entity or to an Individual, as directed by Covered Entity, in accordance with
the requirements of 45 C.F.R. § 164.524. Such access shall be permitted within a
reasonable period of time and in a manner designated by Covered Entity;

 

g. Upon request of Covered Entity, amend PHI maintained in a Designated Record
Set by Business Associate on behalf of Covered Entity. Any such amendments shall
be made within a reasonable period of time and in a manner designated by Covered
Entity. Further, Business Associate shall incorporate any such amendments into
the PHI maintained by it in a Designated Record Set on behalf of Covered Entity;

 

h. Make available its internal books, and records relating to the use and
disclosure of PHI received from, or created or received by Business Associate on
behalf of, Covered Entity available to Covered Entity, or to the Secretary, in a
time and manner designated by Covered Entity or the Secretary, for purposes of
the Secretary determining Covered Entity’s compliance with the Privacy Rule;

 

i. Make information available to Covered Entity regarding Business Associate’s
disclosures of PHI, and document such disclosures, sufficient to permit Covered
Entity to respond to a request by an Individual for an accounting of disclosures
of PHI in accordance with 45 C.F.R. § 164.528; and

 

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j. Upon termination of the Addendum, as provided for in Section 8 herein, if
feasible, return to Covered Entity, or, at Covered Entity’s request, destroy,
all PHI received from, or created or received by, Business Associate on behalf
of Covered Entity that Business Associate still maintains in any form and retain
no copies of such PHI or, if such return or destruction is not feasible,
Business Associate shall notify Covered Entity in writing of the conditions that
make such return or destruction infeasible and shall extend the protections of
this Addendum to such PHI and limit further use or disclosure to those purposes
that make the return or destruction of such PHI infeasible, for so long as
Business Associate maintains such PHI. This provision shall apply to PHI that is
in the possession of subcontractors or agents of Business Associate.

 

4. Permitted Uses and Disclosures by Business Associate. Except as otherwise
limited m this Addendum:

 

a. Business Associate may use or disclose PHI to perform functions, activities,
or services for, or on behalf of, Covered Entity as specified in the Agreement,
provided that such use or disclosure would not violate the Privacy Rule or other
applicable state or federal laws if done by Covered Entity itself;

 

b. Business Associate may use PHI in its possession for the proper management
and administration of Business Associate or to carry out the legal
responsibilities of Business Associate;

 

c. Business Associate may disclose PHI for the proper management and
administration of Business Associate, provided that such disclosures are
Required By Law, or provided that Business Associate represents to Covered
Entity in writing that it has obtained reasonable assurances, from the person to
whom the PHI is disclosed that it will remain confidential and be used or
further disclosed only as Required By Law or for the purpose for which it was
disclosed to the person, and that person notifies Business Associate of any
instances of which it is aware in which the confidentiality of the PHI received
has been breached;

 

d. Except as otherwise limited in this Addendum, Business Associate may use PHI
to provide Data Aggregation services to Covered Entity as permitted by 45 C.F.R.
§ l64.504(e)(2)(i)(B); and

 

e. Business Associate may use PHI to report violations of law to appropriate
state or federal authorities as permitted by 45 C.F.R. § 164.502(b)(2)(v).

 

5. Privacy Rule Obligations of Covered Entity: Covered Entity shall:

 

a. Provide Business Associate with its notice of privacy Covered Entity’s
produced in accordance with 45 C.F.R. § 164.520, as well as any changes,
amendments or modifications to such notice;

 

b. Provide Business Associate with any changes in, or revocation of,
authorization by an Individual to use or disclose PHI, if such changes affect
Business Associate’s permitted or required uses and disclosures;

 

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c. Notify Business Associate of any restriction to the use or disclosure of PHI
that Covered Entity has agreed to in accordance with 45 C.F.R. § 164.522,
provided such changes affect Business Associate’s permitted or required uses and
disclosures of PHI; and

 

d. Not request Business Associate to use or disclose PHI in any manner that
would not be permitted under the Privacy Rule if done by Covered Entity, except
for Data Aggregation or management and administrative activities of Business
Associate.

 

6. Security Rule Obligations of Business Associate: With regard to the Security
Rule, Business Associate agrees that it shall:

 

a. Implement administrative, physical, and technical safeguards that reasonably
and appropriately protect the confidentiality, integrity and availability of the
ePHI that Business Associate creates, receives, maintains or transmits on behalf
of Covered Entity;

 

b. Ensure that any agent, including a subcontractor, to whom Business Associate
provides such ePHI agrees to implement reasonable and appropriate safeguards to
protect that ePHI; and

 

c. Report to Covered Entity any “security incident” (as that term is defined at
45 C.F.R. § 164.304) of which Business Associate becomes aware.

 

7. Breach Notification: Business Associate shall be required to notify Covered
Entity of any breach of “unsecured PHI” (as that term is defined at 42 U.S.C. §
17932(h)(1), 45 C.F.R. § 164.402 and in further guidance issued by the Secretary
under Section 13402(h)(2) of the HITECH Act) in accordance with 45 C.F.R.
§164.410, without reasonable delay but in no event later than ten (10) calendar
days after discovery of a breach; provided, however, that the Parties
acknowledge and agree that this Section constitutes notice by Business Associate
to Covered Entity of the ongoing existence and occurrence of attempted but
Unsuccessful Security Incidents (as defined below) for which notice to Covered
Entity by Business Associate shall be required only upon request. “Unsuccessful
Security Incidents” shall include, but not be limited to, pings and other
broadcast attacks on Business Associate’s firewall, port scans, unsuccessful
log-on attempts, denials of service and any combination of the above, so long as
no such incident results in unauthorized access, use or disclosure of PHI. The
notice of any breach of unsecured PHI must include, to the extent possible, the
identification of each individual whose unsecured PHI has been, or is reasonably
believed by Business Associate to have been accessed, acquired, used or
disclosed during the breach and any of the following information Covered Entity
is required to include in its notice to the individual pursuant to 45 C.F.R.
§164.404(c):

 

a. A brief description of what happened, including the date of the breach and
the date of discovery of the breach, if known;

 

b. A description of the types of unsecured PHI that were involved in the breach
(e.g. social security number, full name, date of birth, address, diagnosis);

 

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c. Any steps the individual should take to protect themselves from potential
harm resulting from the breach;

 

d. A brief description of what is being done to investigate the breach, mitigate
the harm and protect against future breaches; and

 

e. Contact procedures for individuals to ask questions or learn additional
information which shall include a toll-free number, an e-mail address, Web site,
or postal address (this subsection e. is only applicable if Covered Entity
specifically requests Business Associate to establish contact procedures).

 

f. Such information must be submitted to Covered Entity at the time Covered
Entity is required to notify the individual of a breach of unsecured PHI or as
promptly thereafter as the information becomes available.

 

8. Term and Termination:

 

a. The Term of this Addendum shall be effective as of the commencement of the
term of the Agreement, and shall terminate when the Agreement terminates.

 

b. If Covered Entity makes the determination that Business Associate has
breached a material term of this Addendum, Covered Entity may: (i) provide
Business Associate with 30 days written notice of the existence of an alleged
material breach; and (ii) afford Business Associate an opportunity to cure the
alleged material breach upon mutually agreeable terms. Nonetheless, in the event
that mutually agreeable terms cannot be achieved within 30 days, such a failure
to cure the alleged material breach shall be grounds for the immediate
termination of this Addendum and the Agreement.

 

c. Upon Business Associate’s knowledge of a material breach by Covered Entity,
Business Associate shall notify Covered Entity of such breach in reasonable
detail, and provide an opportunity for Covered Entity to cure the breach or
violation, or if cure is not possible, Business Associate may immediately
terminate this Agreement.

 

d. In the event this Addendum is terminated, the destruction, return or
continued maintenance of PHI in possession of Business Associate shall be
controlled by Section 3.j of this Addendum, and Business Associate’s obligations
set forth thereunder shall survive termination of this Addendum.

 

9. Integration: This Addendum shall be incorporated into and made a part of the
Agreement. In the event that any term or provision of this Addendum contradicts
or conflicts with a term or provision of the Agreement, that term or provision
of this Addendum shall control.

 

10. Miscellaneous:

 

a. Regulatory References. A reference in this Addendum to a section in the
Privacy Rule means the section as in effect or as amended, and for which
compliance is required.

 

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b. Survival. The respective rights and obligations of Business Associate under
Section 3.j of this Addendum shall survive the termination of this Addendum.

 

c. Interpretation. Any ambiguity in this Addendum shall be resolved in favor of
a meaning that permits compliance with the Privacy Rule and the Security Rule.

 

d. No Third Party Rights. This Addendum shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and assigns;
provided, however, that nothing in this Addendum is intended, nor shall it be
construed, to confer upon any person or entity other than the Parties hereto and
their respective successors and assigns, any rights remedies, obligations or
liabilities whatsoever.

 

e. Applicable Law. The validity, enforceability and interpretation of this
Addendum shall be governed by the same laws as are applicable to the Agreement
and by the Privacy Rule and the Security Rule.

 

f. Entire Agreement. This Addendum constitutes the entire agreement between the
Parties regarding the confidentiality of PHI and the security and integrity of
ePHI, and supersedes all other agreements, express or implied, oral or written,
between the Parties related to the subject matter of this Addendum.

 

g. No Limitations on Liability. No limitations in, or exclusions from, liability
set forth in the Agreement or any other agreement between the Parties shall
apply to breaches of any of the provisions contained in this Addendum.

 

IN WITNESS WHEREOF, the Parties have duly executed this Addendum on the day and
year first above written.

 

Mesa Pharmacy, Inc.   Products for Doctors           By: /s/ Edward Kurtz   By:
/s/ James Bradford           Title: Chief Executive Officer   Title: Chief
Executive Officer

  

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Exhibit B
compensation

 

Workers Compensation Beneficiaries

 

Client shall pay the Consultant:

 

(a) All Qualified Prescriptions (as defined below) will be sent to a factoring
company. In the event that Client is unable to secure a factoring arrangement,
Client will provide Consultant within 48 hours within receiving notice. For
accounts receivable resulting from Qualified Prescriptions which are sold to
third parties for factoring – thirteen percent (13%) of the face amount of the
accounts receivable. By way of clarification, Consultant is not paid based on
the cash proceeds paid to Client by the third party factor, but instead is paid
based on the gross amount of the accounts receivables resulting from Qualified
Prescriptions and notwithstanding the amount of collections or cash received by
Client with respect to such accounts receivable that are factored. Such amounts
shall be due and payable to Consultant within 5 days with respect to all
proceeds that are received from accounts receivable factoring.(b) for accounts
receivable resulting from Prescriptions which are not sold to third parties for
factoring due to Client not being able to secure a factoring arrangement or
where Prescription is not qualified or where a Prescription is rejected by
factoring company – fifty percent (50%) of the amounts collected by Client after
first deducting 25% of the amount collected for Client’s collections services.
Such amounts shall be due and payable to Consultant by the 15th day of each
calendar month for the prior month with respect to all amounts collected by
Client from accounts receivable that are not sold to third party factors.

 

Qualified Prescriptions

 

A Qualified Prescription shall mean a Prescription for Products from a Prospect
attributable to Consultant or Consultant’s Services (referred to herein as a
“Prescription”) and that contains all reasonably necessary insurance information
as well as a complete copy of the Request for Authorization and PR2’s (i.e., a
doctor’s progress report) that were submitted to the insurance company
specifically stating the medication to be dispensed as well as the reasons for
treatment per applicable law. In the event Client is paid on a Non-Qualified
Prescription by either a factoring company or through collections, Consultant
will still be entitled to Compensation.

 

Rejection of Prescriptions

 

Company may reject a prescription, with notice to Consultant and the prescribing
physician if Company concludes that the prescription meets the following
criteria:

 

  1. It appears to be fraudulent.         2. The case to which the prescription
pertains has been settled and no further claims will be allowed.         3. The
prescription has been the subject of a previous claim which has been paid.      
  4. The prescription is excessive, unnecessary or otherwise unreasonable for
the care of the patient.         5. The prescription relates to an unconfirmed
worker’s compensation claim not in EDEX.         6. The carrier responsible for
the claim is insolvent and the California Insurance Guaranty Association has not
assumed responsibility for payment of the claim.

 

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In the event that a prescription is rejected, no compensation shall be payable
to Consultant; provided that the prescribing physician shall have a reasonable
opportunity to replace the rejected prescription with a Qualified Prescription,
or to demonstrate to the sole satisfaction of Client that the basis for
rejection is inappropriate.

 

Disallowed and Unpaid Claims

 

In the event that claims based on Qualified Prescriptions are disallowed,
reversed by a payor, rejected by a factor or otherwise unpaid, and provided that
and to the extent that Client previously paid Consultant with respect to such
claim in accordance with this Exhibit B, Client shall be entitled to offset the
amount of such disallowance or non-payment against the next payment of
compensation due Consultant; provided that prior to taking an offset, Client
shall give notice of the reason for disallowance or non-payment and Consultant
shall have thirty (30) days in which to investigate and remedy the basis for
disallowance.

 

Right to Inspect and Access Information

 

During the Term of this Agreement and for an 18 month period after the
termination or expiration of this Agreement, or until any on going dispute with
Consultant is resolved if such a dispute continues beyond such 18 month period,
Client hereby grants to Consultant and Consultant’s advisors and accountants the
following rights which may be exercised at any time and from time to time:

 

a. read only remote access via the internet to Consultant’s billing and
collections software and systems so that Consultant can access and monitor the
status of all Prescriptions and orders; and

 

b. and on site access during regular business hours to all of Client’s books and
records that relate to prescriptions and to billings and collections by Client
with respect to its Products and prescriptions and that relate to the
determination of Consultant’s Compensation under the provisions of this
Agreement .

 

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