**Exhibit 10.9**

 

*** CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO RULE 24B-2 OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

SUBCONTRACT AGREEMENTBY AND BETWEENMEMBERHEALTH, INC.andCOMMUNITY CARE RX, L.L.C.as ofOctober 21, 2005

 

ThisSUBCONTRACT AGREEMENT (this “Agreement”), dated as of October 21, 2005(the “Effective Date”), is made and entered into by and betweenMEMBERHEALTH, Inc. (“MHRX”), an Ohio corporation, and Community Care Rx,L.L.C. (“CCRX”), a wholly owned subsidiary of the National CommunityPharmacists Association (“NCPA”),

 

WHEREAS,the Medicare Prescription Drug Benefit program was established bySection 101 of the Medicare Prescription Drug, Improvement, andModernization Act of 2003 (the “MMA”) and created a new Part D, known asthe Voluntary Prescription Drug Benefit Program (hereinafter referred to as“Part D”) which Part D implementing regulations are found at 42 C.F.RPart 423 (the “Part D Regulations”);

 

WHEREAS,MHRX has submitted an application to the Centers for Medicare and MedicaidServices (“CMS”) under Part D to become a Prescription Drug Plan (“PDP”)or (“Part D Plan(s)”) sponsor in each of the thirty-four (34) Part Dregions designated by CMS;

 

WHEREAS,MHRX will act as a sponsor of certain Part D Plans and will contract withCMS to offer one or more Part D Plans to eligible Medicare beneficiaries(“Part D Beneficiaries”) under Part D (the Part D Plans assponsored by MHRX in accordance with Part D and this Agreement shallhereinafter be referred to as the “MHRX Plan(s).”);

 

WHEREAS,CCRX, desires to assist MHRX, and MHRX desires the assistance of CCRX, tobecome a sponsor of, and to operate, one or more Part D Plans in one ormore of the thirty-four Part D regions designated by CMS for the purposesof offering a Part D Plan, and to provide resources and certain assets inconnection with the operation of the MHRX Plans.

 

NOW,THEREFORE, in consideration of the covenants, representations, and warrantiesset forth in this Agreement, and for the mutual benefits to be derived therefrom, the Parties agree as follows:

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

1

----

 

**ARTICLEI**

**SERVICES AND OBLIGATIONS OF CCRX**

 

SECTION 1.01 GeneralResponsibilities. CCRX shall provide to MHRX the services(collectively, the “Services”) and licenses set forth in this Article I.The Services shall be performed, at a minimum, consistent with the timeliness,accuracy, and quality standards set forth in the Part D Regulations, provided,however, that the Parties may from time to time in writing agree tostandards in addition to, or in excess of, those established by CMS.

 

SECTION 1.02Supplies and Services to be Furnished by CCRX. CCRX shall, except asotherwise provided herein, furnish the personnel, materials, equipment, andproperty necessary to perform the work identified in the Statement ofWork/Specification (“SOW”) attached hereto as Attachment 1, which isattached hereto and incorporated herein by reference, in conformance with thePart D Regulations, and consistent with the standards of performance describedherein. MHRX shall reimburse CRRX for all costs for the work identified in Attachment1 in accordance with the Compensation Schedule set forth in Attachment 2,which is attached hereto and incorporated herein by reference.

 

SECTION 1.03License to Use CCRX Marks. CCRX will provide to MHRX an exclusivelicense (as to third parties) to use the names and marks “Community Care Rx”and “CCRX” (collectively the “Mark”) with respect to Part D Plans marketedto individuals (as compared to group plans) as set forth herein. CCRX agreesthat it will not grant a license to use the Mark to any other entity for thepurpose of using the Mark to promote, or in connection with, a Part D Planserving the individual beneficiary market so long as MHRX has a license to usethe Mark under the terms of this Agreement. Each party shall use the Mark asthe primary brand for the MHRX Plans, and only with respect to the MHRX Plans,subject to the terms herein. CCRX agrees that it shall not use the Mark in amanner that would compete with MHRX. CCRX acknowledges that MHRX contemplatesthe use of the Mark in co-branding opportunities with other health careorganizations, retail pharmacy organizations, insurance companies and otherentities who are endorsing the MHRX Plans or contracting for services withMHRX. MHRX shall notify CCRX of all potential co-branding opportunities withother entities to market the MHRX Plans. CCRX shall have the right to object tothe placement and form of the Mark in said co-branding marketing opportunities,but it may not object to the entity with which MHRX co-brands so long as theco-branding opportunity is consistent with the Guiding Principles. Except asset forth herein, MHRX agrees that it shall not use any secondary branding forthe MHRX Plans without the prior written consent of CCRX, which shall not beunreasonably withheld, except for the marks of Computer Sciences Corporationand Community Care Outreach Services, LLC. All other marks, whether MHRX’s orotherwise, shall be secondary to the Mark in connection with any of the MHRXPlans. MHRX shall not sublicense or assign this license or the rights containedherein to any other party except as expressly allowed, in writing, by CCRX,provided that MHRX requests CCRX’s approval to sublicense in writing at leastfifteen (15) days prior to the date on which it wishes for the sublicense tobegin, and at that time it submits the

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

2

----

 

writtenrequest, it provides to CCRX all information necessary in order for CCRX todetermine the ability of the potential sublicensee to live up to the terms ofthis Agreement. MHRX shall be responsible for ensuring that any sublicenseecomplies with the terms of this Agreement. MHRX recognizes the value of thegoodwill inherent in the Marks, and that the Marks and the goodwill associatedtherewith is owned by CCRX. MHRX understands that it shall not acquire anyright, title, or interest to the Marks, and that all use of the Marks by MHRXshall inure to the benefit of CCRX. MHRX shall use, and shall cause othersauthorized under this Agreement to use, the Marks in a manner and qualityreasonably acceptable to CCRX, and shall use with the Marks all trademark ownershipnotices or legends as may be required by CCRX. The license granted hereundershall expire on the date on which this Agreement terminates as set forth inArticle VI, unless as may be extended as provided herein, and upontermination MHRX shall promptly cease use of the Marks, and all materialsbearing the Marks, and shall promptly return to CCRX all materials that bearthe Marks that are in its possession or control. Except as may be agreed inwriting by the Parties or otherwise set forth in this Agreement, MHRXacknowledges that its use of the Mark after termination of this Agreement or inviolation of this Agreement may result in immediate and irreparable damage towhich CCRX may have no adequate remedy at law. MHRX shall comply with all Stateand Federal laws and other governmental regulations and guidelines in its useof the Marks pursuant to the license granted herein.

 

SECTION 1.04License to Use Software Furnished by CCRX. CCRX hereby grants MHRX anon-exclusive license to use the software developed and owned by CCRX (or itsAffiliate) for the purposes of providing medication therapy management services(“MTM”) that is provided to MHRX pursuant to this Agreement (the “Software”).The parties acknowledge that it is the intent of the parties that MHRX shall beable to use and/or license the Software to others for the provision of MTMServices, upon terms and conditions reasonably acceptable to CCRX. In thatregard, MHRX shall have the right to sublicense or grant rights to the Softwareto a third party upon terms and conditions acceptable to CCRX. Except as setforth in the prior sentence, MHRX shall use the Software only in conjunctionwith services provided by CCRX under this Agreement and for no other purposeswhatsoever, including, without limitation, the development of other softwarewith similar functionality (nothing herein shall prohibit MHRX to develop itsown software, but without using the software). CCRX further provides MHRX a non-exclusivelicense to use the clinical protocols, policies, procedures, and documentationfor MTM developed by CCRX (or its Affiliates) (the “Protocols”). The licensegranted in this Section 1.04 shall expire on the date on which thisAgreement terminates as set forth in Article VI, and upon termination MHRXshall promptly return to CCRX all copies of the Software and Protocols in itspossession or control. Except as may be agreed in writing by the Parties orotherwise set forth in this Agreement, MHRX acknowledges that its use of theSoftware or the Protocols after termination of this Agreement or in violationof this Agreement may result in immediate and irreparable damage to which CCRXmay have no adequate remedy at law. All rights not specifically granted to MHRXhereunder are specifically reserved for CCRX. MHRX shall comply with all Stateand Federal laws and other governmental regulations and guidelines relating toits use of the Software and Protocols pursuant to the license granted herein.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

3

----

 

SECTION 1.05Intellectual Property Infringement Indemnification. In the event that athird party brings a claim of trademark infringement against MHRX for trademarkinfringement based on MHRX’s use of the Mark during the term of this Agreement,or a claim of copyright infringement for MHRX’s use of the Software during theterm of this Agreement, MHRX shall promptly notify CCRX of such claim ofinfringement. CCRX shall commence or prosecute any such claims in its name andat its own costs, provided that such allegations of infringement were notcaused by actions of MHRX or its agents, including misuse of the Mark or theSoftware or breaches of this Agreement, and provided that MHRX cooperates inany enforcement efforts and any actions, claims, or suits that may be broughtby CCRX as set forth herein in connection with the Property during the term setforth above, and CCRX shall indemnify MHRX for any reasonable and necessarycosts related thereto, including but not limited to MHRX’s reasonableattorneys’ fees.

 

SECTION 1.06Other Activities. Neither party shall use the Property or conduct anyactivity, or allow its Affiliates or subcontractors to conduct any activity,which would materially affect the validity or enforceability of the Mark,adversely affect the right or ability of the other party to demonstrate to thepublic the quality of services it provides, result in material damage of thereputation or goodwill of the other party, or cause any material adversepublicity to the other party.

 

**ARTICLE II**

**REPRESENTATIONS AND WARRANTIES OF MHRX**

 

SECTION 2.01MHRX hereby represents, warrants, and covenants to CCRX as follows:

 

(a)                                  CorporateStatus. MHRX is a corporation duly incorporated, validly existing and in goodstanding under the Laws of the State of Ohio. MHRX has the corporate power andauthority, and all licenses, permits, waivers or other authorizations requiredfor MHRX to carry on its business as now conducted and as contemplated by thisAgreement, except where the failure to possess any such authority,authorization, licenses, permits, waivers or other authorizations would nothave a material adverse effect.

 

(b)                                 Part DQualification. MHRX will operate under CMS waiver or as a riskbearing entity licensed to provide health insurance benefits in each of thefifty states, the District of Columbia, the U.S. Virgin Islands and PuertoRico, and has developed, or will develop, a pharmacy network that meets, or willmeet, CMS access standards for a PDP Sponsor; and otherwise qualifies for oneor more Part D contracts.

 

(c)                                  Part DContract Requirements. MHRX will comply with allof the requirements imposed by any Part D Contract it executes with CMS, provided,however, that MHRX’S failure to comply with any Part D Contractrequirements will not be

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

4

----

 

groundsfor termination of this Agreement unless CMS terminates the Part DContract based on MHRX’s failure to comply.

 

(d)                                 State Licensure. MHRX willcontinuously maintain all appropriate state insurance licenses, permits,waivers or qualifications for the provision of its services to Enrollees underthe PDP.

 

(e)                                  Part DApplications for 2007-2010 Coverage Years. MHRX shall complete andsubmit PDP applications for the 2007-2010 Coverage Years unless this Agreementis terminated by either or both of the Parties prior to the due date for a PDPapplication for any of these Coverage Years.

 

(f)                                    GuidingPrinciples. MHRX will at all times during the term ofthis Agreement operate the MHRX Plans and any Part D Plan that itsponsors, whether individual or group plan, and whether or not bearing theMark, in accordance with the Guiding Principles set forth in Attachment 4.

 

(g)                                 PharmacyMethodologies. Unless otherwise approved by CCRX, MHRXshall administer the MHRX Plans at all times in a manner such that(i) there shall be an open pharmacy network (i.e., no preferred network,no preferred pricing, and no co-pay differentials), and (ii) there shallbe no mail order component to the MHRX Plans. CCRX shall have the right toreview any and all pharmacy reimbursement and/or pharmacy professional feeformulas or methodologies applicable to the pharmacies and any changes madethereto in the future (“Pharmacy Methodologies”). Notwithstandinganything herein to the contrary, should CCRX, in its sole discretion, decidethat Pharmacy Methodologies are inconsistent with its mission, it may terminatethis Agreement immediately without penalty.

 

**ARTICLEIII**

**REPRESENTATIONS AND WARRANTIES OF CCRX**

 

SECTION 3.01 CCRX hereby represents andwarrants to MHRX as follows:

 

(a)                                  Subsidiary/ParentStatus. CCRX operates as a limited liability company under the Laws of theState of Virginia and is a wholly owned subsidiary of NCPA.

 

(b)                                 Property Rights. CCRXrepresents, warrants, and covenants to MHRX that CCRX has obtained, or willduly obtain, all intellectual property rights necessary to perform itsobligations under this Agreement. CCRX’s certification to these intellectualproperty rights is a material representation of fact upon which MHRX reliedwhen this Agreement was entered into by the Parties.

 

(c)                                  PDP Endorsement. CCRX shallonly endorse the MHRX Plans and shall not endorse any other PDP. MHRXacknowledges that individual NCPA members

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

5

----

 

shallmake individual and independent decisions regarding their participation in anyPDP, including the MHRX Plans. CCRX neither represents nor warrants theparticipation of any NCPA members or pharmacies in the MHRX Plans.

 

(d)                                 ContractingCapacity. CCRX represent, warrants, and certifies that(1) as to itself within the last five (5) years, and (2) theiremployees and subcontractors that will be assigned to perform Serviceshereunder within the five-year period preceding their initial performancehereunder, to CCRX’s knowledge: (i) are not debarred, suspended, proposedfor debarment or suspension, or otherwise excluded or declared ineligible forthe award of contracts by or participation in any Federal program, departmentor agency; (ii) have not been charged with, convicted of or had a civiljudgment rendered against them for: commission of a fraud or a criminal offensein connection with obtaining, attempting to obtain, or performing a public (Federal,state, or local) contract or subcontract; dishonesty or breach of trustincluding but not limited to violation of Federal or state antitrust statutes,commission of a fraud including but not limited to mail fraud or falserepresentations, violation of fiduciary relationship, securities offenses,embezzlement, theft, forgery, bribery, falsification or destruction of records,making false statements, tax evasion, or receiving stolen property;(iii) have not been indicted for, or otherwise criminally or civillycharged by a government entity (Federal, state, or local) with, commission ofany of the offenses enumerated in this Section; (iv) have not had one ormore public agreements or transactions (Federal, state, or local) terminatedfor cause or default; and (v) have not been excluded from participationfor a federal program, including but not limited to, Medicare, Medicaid,federal health care programs or federal behavioral health care programspursuant to Title XI of the Social Security Act, 42 U.S.C. 1320a-7 and otherapplicable federal statutes. CCRX shall provide immediate written notice toMHRX if, at any time during the term of this Agreement, CCRX learns that itscertification in this Section was erroneous on the Effective Date of thisAgreement or has become erroneous by reason of new or changed circumstances. Ifthe circumstances causing such certification to be erroneous are curable, thenCCRX shall have forty-five (45) days to cure such circumstances. Furthermore,if the circumstances causing such certification to be erroneous relate to anon-compliant employee or subcontractor then CCRX shall be deemed to havetimely cured such circumstances, so long as CCRX completely removes suchemployee or subcontractor from performing any Services hereunder immediatelyupon learning that such employee or subcontractor is non-compliant with thisSection. Subject to the foregoing cure provisions, if it is later determinedthat CCRX’s certification in this Section was erroneous on the EffectiveDate of this Agreement or has become erroneous by reason of new or changedcircumstances, in addition to other remedies available to MHRX, MHRX mayterminate this Agreement for convenience, at its sole discretion.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

6

----

 

**ARTICLEIV**

**COMPENSATION**

 

SECTION 4.01Compensation Schedule. CCRX shall be paid by MHRX for the Services andProperty, as defined in Article I herein, rendered hereunder accordancewith the compensation schedule set forth in Attachment 2.

 

SECTION 4.02Taxes, Freight and Delivery Charges. Except as may otherwise be providedin this Agreement, all compensation paid by MHRX to CCRX for the Services andProperty, as defined in Article I herein, includes applicable federal,state and local income taxes, freight, and/or delivery charges.

 

SECTION 4.03Financial Management Team. The Parties shall establish a FinancialManagement Team (“FMT”) who shall review the financial performance of theParties pursuant to this Agreement, and shall comply with the provisions setforth in Attachment 2. The FMT shall consist of two (2) personsrepresenting CCRX, two (2) persons representing MHRX, and such otherpersons as may be agreed upon from time to time by CCRX and MHRX.   ***   .CCRX and MHRX shall each have the right to remove and/or appointreplacements for their respective representatives on the FMT in theirrespective sole discretion. CCRX and MHRX shall each cause their respectivemembers on the FMT to meet, whether in person or telephonically, as often as isreasonably necessary to carry out their duties as set forth herein, but in noevent less than once every thirty (30) days.

 

**ARTICLEV**

**ADDITIONAL AGREEMENTS**

 

SECTION 5.01Legal and Regulatory Compliance. Each Party shall carry out its dutiesand obligations under this Agreement in material compliance with all applicableLaws. Each party shall provide the services set forth in this Agreement inaccordance with the terms and conditions of this Agreement and in a mannerconsistent with the requirements of the Medicare statutes and regulations, CMSguidance with respect to the Part D Program, and MHRX policies, including,but not limited to, MHRX’s CMS-required compliance programs with respect toMedicare Part D, as amended from time to time, and training thereon, provided,however, that such policies and compliance programs, as amended, shall havebeen furnished in writing to CCRX and there shall have been a reasonable periodof time for their implementation. With respect to MHRX policies other thanMHRX’s CMS-required compliance program, MHRX shall not require compliance byCCRX in excess of that required of MHRX’s other Part D subcontractors.

 

SECTION 5.02Performance of Duties. The Parties agree to perform their dutieshereunder with the skill, diligence, and expertise commonly expected fromexperienced and qualified personnel performing such duties and in conformancewith industry standards and the requirements of this Agreement, the Part DRegulations, and other applicable Law.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

7

----

 

SECTION 5.03Duty to Cooperate In Submission of Part D Plan Application and Bid.The Parties agree to work together to complete and submit the PDP applicationsand the Part D bids, and to keep the other Party fully advised of issuesraised by or with the Centers for Medicare & Medicaid Services(hereinafter “CMS”.) The Parties agree to cooperate with each other byfurnishing any additional information and executing and delivering anyadditional documents as may be reasonably requested by the other Party to carryout the transactions contemplated by this Agreement, or to aid in thepreparation of any regulatory filing, financial statement, or tax return; provided, however,that any such additional documents must be reasonably satisfactory to each ofthe Parties and must not impose upon either Party any material liability, risk,obligation, loss, cost, or expense not contemplated by this Agreement.

 

SECTION 5.04Inspection, Audit and Acceptance.

 

(a)          As required by 42 C.F.R. § 423.505, MHRX and CMSshall have the right, directly or through their designated auditors, at allreasonable times to inspect, audit, or otherwise evaluate the work performed orbeing performed by CCRX, its supporting policies and procedures, includingthose related to data security, disaster recovery and back-up, as well as alldata supplied, in the performance of this Agreement. If any inspection orevaluation is made by MHRX or CMS on the premises of CCRX or any of CCRX’sAffiliates, CCRX or its Affiliates shall provide at no additional charge all reasonablefacilities and assistance for the safety and convenience of the personnelconducting the inspection or evaluation. The Secretary of Health and HumanServices, the Comptroller General of the U.S. Government Accounting Office, ortheir designees shall have the right during the term of this Agreement and fora period of ten (10) years after termination of this Agreement or the dateof the audit completion, whichever is later, to audit, evaluate, or inspect anybooks, contracts, medical records, documents, papers, enrollee documentation,and other records of CCRX, related entity, subcontractor, or transferee thatpertain to any aspect of the Services provided under this Agreement, or as theSecretary may deem necessary to enforce the applicable Medicare Contractbetween CMS and MHRX. Any audit, evaluation, or inspection covered by thisSection 5.02(a) shall be at no additional charge to MHRX, but eachParty will be responsible for its own labor and out of pocket expenses.

 

(b)         All Services provided by CCRX to MHRX shall be inaccordance with the requirements of this Agreement, including all attachments,schedules, annexes, and exhibits. No inspection or evaluation performed byMHRX, its Affiliates, or CMS shall in any way relieve CCRX of its obligation tofurnish all required Services in strict accordance with the requirements ofthis Agreement. If any of the Services do not conform to the requirements ofthis Agreement, MHRX shall have the right to require CCRX to take such steps asare reasonably necessary to bring its performance into compliance including,but not limited to, requiring

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

8

----

 

CCRXto perform the work or services again in conformity with the applicablerequirements at no cost to MHRX or CMS.

 

SECTION 5.05Privacy and Security of Certain Data. The Parties expect to beresponsible for obtaining, analyzing, storing, transmitting, and reportingProtected Health Information, as defined in regulations, 45 CFR Parts 160 and164, implementing the Health Insurance Portability and Accountability Act of1996, Pub. L. 104-191 (“HIPAA”). Each Party, to the extent it is a HIPAAcovered entity, agrees to comply with all applicable Federal and State privacyand security laws including but not limited to the requirements of HIPPA. TheParties agree to execute and comply with the terms set forth in the HIPAABusiness Associate Agreement attached hereto and incorporated herein as Attachment 3.

 

SECTION 5.06Assignment and Subcontracting. Except as described on Attachment 1, CCRX is solelyresponsible for the provision of the Services and its other obligations underthis Agreement. CCRX may not assign or transfer, in whole or in part, theseobligations, any interest in this Agreement, any claim under this Agreement, orany obligation or task hereunder, except to its Affiliates, without the consentof MHRX, which shall not be unreasonably withheld, delayed, or conditioned.CCRX shall have the right to administer the MTM services through its AffiliateCommunity MTM Services, L.L.C. so long as that entity remains an Affiliate ofCCRX. Any delegation by CCRX of functions or responsibilities imposed pursuantto this Agreement other than to its Affiliates shall be subject to the priorwritten approval of MHRX and shall also be subject to the requirements setforth in 42 C.F.R. § 423.505(i)(4), as they may be amended over time; provided,however, that MHRX hereby consents to CCRX’s delegation to non-networkpharmacists of certain MTM functions, and delegation of the provision of theMTM clinical encounter to individual pharmacists or pharmacy companies.

 

SECTION 5.07Delegation of Duties. The parties acknowledge thatMHRX shall oversee and will be accountable to CMS for any functions orresponsibilities described in the Part D Regulations and, upon becoming asponsor of the PDP, will monitor the performance of CCRX on an ongoing basis.CCRX shall perform its obligations under this Agreement in a manner consistentwith and in compliance with MHRX’s contractual obligations under MHRX’sPart D Contract with CMS. In the event that MHRX delegates to CCRX anyfunction or responsibility imposed pursuant to MHRX’s Part D Contract withCMS, such delegation shall be subject to the requirements set forth in 42C.F.R.§ 423.505(i)(4), as they may be amended over time.

 

SECTION 5.08Document Retention, Audit Rights. Each Party shall retain, inaccordance with standard and accepted practices, such financial, accounting,and administrative records related to the services it is obligated to provideunder this Agreement for such period as is necessary to comply with applicableLaw, but in no event less than ten (10) years after the date suchdocuments and information are created or obtained, or longer under theconditions enumerated in 42 C.F.R. § 423.505(e)(4). Subject to applicable Law,during the term of this Agreement MHRX, on one hand, and

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

9

----

 

CCRX,on the other hand, may reasonably conduct (or have conducted on its behalf), atits own expense, one audit each year of the other Party with respect torelevant documents and data in the possession of such other Party and withreasonable access to relevant personnel of such other Party upon reasonablenotice solely for the purposes of confirming compliance with obligations undertakenpursuant to this Agreement including those that are required to be reported toan applicable government agency; provided, however, thatsuch audits may be performed more frequently to the extent necessary to respondto a request by CMS or another government agency. The terms of the confidentialityprovisions set forth in Article VII hereof shall apply to any such audits.Such audit rights will be available following termination of this Agreement tothe extent necessary to respond to a request by a customer, GovernmentalAuthority, provider or other relevant party and for a Party’s need to managelitigation and to determine compliance with this Agreement or applicable Laws.

 

SECTION 5.09Non-Solicitation. Neither Party shall directly solicit employees of theother to undertake employment with it during the term of this Agreement and fora period of one (1) year after termination for any reason. Directsolicitation does not include advertisements in the general media and, exceptto the extent that an individual was specifically encouraged to respond to suchadvertisements, there shall be no restrictions on the hiring of an individualso responding. Notwithstanding anything herein to the contrary, each party isfree to employ any individual who has approached that Party about employmentwithout being solicited (other than by advertisements in the general media).

 

SECTION 5.10Publicity. Each Party agrees to submit to the other Party for review, tothe extent practicable, any news releases, public announcements,advertisements, or publicity each may release in connection with the MHRXPlans. Notwithstanding the foregoing, MHRX shall submit to CCRX forpre-approval, which pre-approval shall not be unreasonably withheld, delayed,or conditioned, any and all news releases, public announcements or publicityMHRX intends to release directly to the pharmacy community regarding the MHRXPlans.

 

SECTION 5.11Exclusivity of CCRX Services. For so long as CCRX provides the servicesset forth in this Agreement, MHRX agrees that CCRX is and shall be theexclusive subcontractor in connection with the services as set forth in theStatement of Work (Attachment 1) and MHRX shall not, directly orindirectly, engage the services of any other person or entity in connectionwith the services to be rendered by CCRX. Notwithstanding anything herein tothe contrary, nothing herein shall preclude CCRX or its Affiliates(i) from using the Property for its or their own business purposes or(ii) from providing MTM Services or any other services to any other thirdparty.

 

**ARTICLEVI**

**AGREEMENT CONTINGENT;TERM AND TERMINATION**

 

SECTION 6.01Term. For the purposes of this Agreement, “Coverage Year” shall mean anycalendar year during which MHRX offers, sells, and sponsors one or more PDPs to

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

10

----

 

Part DBeneficiaries. The initial term of this Agreement shall commence as of theEffective Date and will continue until and through December 31, 2010,unless otherwise terminated by either Party pursuant to the terms set forthherein below.

 

SECTION 6.02Renewal of Term. Subject to the terminationsset forth in this Article VI, this Agreement shall renew automatically foradditional one (1) year terms equal to each subsequent Coverage Year,beginning with the 2011 Coverage Year and continuing thereafter untilterminated.

 

SECTION 6.04 Termination ForCause.

 

(a)                                  Either Partymay terminate this Agreement for Cause, as defined below, upon written noticeto the other Party. Such termination shall be effective upon receipt of writtennotice of termination.

 

(b)                                 For thepurposes of this Agreement, “for Cause” shall be defined as any of thefollowing: (i) a material breach of the terms of this Agreement which isnot cured by the breaching party within thirty (30) days from the date thebreaching party received written notice of the breach (in the event that thebreaching party cannot cure the breach within thirty (30) days from the receiptof notice of the breach despite its good faith efforts to do so, the Partiesagree to extend such thirty (30) day period for another thirty (30) daysprovided that the breaching party continues its good faith efforts to cure thebreach during such period of time); (ii) a Party is adjudicated to havecommitted fraud in a civil proceeding or otherwise settles a civil fraud actioninvolving the United States for a material amount, or a criminal action isfiled by a governmental agency against a Party arising out of, or relating to,the PDP, or a Party is excluded or barred fromparticipation in any federal or state health care program pursuant to 42 U.S.C.§ 1320a-7; (iii) a Party is declared insolvent in any proceeding;(iv) with respect to MHRX, in the event CMS terminates the Part DContract based on MHRX’s failure to comply with the terms thereof.

 

SECTION 6.05Termination Without Cause. Neither party shall have theright to terminate this Agreement without Cause except as is specifically setforth herein below.

 

(a)                                  Either Partyshall have the right to terminate this Agreement without Cause effective at theend of the 2010 Coverage Year, or at the end of any subsequent Coverage Year,upon providing the other party written notice of termination no less than onehundred fifty (150) days prior to the date that MHRX must submit itsapplication to be a sponsor of a Part D Plan for the following CoverageYear. By way of example only, in the event that MHRX desires to terminate thisAgreement without Cause effective at the end of the 2010 Coverage Year, and theapplications for the 2011 Coverage Year are due on May 31, 2010, then MHRXshall give written notice of termination no later than December 31, 2009.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

11

----

 

(b)                                 CCRX shall havethe right to terminate this Agreement at any time without Cause in the eventMHRX elects not to apply as a sponsor of a PDP Plan in at least 70% of thePart D Regions, or in the event CMS does not approve MHRX as a sponsor ofa PDP Plan in at least seventy percent (70%) of the total Part D Regions.

 

(c)                                  CCRX shall havethe right to terminate this Agreement without Cause pursuant to Section 2.01(g).

 

(d)                                 In the eventthat CCRX exercises its right to terminate without Cause as set forth hereinabove, MHRX shall have no obligation to pay any performance awards as set forthin Attachment 2 based upon performance that occurs subsequent tothe date of termination.

 

(e)                                  In the eventCCRX terminates this Agreement without Cause pursuant toSection 6.05(a) or (b), MHRX’s license to use the Mark pursuant toSection 1.03 shall be extended for a period of one (1) year from thedate of termination, and MHRX shall pay to CCRX a license fee of   ***   for the use ofthe Mark for such one year period after termination. This one year extension touse the Mark shall not apply in the event MHRX is not a PDP sponsor in at leastone PDP region. Should MHRX cease using the Mark at any time during such one(1) year period set forth herein above, MHRX shall notify CCRX in writingof said cessation and MHRX.

 

(f)                                    In the eventMHRX terminates this Agreement without Cause pursuant to Section 6.05(a),or in the event CCRX exercises its right to terminate this Agreement withoutCause pursuant to Sections 6.05 (c), MHRX shall as of the date of terminationimmediately cease all further use of the Property or any further reference toit, direct or indirect, or any reproduction or copy thereof in connection withthe use of the Property. MHRX shall return to CCRX all materials, including butnot limited to marketing and advertising materials, signage, business cards andbusiness forms that contain the Property.

 

SECTION 6.06Survival. The termination of this Agreement for any reason,shall not affect those obligations or causes of action that have theretoforeaccrued or, that from the context hereof, are intended to survive thetermination of this Agreement.

 

**ARTICLEVII**

**CONFIDENTIALITY; USE OF INTELLECTUAL PROPERTY;ENROLLEE DATA**

 

SECTION 7.01Confidentiality. Prior to entering into this Agreement the Partieshave each committed substantial resources to developing the arrangementsdescribed in this Agreement. The Parties specifically acknowledge that toinduce each other to enter into this Agreement each Party specifically confirmsthat all Confidential Information received from the other party at any timeshall remain confidential during the term of this Agreement and shall be usedonly in furtherance of the business relationships

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

12

----

 

contemplatedby the provisions of this Agreement. In this regard, each Party agrees that anyConfidential Information provided to it will only be provided to its employees,agents, Affiliates and representatives on a “need to know” basis, and will betreated with at least as much care as the receiving party provides for its ownConfidential Information (and in no event treated with any less than a highdegree of confidentiality.)

 

**ARTICLEVIII**

**SURVIVAL; INDEMNIFICATION**

 

SECTION 8.01Survival of Representations and Warranties. Notwithstanding anyinvestigation made by or on behalf of the Parties hereto, the results of anysuch investigation, or the knowledge of MHRX or the knowledge of CCRX(regardless of how obtained), the representations and warranties contained inArticles II and III hereof and the indemnification obligations of the Partieswith respect thereto, and the provisions of Article IX (DisputeResolution), shall survive the expiration or termination ofthis Agreement until the later of (i) one (1) year following suchexpiration of MHRX’s license to use the Mark or (ii) the applicablestatute of limitations.

 

SECTION 8.02Mutual Indemnification.

 

(a)                                 Subject to theterms and conditions of this Article VIII, CCRX shall hold harmless andindemnify MHRX from any claims, losses, damages, liabilities, costs, expensesor obligations, including reasonable attorney’s fees and expenses related tothe performance of this Agreement (collectively, “Losses”) that arise out of orresult from (i) the breach of any representation or warranty of CCRX underthis Agreement, or (ii) the negligence or willfulmisconduct of CCRX, its officers, employees and agents in the performance ofCCRX’s obligations under this Agreement, including the provision of MTMServices.

 

(b)                                Subject to theterms and conditions of this Article VIII, MHRX shall hold harmless andindemnify CCRX from any Losses that arise out of or result from (i) thebreach of any representation or warranty of MHRX under this Agreement,(ii) the negligence or willful misconduct of MHRX, its officers, employeesand agents in the performance of MHRX’s obligations under this Agreement,(iii) any and all claims arising from injury or allegations of injury tobeneficiaries; or (iv) any and all claims arising out of MHRX’s activitiesas a pharmacy benefit manager, including, but not limited to, plan design.

 

SECTION 8.03Method of Asserting Third-Party Claims.

 

(a)                                  As used in thisAgreement, “Notifying Party” refers to any Party who claims entitlement toindemnification under Section 8.02 for losses resulting from a third-partyclaim. The “Indemnifying Party” refers to the Party obligated to indemnify theNotifying Party under Section 8.02.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

13

----

 

(b)                                 In the eventany Notifying Party is made a defendant in or party to any claim instituted byany third party for which the Notifying Party may be entitled toindemnification under Section 8.02, the Notifying Party shall give theIndemnifying Party prompt notice thereof. The failure to give such notice shallnot affect any Notifying Party’s ability to seek reimbursement unless, and onlyto the extent that, such failure has a detrimental effect on the IndemnifyingParty’s ability to defend successfully the claim. The Indemnifying Party shallbe entitled to contest and defend such claim, provided that the IndemnifyingParty: (i) has a reasonable basis for concluding that such defense may besuccessful; and (ii) diligently contests and defends such claim.

 

(c)                                  Notice of theintention so to contest and defend shall be given by the Indemnifying Party tothe Notifying Party within fifteen (15) business days after the NotifyingParty’s notice of such claim. The Indemnifying Party shall use reputableattorneys of its choosing to conduct such contest and defense. The NotifyingParty shall be entitled at any time, at its own cost and expense (which expenseshall not constitute a Loss for which the Notifying Party can be indemnifiedunder Section 8.02), to participate in such contest and defense and to berepresented by attorneys of its own choosing. The Notifying Party shall givethe Indemnifying Party notice that it intends to participate in such contestand defense.

 

(d)                                 If theNotifying Party elects to participate in such defense, the Notifying Partyshall cooperate with the Indemnifying Party in the conduct of the defense.Whether or not the Notifying Party elects to participate in such defense,neither the Notifying Party nor the Indemnifying Party may concede, settle orcompromise any claim without notifying the other Party and without theIndemnifying Party’s consent if the settling party is the Notifying Party,which consent shall not be unreasonably withheld.

 

(e)                                  Notwithstandingany provision in this Agreement to the contrary, if: (i) a claim from athird party seeks relief in the form of a material obligation of the NotifyingParty other than an obligation to pay monetary damages; (ii) the subjectmatter of a claim relates to the ongoing business of the Notifying Party, whichclaim, if decided against the Notifying Party, would adversely effect theongoing business (including, without limitation, requiring any material changein the business practices of the Notifying Party) of the Notifying Party; or(iii) the Notifying Party would not be fully indemnified under Section 8.02or released with respect to such claim, then, in each such case, the NotifyingParty shall be entitled to contest and defend such claim, the expense of whichshall constitute a Loss for which the Notifying Party can be indemnified underSection 8.02 (and the Indemnifying Party may participate); provided, however, that anysettlement or compromise shall require the consent of the Indemnifying Party,which consent shall not be unreasonably withheld, and, if the Notifying Partydoes not contest and defend such claim, the Indemnifying Party shall then havethe right to contest and defend (but not settle) such third party claim.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

14

----

 

(f)                                    Any disputebetween the Parties about the applicability of any Party’s indemnificationrights or obligations under Section 8.02 or the method of asserting claimsunder this Section 8.03 shall be resolved in accordance with the disputeresolution provisions set forth in Article IX.

 

SECTION 8.04Limitations on Indemnification. Except as set forth inArticle IX, the rights set forth in Section 8.02 shall be eachParty’s sole and exclusive remedies against the other Party hereto for anylosses. No Party shall be entitled to any recovery under this Agreement for itsown special, consequential, incidental or punitive damages. The limitations setforth in this Section 8.04 shall not apply to any losses that have resultedproximately from any fraudulent act of the Indemnifying Party or its directors,officers, employees, agents or representatives.

 

SECTION 8.05Insurance. During the term of this Agreement, theParties shall each maintain adequate insurance related to the operation oftheir respective businesses and their respective obligations under thisAgreement. CCRX shall provide and maintain the following insurance which willbe primary to any insurance carried by MHRX: (a) Commercial GeneralLiability insurance in limits of one million dollars ($1,000,000) bodily injuryand property damage per occurrence, including contractual liability to coverCCRX’s obligations under Articles VIII and IX of this Agreement; and(b) Workers; Compensation and Employer’s Liability Insurance. CCRX shallprovide certificate of insurance to MHRX for each line of coverage set forthherein above. CCRX’s required insurance certificates shall require CCRX’sinsurer to provide MHRX with thirty (30) days prior written notice of anycancellation or material change in the insurance policies and shall furtherspecify the contractual and additional insured requirements as set forth inthis SECTION 8.05.

 

**ARTICLEIX**

**DISPUTE RESOLUTION**

 

SECTION 9.01Disputes. This Article IX sets forth the solesource of remedies available to the Parties with regard to any and all disputesbetween them arising in connection with this Agreement (hereinafter referred toas “Disputes”) including all questions of arbitrability, the existence,validity, scope or termination of this Agreement or any term thereof; provided, however,that the Parties agree that money damages may not be an adequate remedy for anybreach of the provisions of this Agreement and that a Party may, in itsdiscretion, apply to a court of law or equity of competent jurisdiction locatedin a venue set forth in Section 11.09 for specific performance andinjunctive relief in order to enforce or prevent any violations of thisAgreement and any Party against whom such proceeding is brought hereby waivesthe claim or defense that such Party has an adequate remedy at law and agreesnot to raise the defense that the other Party has an adequate remedy at law.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

15

----

 

SECTION 9.02Commencing Arbitration. The Parties shall worktogether in good faith to resolve any and all Disputes. Either party may submita dispute which the parties have been unable to satisfactorily resolve amongthemselves to the American Arbitration Association for binding arbitration byproviding the other party with written notice of its intent to arbitrate.Within thirty (30) days following the date one Party sent written notice of itsintent to arbitrate the Dispute to the other Party, such Party must submit theDispute to binding arbitration in accordance with the American ArbitrationAssociation Commercial Arbitration Rules, as they may be amended from time totime (see http://www.adr.org). The party initiating the arbitration shall havethe obligation, initially, to pay any and all filing fees. Any party initiatinga counterclaim shall have, initially, to pay any filing fees for suchcounterclaims. Any arbitration proceeding under this Agreement shall beconducted in Cuyahoga County, Ohio. The arbitrator(s) may construe orinterpret but shall not vary or ignore the terms of this Agreement and shall bebound by controlling Law. The arbitrator(s) shall have no authority to awardspecial, consequential, incidental or punitive damages.

 

SECTION 9.03Decision Binding; Federal Arbitration Act. The decisionof the arbitrator(s) regarding the Dispute and any fees, including but notlimited to filing fees, reasonable attorney fees and expenses, expenses of thearbitrators and costs, will be binding, and judgment on the award may beentered in any court having jurisdiction thereof. The Parties acknowledge thatbecause this Agreement affects interstate commerce, the Federal Arbitration Actapplies.

 

SECTION 9.04Waiver; Survival. In the event any courtdetermines that this arbitration procedure is not binding or otherwise allowslitigation involving a Dispute to proceed, the Parties hereby waive any and allright to trial by jury in, or with respect to, such litigation. ThisArticle IX shall survive any termination of this Agreement.

 

**ARTICLEX**

**DEFINITIONS**

 

SECTION10.1 Defined Terms. When each of the followingterms is used in this Agreement it shall have the meaning stated below:

 

**“Affiliate”**with respect to any Personmeans a Person that directly or indirectly, through one or more intermediaries,controls, is controlled by, or is under common control with, the firstmentioned Person.

 

**“Confidential Information”**meansinformation about a Party’s customers, business practices and procedures, andthe proprietary business information of a Party.

 

**“Contract”**means any written or oralcontract, agreement, commitment, insurance policy, arrangement orunderstanding.

 

**“Enrollee” or “Part D Enrollee”**means eacheligible persons enrolled directly, or indirectly, in a MHRX-sponsored PDP.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

16

----

 

**“Governmental Authority”**means anygovernment or political subdivision thereof, whether federal, state or local(including counties and cities), or any court, agency, commission, department,district, or other instrumentality of any such government or political subdivision.

 

**“Law”**means the common law and anystatute, ordinance, code or other law, rule, regulation, order, standard,requirement or procedure enacted, adopted, promulgated, applied or followed byany Governmental Authority with proper jurisdiction over the Parties, or theactivities of the Parties.

 

**“Medicare Program”**means, collectively, theprograms created by Congress in the Act, including without limitation, theimplementation of the Medicare Part D Prescription Drug Benefit Program,including any regulations or CMS pronouncements and any future amendments.

 

**“Parties”**means MHRX and CCRX.

 

**“Person”**means an individual,corporation, partnership, association, limited liability company, trust,unincorporated organization, Governmental Authority or other entity or group(as defined in Section 13(d) of the Securities Exchange Act of 1934,as amended).

 

**ARTICLEXI**

**GENERAL PROVISIONS**

 

SECTION 11.01Notices. All notices and other communications givenor made pursuant to this Agreement shall be in writing and shall be deemed tohave been duly given or made as of the date delivered, mailed or transmitted tothe other party’s facsimile number, and shall be effective upon receipt, ifdelivered personally, the next business day if sent by traceable overnight expresscourier, charges prepaid, or, if mailed, five (5) days after deposit withthe United States Postal Service, certified mail, return receipt requested,postage prepaid, to the Parties at the following addresses (or at such otheraddress for a Party as shall be specified by like changes of address) or uponreceipt if sent by electronic transmission to the facsimile number specifiedbelow (provided a confirmation copy is sent by traceable overnight expresscourier, charges prepaid):

 

If to MHRX:

JaneC. Koehl-Colling, Esq.

MemberHealth, Inc.

29100Aurora Road, Suite 301

Solon,OH 44139

Facsimile:440-248-4734

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

17

----

 

Ifto CCRX:

JohnRector, Esq.

CommunityCare Rx, L.L.C.

100Dangerfield Road

Alexandria,VA 22314

Facsimile:                    

 

SECTION 11.02Headings. The headings contained in this Agreement arefor reference purposes only and shall not affect in any way the meaning orinterpretation of this Agreement.

 

SECTION 11.03Severability. If any term or other provision of thisAgreement is finally adjudicated by a court of competent jurisdiction to beinvalid, illegal or incapable of being enforced by any Law, all otherconditions and provisions of this Agreement shall nevertheless remain in fullforce and effect. Upon such determination that any term or other provision isinvalid, illegal or incapable of being enforced, the Parties shall negotiate ingood faith to modify this Agreement, as the case may be, so as to effect theoriginal intent of the Parties as closely as possible in an acceptable mannerto the end that transactions contemplated hereby are fulfilled to the extentpossible.

 

SECTION 11.04Entire Agreement. This Agreement (togetherwith any Attachments, Exhibits and Schedules hereto and thereto) constitute theentire agreement of the Parties and supersede all prior agreements andundertakings, both written and oral, between the Parties with respect to thesubject matter hereof. Each Party acknowledges that nothing in this Agreementor any other materials presented to such Party in connection with thetransaction contemplated by this Agreement constitutes legal or tax advice tosuch Party. The Parties have consulted such legal and tax advisors as they, intheir sole discretion, have deemed necessary or appropriate in connection withthis Agreement.

 

SECTION 11.05Assignment. Except as permitted by Section 5.06 above,neither Party may assign its rights or delegate its duties under thisAgreement, whether by operation of law or otherwise, without the other Party’sprior written consent, which consent shall not be unreasonably withheld,conditioned or delayed. Notwithstanding the above, it shall not be unreasonablefor a Party to withhold its consent if the proposed assignee is a competitor ofthe Party whose consent is sought or in the event that such proposed assignee’sbusiness practices are inconsistent with the Guiding Principles attached heretoas Attachment 4 and incorporated by reference herein. CCRXacknowledges that MHRX is contemplating a private financing opportunity to becompleted by the end of calendar year 2005 which may or may not entail therestructuring of the MHRX entity. CCRX agrees in advance that no consent shallbe required for this particular financing opportunity.

 

SECTION 11.06Parties in Interest. This Agreement shall be binding upon andinure solely to the benefit of each Party and their respectivesuccessors and permitted assigns, and nothing in this Agreement, or sale orchange of control of a Party, shall affect this Agreement or the enforceabilityof this Agreement. The terms of this Agreement shall

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

18

----

 

applyto the Parties and all Affiliates and subcontractors of the Parties and uponchange of control of either Party, shall apply to such acquirer and allAffiliates of the acquirer.

 

SECTION 11.07Construction of Terms. Whenever used in thisAgreement, a singular number shall include the plural and a plural thesingular. Pronouns of one gender shall include all genders. References hereinto articles, sections, paragraphs, subparagraphs or the like shall refer to thecorresponding articles, sections, paragraphs, subparagraphs or the like of thisAgreement, as the case may be. The words “hereof,” “herein,” and terms ofsimilar import shall refer to this entire Agreement. Whenever used in thisAgreement, the use of the terms “including,” “included,” “such as,” or terms ofsimilar meaning, shall not be construed to imply the exclusion of any otherparticular elements.

 

SECTION 11.08No Strict Construction. The language used in this Agreement shall bedeemed to be the language chosen by the Parties to express their mutual intent,and no rule of strict construction shall be applied against any Party.

 

SECTION 11.09Governing Law; Jurisdiction; Waiver of Jury Trial.

 

(a)                                 Except to theextent that each of the Parties is governed by the Laws of its domiciliarystate, this Agreement shall be construed and enforced in accordance with theinternal Laws of the State of Ohio.

 

(b)                                Thejurisdiction and venue for any request, motion or other action for injunctiverelief, specific performance and other equitable relief brought by any Partyhereto pursuant to this Agreement shall properly lie in any federal court ofcompetent jurisdiction located in Cleveland, Ohio. By execution and delivery ofthis Agreement, each Party hereto irrevocably submits to the exclusivejurisdiction of such courts for itself and in respect of its property withrespect to such action. The Parties irrevocably agree that venue would beproper in such court, and hereby waive any objection that such court is animproper or inconvenient forum for the resolution of such action. The Partiesfurther agree that the mailing by certified or registered mail, return receiptrequested, of any process required by any such court shall constitute valid andlawful service of process against them, without necessity for service by anyother means provided by statute or rule of court.

 

SECTION 11.10Amendment. This Agreement may not be amended except by an instrument inwriting signed by the Parties, except that in the event that this Agreement orany Exhibit does not contain a particular provision required by the Lawsgoverning the Part D program, or any provision of this Agreement or anAttachment, Exhibit or Schedule conflicts with such Laws or regulations,then this Agreement and any Exhibits, Attachments or Schedules as applicable,shall be deemed amended to comply with the Laws governing the Part Dprogram and any conflicting provision shall be deemed stricken and suchamendment shall be effective immediately upon the date that such Law becomeseffective.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

19

----

 

SECTION 11.11Waiver. At any time a Party may (a) extend thetime for the performance of any of the obligations or other acts of the otherParty, (b) waive any inaccuracies in the representations and warranties ofanother Party contained in this Agreement or in any document delivered pursuantto this Agreement and (c) waive compliance by the other Party with any ofthe agreements or conditions contained in this Agreement. Any such extension orwaiver shall be valid only if set forth in an instrument in writing signed bythe Parties. It is agreed that no delay or omission to exercise any right,power or remedy accruing to any Party, upon any breach, default ornoncompliance by any other Party under this Agreement shall impair any suchright, power or remedy, nor shall it be construed to be a waiver of any suchbreach, default or noncompliance, or any acquiescence therein, or of or in anysimilar breach, default or noncompliance thereafter occurring. It is furtheragreed that any waiver, permit, consent or approval of any kind or character onany Party’s part of any breach, default or noncompliance under this Agreementor any waiver on such Party’s part of any provisions or conditions of thisAgreement must be in writing and shall be effective only to the extentspecifically set forth in such writing. All remedies under this Agreementafforded to either Party shall be cumulative and not alternative.

 

SECTION 11.12Force Majeure. Neither party shall be liable to the other Partyfor a delay in performance or failure to perform due to causes beyond itsreasonable control including, but not limited to acts of God, acts of the otherParty, acts (including the failure to act) of any governmental authority,governmental priorities, strikes or other labor difficulties, terrorism, fire,floods, sabotage, earthquakes, storms, epidemics, wars, riots or delays intransportation. A Party to whom this Section is applicable shall notifythe other Party, as promptly as possible, of any delay or failure so excusedand shall specify a revised date of performance of its obligations as soon asreasonably possible.

 

SECTION 11.13Independent Contractor Status. Each Party’s associationwith the other is that of an independent contractor. Both CCRX and MHRXdisclaim any desire or intention to create an employer-employee relationshipbetween the other’s employees and its own. No employee of a Party shall haveany entitlement to benefits provided by the other Party to its employees. ThisAgreement shall not constitute, give effect to, or otherwise imply a jointventure, partnership, or business organization of any kind. Each party is anindependent party and shall not act as an agent of the other party for anypurpose.

 

SECTION 11.14Counterparts. This Agreement may be executed via facsimile in oneor more counterparts, and by the Parties hereto in separate counterparts, eachof which when executed shall be deemed to be an original but all of which takentogether shall constitute one and the same agreement.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

20

----

 

INWITNESS WHEREOF, the Parties have caused this Agreement to be executed as ofthe date first written above by their respective officers duly authorized.

 

 
| **Community Care RX L.L.C.** | **MemberHealth, Inc.**                                                                                                                                                                                                                                      |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |                                                                                                                                                                                                                                                        |
| By:                          | /s/  Bruce Roberts                                                                                                                                                                                                                                          |   | By: | /s/  Charles E. Hallberg |
|                         | Signature                                      Date  10/21/05 |   | Signature                                      Date  10/21/05 |
|                         |                                                                                                                                                                                                                                                        |
| Printed  Name:               | Bruce  Roberts                                                                                                                                                                                                                                              |   | Printed  Name: | Charles  E. Hallberg |
|                         |                                                                                                                                                                                                                                                        |   |   |
| Title:                       | Chairman                                                                                                                                                                                                                                                    |   | Title: | President  & CEO |
|                              |                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  |

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

21

----

 

ATTACHMENT 1

 

Statement of Work (“SOW”)

 

Between

 

MemberHealth, Inc.

 

And

 

Community Care Rx, LLC (“CCRx”)

 

October 21, 2005

 

MemberHealth, Inc.(“MemberHealth”) has been awarded a contract with the Centers for Medicare andMedicaid Services (“CMS”), the administrator of the Medicare program, to offer,and be the sponsot of, an outpatient prescription drug insurance benefit toeligible Medicare beneficiaries for the 2006 Coverage Year.As set fourth in such application, MernberHealth has developed and intends to-implement-and operate a Medicare Prescription Drug Planthat will offer-private outpatient prescription drug benefitplans (“PDPs” or“Part D Plans”) to eligible Medicare beneficiaries under Part D of the Medicare program (the “Part DProgram”). Part D Plans are authorized under  the federal Medicare Prescription DrugImprovement and Modernization Act of 2003 (the “MMA”) and the Part Dimplementing regulations at 42CFR Part 423 (the “Part D Regulations”). Inorder to offer Part D Plan benefits for a particular Calendar year (i.e., CoverageYear), a PDP Sponsor must submit to CMS a bid for each Part D Plan that ifintends to offer by the first Monday of June of the year prior to theapplicable Coverage Year. If the PDP Sponsor’s bid is accepted, the PDP Sponsorwill begin to market and enroll Medicare beneficiaries in the Fall immediatelyprior to the applicable Coverage Year and the Part-D-Plan benefits will become effective as of the beginning of suchCoverage Year. For purposes of this SOW, the Prime Contract means the contractbetween CMS and MemberHealthsetting forth the terms andconditions under which MemberHealth may offer a PDP Plan. For purposes of thisSOW, MemberHealth Part D Plans shall mean those Part D Planssponsored by MemberHealth in the applicable PDP Regions pursuant to the termsof this SOW and the Prime Contract(s).

 

CommunityCare Rx LLC, a wholly owned subsidiary of the National Community PharmacistsAssociation, (“CCRx”) desires to assist MemberHealth, and MemberHealth desiresthe assistance of CCRx, to become a sponsor of one or more Part D Plans inone or more of the geographic regions established by CMS for the purpose ofoffering a PDP Plan, and to provide resources and certain assets in connectiontherewith. Section 1 of this SOW addresses the responsibilities of. CCRx to MemberHealth prior tothe award of the Prime Contract, and Section 2 of this SOW addressesCCRx’s scope of work after MemberHealth has been awarded a Prime Contract. Bothsections also contain responsibilities of MemberHealth to CCRx.

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

1

----

 

CCRxis aware that its parent company has been identified as a resource to provideservices/support under the Prime Contract. These services/support arecontingent upon the Subcontract between MemberHealth and CCRx with requiredPrime Contract flow-down clauses and mutually acceptable terms and conditions,and Contracting Officer approval, if required. Member Health will involve CCRxas a fully integrated team member in the pursuit of this opportunity. CCRx willlicense to MemberHealth the right to use certain of CCRx’s intellectualproperty, including the trademarks “Community Care Rx” and “CCRx” to thisproject as set forth below. Other sub-contractors to MemberHealth shallinclude, but are not limited to, Computer Sciences Corporation (CSC) and othervendors.

 

Theparties negotiated in good faith the terms of the Subcontract Agreement(s) consistentwith the terms and objectives of this SOW.

 

Section 1:Pre-Award Responsibilities

 

1.          Drawing on CCRx’s extensive skills andexperiences in the pharmaceutical industry, CCRx will provide program supportto the MemberHealth team for purposes of negotiating and being awarded thePrime Contract

 

2.          CCRx will proactively contribute leadershipand expertise to satisfy the applicable requirements outlined in the Part DRegulations as they relate to marketing efforts by CCRx’s member pharmacies

 

3.          CCRx will use its relationships withcommunity based pharmacists, pharmacy chains, and industry associations to bothsatisfy the terms and conditions of the applicable application guidelines andto maximize the potential of success of the program.

 

4.          CCRx will proactively contribute leadershipand insights regarding pricing strategies so that the MemberHealth Part DPlans are (and remain) competitive and represent good value to the Medicarebeneficiary population.

 

5.          CCRx shall provide certain valuable intellectualproperty and assets to MemberHealth for purposes of theMemberHealth Part D Plans, including a license to use the CCRx name and themark Community Care Rx (the “Mark”) in connection with the MemberHealth Part DPlans.  MemberHealth shall use the Markexclusively as the primary brand for the MemberHealth Part D Plans, andshall use no secondary branding for the MemberHealth Part D Plans, exceptas set forth in the Subcontract. Furthermore, all contracts betweenMemberHealth and other third parties in connection with the MemberHealth Part DPlans shall require that the subcontractor(s) abide by the MemberHealth Part DPlans Branding Parameters. CCRx and MemberHealth shall work collaboratively todevelop marketing, promotional, and operational materials necessary toadminister the MemberHealth Part D Plans. Final approval of all materialwill be subject to the Part D Regulations, as well as approval by CCRx and MemberHealth. MemberHealth will be thesole point of contact with CMS regarding the approval process to execute thePrime Contract. MemberHealth shall advise CCRx of all relevant communicationswith CMS related to the MemberHealth Part D Plans and the applicationtherefore Ownership of the Mark shall remain with CCRx

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

2

----

 

6.          CCRx will assume a leadership role inestablishing the strategy of developing plan design(s) for the Medicarebeneficiaries that embrace the Guiding Principals set forth on Exhibit Ahereto.

 

7.          CCRx will provide the technical approach tobe employed to the design and implementation of a mechanism to administerMedication Therapy Management (MTM) services. The focus of these services will be to mitigate drug costsfor the MemberHealth Part D Plans and to provide for the well being ofbeneficiaries. The MemberHealth Part D Plans will be designed toincorporate other objectives, as determined by CMS. The primary mechanism to deliverMTM services will be through community pharmacists. CCRx will work with MemberHealthto develop a schedule of payments to pharmacists as compensation for theirservices.

 

Section 2:Post Award Scope of Work

 

1.          CCRx shall take appropriate measures toassure that all data regarding Medicare beneficiaries and their consumption ofpharmaceuticals made available to CCRx and shall be only used in accordancewith the data use agreement promulgated by CMS, HIPAA rules and regulations,and the terms of the MemberHealth Business Associate Agreement (a copy of whichshall be provided to CCRx). MemberHealth shall provide CCRx in a timely manner withall data, data dictionaries, and test data necessary, as determined by CCRx andMHRX, to provide the services required of CCRx, it being acknowledged by MemberHealththat thetimelydelivery of sufficient data is a prerequisite to CCRx’s performance hereunder.MemberHealth shall provide CCRx in a timely manner applicable periodic reportsrelative to claims processing to support CCRx role in the Member-Health Part D Plans. The MemberHealth Business Associate Agreementshall permit all use of such data required to perforn CCRx’s responsibilitiesunder the Subcontract CCRx will contribute the hardware and communicationsinfrastructure to support the MTM services.

 

2.          CCRx will participate as a fully integratedteam member and assume a leadership andmanagement role in the following four areas: (1) Salesand marketing to the pharmacy community; (2) Market Research; (3) MedicationTherapy Management Services; and (4) Communications and Public Relationsexcept those directed at the beneficiary market In areas (2) through (4) hereinabove, CCRx will manage the function and will be the point of contact to theProvider market for the Plans. In area (1), the parties will collaborate as ateam in a manner calculated to obtain optimal results. CCRx and MemberHealthagree that it is necessary to mutually develop service level agreements(“SLAs”) in order to measure the performace of CCRx’s responsibilities underthis Section 2(2). CCRx and MemberHealth, through the FMT, shall developand mutually agree upon a set of SLAs that are consistent with the intent ofthis Agreement and that will permit each party to realize the benefits that itbargained for under. theSubcontract.

 

3.          CCRx will encourage the support of communityretail pharmacies to participate and endorse the MemberHealth Part DPlans.

 

4.          In administering the MemberHealth Part DPlans during the term of the Subcontract and for so long as MemberHealth isusing the Mark, MemberHealth shall abide by the Guiding

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

3

----

 

Principlesattached to the Subcontract as Attachment 4. The Guiding Principles may beamended from time to time with the consent of both CCRx and MemberHealth

 

5.          The MemberHealth Part D Plans shall beadministered at all times in a manner such that (i) there shall be an openpharmacy network (i e , no preferred network, no preferred pricing, and noco-pay differentials), (ii) there shall be no mail order component to theMemberHealth Part D Plans unless agreed to by CCRx and MernberHealth. CCRxshall have the right to review any and all pharmacy reimbursement and/orpharmacy professional fee formulas or methodologies applicable to the pharmaciesand any changes made thereto in the future (“Pharmacy Methodologies”). ShouldCCRx, at its sole discretion, decide that Pharmacy Methodologies areinconsistent with its mission, it may terminate the Subcontract withoutpenalty.

 

6.          CCRx shall contribute to the monitoring ofperformance so that MemberHealth is compliant with the terms of the ServiceLevel Agreements described by CMS as their parameters of the successfulperformance of a Prescription Drug Plan.

 

7.          CCRx shall contribute leadership and insightsregarding pricing strategies so that Member-Health’soffering remains competitive and represents good value to the Medicarebeneficiary population.

 

8.          CCRx shall monitor the performance of drugspending levels and play a leadership role to managing the MTMS portion of the MemberHealthPart D Plans in order that desired spending levels are achieved. CCRx shallcreate and distribute information and training  materials to transform the retail pharmacistinto a program risk manager.

 

9.          CCRx agrees to participate in theMemberHealth Part D Plans through at least the 2010 Coverage Year pursuantto the Subcontract.

 

10.    CCRx willabide by all Federal and State laws and regulations and CMS instructions, Stateand Federal privacy and security requirements (42CFR 423.136), auditrequirements (42CFR 423.505) and acknowledges that beneficiaries are not heldliable for fees that are the responsibility of the PDP Plan Sponsor

 

11.    CCRx acknowledgesthat MemberHealth, as the PDP Plan Sponsor, retains the right to approve,suspend, or terminate any arrangement with a pharmacy and that MemberHealthwill be monitoring CCRx’s performance, on an ongoing basis only upon one of thefollowing events:

 

(1)   Pharmacy’s license,certification or accreditation necessary to perform any services contemplatedby this Agreement is suspended, revoked, restricted, or placed on provisionalor probational status (either voluntarily or involuntarily), or Pharmacy is nolonger Medicare-eligible, Medicaid-eligible, or eligible to participate in anyother government program;

 

(2)   Pharmacy’s liabilitycoverage as required under this Agreement is reduced below required amounts oris no longer in effect;

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

4

----

 

(3)   At any time, Pharmacy failsto meet CCRx quality management or utilization management criteria;

 

(4)   CCRx or MemberHealth makes areasonable and good faith determination that termination is necessary in orderto protect the health or welfare of plan beneficiaries.

 

(5)   Pharmacy ceases to activelyperform its business or dissolves;

 

(6)   Pharmacy is unable to payits debts in the ordinary course of business;

 

(7)   Pharmacy files a petition inbankruptcy or an involuntary petition is filed against Pharmacy that is notdismissed within forty-five (45) days of the filing;

 

(8)   The Department of Insuranceor other state or federal agency with jurisdiction over MemberHealth or Pharmacydetermines that it is improper for Pharmacy to provide services in accordancewith this Agreement and the parties cannot agree upon an acceptable addendum tothis Agreement within a time frame acceptable to the applicable state orfederal agency or within fifteen (15) days after the determination of theagency, whichever is sooner.

 

12.    CCRx agrees to provide any reports or information forreports that are required under the resaltant contract that may be reasonably be expected to produce giventhe data to which it has access.

 

13.    CCRx agreesto make its books and otherrecords available in accordance with 42 CFR §423 505(i)(2), which generallygives the Department of Health and Human Services, the Comptroller General, ortheir designees the right to inspect.

 

14.    CCRxunderstands that MemberHealth, as the Part D Plan Sponsor may delegate anactivity or responsibility to CCRx, that such activity or responsibility may be revoked if CMS or MemberHealth,as the Part D Plan Sponsor, determines CCRx has not performedsatisfactorily The Subcontract includes mutually acceptable remedies andescalation procedures in lieu of revocation to address this requirement Allresponsibilities with respect to the MemberHealth Part D Plans that arenot explicitly subcontracted to CCRx in the Definitive Agreement are theresponsibility of MemberHealth.

 

15.    Therelationship between the parties, as well as the subcontracting relationshipbetween MemberHealth and CSC, shall be exclusive with respect to providing dinginsurance under Medicare Part D.

 

16.    MemberHealth’slicense to use the Mark is restricted to the exclusive primary branding of the Part D Program under therelationship between MemberHealth and CCRx as outlined in the Subcontract.MemberHealth’s license to use the Mark will cease immediately upon terminationof the Subcontract pursuant to the terms set forth in the Subcontract.

 

17.    Compensation to CCRx will be based on the following:

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

5

----

 

A.            A schedule of labor categories willbe established. Each labor category will have an agreed hourly billing rate.This rate will be established by CCRx and approved by MemberHealth. The hourlyrate will include direct salary, overhead, fringe benefits and otherconsiderations as is customary. The rates shall be established with the duelobjective of just and fair compensation coupled with an intent to offer acompetitive solution to the client. Separate actual budgets for Marketing andMTM services which consider costs incurred by CCRx prior to award as well as goforward costs will be set by the parties.

 

B             The Marketing budget for CCRx,which will be set forth in final detail in Exhibit A hereto, is estimatedby the parties to be between  ***   . The actual Marketing budget for CCRx willreflect the Parties’ agreement on the true anticipated Marketing expenses,including any markup, in order to meet the SLAs.

 

C.    The MTM budget for CCRx, which will be setforth in detail in Exhibit B hereto, is estimated by the parties to be anamount not to exceed   ***   .The actual MTM budget for CCRx will reflect the Parties’ agreement on the trueanticipated MTM expenses, in order to meet the SLAs. It is the intent of theparties that MemberHealth shall pay for the actual costs of all MTM expenses inaccordance herewith, and all such budgets shall be designed and amended toachieve this intent.

 

D.      ***   .

 

E.     The parties agree to provide commerciallyreasonable resources in support of the application process andsubsequent ancillary activities necessary to be approved by CMS asa PDP Plan Sponsor. MemberHealth has the lead for proposal developmentand contract program management. Each party shall beat their respective costfor annual application development (proposal phase). MemberHealth understands andagrees that while CCRx shall not endorse any other Medicare Prescription Drug Plans,all pharmacy members of CCRx shall make individual decisions regardingtheir participation in any Part D Plan.

 

[Remainder of Page Intentionally Left Blank]

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

6

----

 

ACCEPTANCE:

 

INWITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS STATEMENT OF WORK AS OFTHE DATES SET FORTH BELOW:

 
| COMMUNITY  CARE RX LLC | MEMBERHEALTH,  INC.                                                                                                                                                                                                                                                                                               |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                                                                                                                                              |
|                   |                                                                                                                                                                                                                                                                                                              |
| By:                    | /s/ Bruce Roberts                                                                                                                                                                                                                                                                                                 |   | By: | /s/ Charles E. Hallberg |   |
|                   | Signature                                               Date  10/21/05 |   | Signature                                               Date  10/21/05 |
|                   |                                                                                                                                                                                                                                                                                                              |
| Typed Name:            | Bruce Roberts                                                                                                                                                                                                                                                                                                     |   | Typed Name: | Charles E. Hallberg |   |
|                   |                                                                                                                                                                                                                                                                                                              |   |   |   |   |
|                   |                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| Title:                 | Chairman                                                                                                                                                                                                                                                                                                          |   | Title: | President & CEO |   |
|                        |                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  |  |  |  |

 

----

*** Material has been omittedpursuant to a request for confidential treatment and filed separately with theSEC.

 

7

----

 

**ATTACHMENT2**

** **

**COMPENSATION**

 

   ***   

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

----

 

**BUSINESS ASSOCIATE AGREEMENT**

 

**THIS BUSINESS ASSOCIATE AGREEMENT (“Agreement”)** is enteredinto as of October 21st, 2005, by and between MemberHealth, Inc., an Ohio corporation **(“Covered Entity”)**, and Community Care Rx, LLC, a Delawarelimited liability company **(“Business Associate”)**

 

**RECITALS**

 

A.                                   Covered Entityis a covered entity, as that term is defined by HIPAA;

 

B.                                     Covered Entityhas engaged Business Associate to perform on behalf of Covered Entity theservices (**“Services”**) described in that certainSubcontract Agreement between the parties, dated as of the date hereof (suchSubcontract Agreement and any and all agreements between the parties relatingto the provision of the Services shall be referred to as the **“Underlying Agreement(s)”**), and, in the course of providingthe Services, Business Associate is likely to obtain and/or maintain, use, ordisclose Protected Health Information (as defined below) provided to it byCovered Entity; and

 

C.                                     The partiesdesire to enter into this Agreement in compliance with the business associateagreement requirements of HIPAA;

 

**NOW, THEREFORE,** the parties do hereby agree as follows:

 

**1.**                                      **Definitions****.**

 

**1.1.**                            **“HIPAA”** shall mean theHealth Insurance Portability and Accountability Act of 1996 and itsimplementing regulations (45 C.F.R. Parts 160-164).

 

**1.2.****                           ****“Patient”** shall mean anindividual who is participating in, has participated in, or has been therecipient of; any program or service of Covered Entity.

 

**1.3.****                           ****“PatientInformation”** shall mean (a) PHI and (b) informationrelating to an individual who is or has been a Patient of Covered Entity andwhich Covered Entity has determined does not identify, or cannot reasonably belinked to the identity of, individuals who are or have been Patients of CoveredEntity, including, without limitation, information in raw, aggregated,stripped, or masked form

 

**1.4.****                           ****“ProtectedHealth Information”** or **“PHI”** shallmean any information relating to the healthcare of a Patient that containsinformation that identifies, or can reasonably be linked tothe identity of, such Patient

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

----

 

**2.**                                      **PatientInformation.**

 

**2.1.****                           ****Obligationsof Covered Entity****.** Covered Entity herebyagrees that it:

 

(a)                                  Will promptlynotify Business Associate in writing of any restrictions that Covered Entityhas agreed to regarding the use and disclosure of PHI that may affect BusinessAssociate’s ability to provide the Services or to perform its obligations underthis Agreement.

 

(b)                                 Will promptlynotify Business Associate in writing of any change in, or revocation of,permission by a Patient to use or disclose his or her PHI, if such change orrevocation may affect Business Associate’s ability to provide the Services orto perform its obligations under this Agreement.

 

**2.2.****                           ****Obligationsof Business Associate****.** Business Associateacknowledges and agrees that it is considered a “Business Associate” as definedby HIPAA. As a Business Associate of Covered Entity, Business Associate shall,in addition to complying with the other terms and conditions of this Agreement,comply with the HIPAA-required provisions set forth in this Section.

 

(a)                                  Disclosure. BusinessAssociate shall not use or further disclose PHI other than as permitted orrequired by this Agreement, or as required by law or as expressly consented to byCovered Entity in writing.

 

(b)                                 Safeguards. BusinessAssociate shall use appropriate safeguards to prevent use or disclosure of PHIother than disclosures permitted or required by this Agreement and to protectthe confidentiality, integrity, and availability of electronic PHI

 

(c)                                  Reporting. BusinessAssociate shall report to Covered Entity any attempted or successful access, use, disclosure,modification, or destruction of PHI not permitted or required by this Agreementof which it becomes aware. Business Associate shall, to the extent practicable,mitigate any harmful effect that is known to Business Associate of a use or disclosureof PHI by Business Associate in violation of this Agreement.

 

(d)                                 Patient Rights. BusinessAssociate hereby represents that it shall not create, collect, compile, ormaintain PHI in any form in connection with the Services provided pursuant tothis Agreement, except that Business Associate may maintain an exact duplicateof the Protected Health Information maintained by Covered Entity. If BusinessAssociate maintains an exact duplicate of PHI, Business Associate representsthat it will not amend, supplement, delete any part of, revise, or otherwisealter the PHI except as requested by Covered Entity to the extent necessary toconform to the Designated Record Set maintained by Business Associate.

 

(e)                                  Inquiries. In additionto complying with the provisions of Section 2.2(d) above, if any Patientsubmits to Business Associate an oral or written request with respect toPatient Information, including, without limitation, a Patient requesting accessto, amendment of, or an accounting of disclosures of PHI, Business Associateshall notify Covered Entity of the details of such request within ten (10)calendar days of receiving the request. Following receipt of such notice,Covered Entity shall be responsible for responding to such request.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

2

----

 

(f)                                    Management andAdministration. Except as otherwise limited in this Agreement,Business Associate may use PHI in providing Services under the underlyingAgreements, as necessary for the proper management and administration ofBusiness Associate, or to carry out the legal responsibilities of BusinessAssociate, provided that such use would not violate HIPAA if done by CoveredEntity. Business Associate shall limit the use or disclosure of the PHI to onlythose entities, individuals, or classes of individuals who perform; or assistBusiness Associate in the performance of, the Services. Business Associate willtake all reasonable steps necessary to make its personnel to whom it disclosesPHI in accordance with this Agreement aware of the provisions of this Agreementrelating to the confidentiality and safeguarding of the PHI. Business Associateshall require that any agents and subcontractors to whom it provides PHI aspermitted or required under this Agreement agree, in writing, prior to the disclosureof such PHI, to the same restrictions and conditions that apply to BusinessAssociate with respect to such PHI, including without limitation the provisionsof this Section 2 2.

 

(g)                                 Audit. BusinessAssociate shall make its internal practices, books, and records relating to the use anddisclosure of PHI received front, or created or received by Business Associateon behalf of, Covered Entity available to the Secretary of Health and HumanServices or to Covered Entity, upon request, for purposes of determining andfacilitating Covered Entity’s compliance with HIPAA.

 

(h)                                 Termination forFailure to Comply. Covered Entity may immediately terminate thisAgreernent and any and all Underlying Agreement(s) if Covered Entitydetermines that Business Associate has materially breached this Section 2.2; providedhowever, Covered Entity shall first provide Business Associate a reasonableopportunity to cure the breach. If Business Associate is timely (but no lessthan thirty (30) days) able to cure the breach to the reasonable satisfactionof Covered Entity, this Agreement shall remain in full force-and effect.

 

(i)                                     Duties UponTermination. At termination or expiration of theUnderlyingAgreement(s),Business Associate shall return or destroy all PHI that Business Associatestill maintains in any form and retain no copies of the PHI. If return ofdestruction is infeasible, Business Associate shall extend the protections ofthis Agreement to the PHI and limit further uses and disclosures of the PHI tothe purposes that make such return or destruction infeasible.

 

**2.3.****                           ****Survival****.** The terms of Section 2.2(i) shallsurvive the termination or expiration of this Agreement.

 

**3.****                                     ****RequiredDisclosure****.** In the event BusinessAssociate receives a subpoena or other validly issued administrative orjudicial process requesting disclosure of PHI it receives under this Agreement,Business Associate shall promptly notify Covered Entity to allow Covered Entitytime to challenge such disclosure. Unless the demand shall have been timely limited,quashed or extended, Business Associate may disclose PHI to the extent requiredby law.

 

**4.****                                     ****Compliancewith Laws****.** Business Associate shallcomply with all applicable federal, state, and local laws, rules and regulations,including, without limitation, the requirements of HIPAA.

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

3

----

 

**5.****                                     ****Amendment**. The partiesshall amend this Agreement from time to time by mutual written agreement inorder to keep this Agreement consistent with any changes made to the HIPAA lawsor regulations in effect as of the date of this Agreement and with any newregulations promulgated under HIPAA

 

**6.****                                     ****NoThird Party Benefit** This Agreement is for the sole benefit ofthe parties hereto and shall not confer or be deemed to confer any rights,benefits, or claims upon any person or entity not a party to this Agreement.Without in any way limiting the foregoing, it is the patties’ specific intentthat nothing contained in this Agreement gives rise to any right or cause ofaction, contractual or otherwise, in or on behalf of the individuals whose PHIis used or disclosed pursuant to this Agreement.

 

**7.****                                     ****Interpretation**. This Agreementshall be construed in accordance with and governed by the laws of the State of Ohio; provided,however, that the conflicts of law principles of the State of Ohio shall notapply to the extent that they would operate to apply the laws of another stateTerms not defined herein shall have the meaning set forth in HIPAA. To theextent that the terms of this Agreement conflict with the provisions of anyUnderlying Agreement, the terms of this Agreement shall control. Any ambiguityin this Agreement shall be resolved in favor of a meaning that permits theparties to comply with HIPAA.

 

**8.****                                     ****Counterparts****.** This Agreementmay be executed in two or more counterparts, each of which-shall -be-anoriginal, but all of which taken together shall constitute one and the same agreement.

 

**IN WITNESS WHEREOF,** the duly authorizedrepresentatives of the parties have executed this Agreement as**of the datefirst written above.

 
| **MEMBERHEALTH,  INC.**  | ** ** | **COMMUNITY  CARE RX, LLC** |
|--------------------------|------------|-----------------------------|
| ** **               | ** ** | ** **                  |
|                     |       |                        |
| /s/  Charles E. Hallberg |       | /s/  Bruce Roberts          |
| Signature                |       | Signature                   |
|                     |       |                        |
| Charles E. Hallberg      |       | Bruce Roberts               |
| Print  Name              |       | Print  Name                 |
|                     |       |                        |
| President & CEO      |       | Chairman                    |
| Title  or office         |       | Title  or office            |
|                     |       |                        |
| 10/21/05                 |       | 10/21/05                    |
| Date                     |       | Date                        |

 

----

*** Material has been omitted pursuant to arequest for confidential treatment and filed separately with the SEC.

 

4

----

 

**ATTACHMENT 4**

 

**GUIDING PRINCIPLES**

 

**GuidingPrinciples for a****PBM**

 

**Guiding Principle #1:**A PBM will provide a cost-efficient benefit design that aligns the financial interests of consumers, plansponsors, PBMs, and pharmacists.**

 

SupportingBullet Points:

 

·                  Full disclosureof ALL sources of revenue to plan sponsors.

·                  Disclose 100%of drug manufacturer rebates and all shared revenue arrangements betweenmanufacturers, PBM, and consumers (this must include service and admin feesplus disclosures to financially supporting P-T and benefit design committees )

·                  Full disclosure of clinicaland cost data to prescribing physicians, dispensing pharmacists, and patientsas requested.

·                  No mandatory mail order orfinancially incented mail order in the plan design

·                  Elimination of “SpreadPricing”

·                  Pharmacist intervention todrive utilization to the most cost-effective model

·                  Elimination of mail orderconflicts of interests

·                  Full audit rights consistentwith ERISA and Department of Labor

·                  Agree to serveplan sponsors in a fiduciary role.

 

Description:

 

APBM will always provide the most cost effective and efficient benefit throughthe examination of clinical information and alignment of financial interests.Clinical leadership by pharmacists in the development of the formulary coupledwith pharmacists’ interventions to drive utilization to the most cost-effectmodel will aid in the efficient benefit design. Moreover, in any contractualrelationship with its stakeholders, a PBM will provide details on financialrelationships with drug manufacturers (i.e. contracts) as well as its pharmacynetwork to ensure that financial agreements are understood This transparencyincludes full disclosure of manufacturer rebates to plan sponsors, informationsharing of reimbursement rates and/or prices to both retail pharmacy and plansponsors, and “right to audit” clauses in all contracts with stakeholders

 

*Guiding Principle #2. A PBM will leverage the knowledge andclinical expertise of community pharmacists to maximize the value of thepharmacy benefit for its clients. Furthermore, a PBM will develop a paymentstructure for community pharmacists which will reward them  for their innovative care services and recognize the true costs of providing thoseservices.*

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

----

 

SupportingBullet Points:

 

·                  Position the communitypharmacist as a value-added resource to both the patient and the plan sponsoras opposed to a commodity resource for dispensing medication

·                  Provide incentives to localpharmacists for health improvement and cost saving initiatives

·                  Leverage the communitypharmacist in alternative distribution services such as central fill and mailorder

·                  Incorporate fairreimbursement based on benchmarks that are more reflective of true costs

·                  Pay for performanceincentives that reward pharmacists for dispensing cost efficient medicationsshould be incorporated into reimbursement methodologies.

·                  Provide opportunity topharmacists for other value added services such as medication therapymanagement services.

 

Description:

 

APBM will leverage the community pharmacist to be the primary provider for itsclients’ pharmaceutical needs by providing incentives for health improvementand health care cost savings. To accomplish this, a PBM will develop new andinnovative methodologies for pharmacist reimbursement that are fair,transparent, and reflective of the true costs. This simplification will make itclear to plan sponsors what their costs are, and that they are being based onthe specific payment to the network pharmacy and thereby eliminating spreadpricing.

 

***Guiding Principle #3: A PBM will provideconsumer choice and empowerment to plan sponsors’ members through open network access and pharmacy benefiteducation and consumer driven plan designs.***

 

SupportingBullet Points:

 

·                  Access to retail pharmacies far beyond theMedicare standard

·                  Help patients choose individual medicationsthrough cost/benefit education of choices within therapeutic classes.

·                  Pharmacy benefit design thatencourages the rational utilization of pharmaceutical products

·                  Create consumer prices thatreflect the relative acquisition prices (net of rebates) of medications.

·                  Devise benefit designs whereconsumers can share in drug manufacturer rebates at the point of sale

 

Description:

 

APBM will provide consumer choice and empowerment as a core part of its benefitdesigns. First, consumers will have a wide choice of pharmacies thatparticipate on an equal access basis.

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

----

 

Second,consumers will be empowered to choose the medications that they, along withtheir doctor and pharmacist, believe are best for them. They will make informedchoices about their medications through education and a thorough understandingof the costs and benefits of different medications. This education will focuson educating patients on generic products, similar products within the sametherapeutic class, and the cost-quality tradeoffs of different products.

 

***Guiding Principle #4: APBM will recognize and educate stakeholders on the value of******pharmaceuticalsin improving total health care outcomes and costs.***

 

Supporting Bullet Points:

 

·                   Assume aleadership role in educating plan sponsors and patients on improving healthoutcomes through pharmaceuticals

·                  Study and report on pharmaceutical dataintegrated with medical data that documents improved health outcomes andsavings

·                  Educate patients on the value ofpharmaceuticals within the overall context of their own health care

 

Description:

 

APBM will work with key stakeholders to educate plan sponsors and patients onthe tremendous value of pharmaceuticals in improving health outcomes. A PBMwill seek to be a leader within the health care industry in this regard.

 

***Guiding Principle #5: A PBM will activelysupport regulatory accountability and credentialing of PBMs***

 

SupportingBullet Points:

 

·                  National and state full disclosureinitiatives

·                  Regulation of alternative distributionservices

·                  State licensing and registration of PBMs

·                  Support national credentialing standards

 

Description:

 

APBM will assume a leadership role within today’s “PBM” industry to develop andmaintain higher levels of business standards for PBMs. These standardswill include financial transparency, regulation of alternative distributionservices, state licensing, and national credentialing standards

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

----

 

**ASSIGNMENT AND ASSUMPTION AGREEMENT**

 

THISASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment Agreement”) is made as of September 1,2006, by and among Community Care RX, L.L.C., a Delaware limited liabilitycompany (“CCRX”), Community Pharmacy Ventures, Inc., a Delawarecorporation (“Ventures”), and National Community Pharmacists Association, aVirginia corporation (“NCPA”). Unless otherwise defined herein, capitalizedterms used herein without definition shall have the respective meaningsprovided in that certain Subcontract Agreement dated as of October 21,2005 by and between MemberHealth, Inc., an Ohio corporation (“MHRX”) andCCRX (the “Subcontract Agreement”). This Assignment Agreement is intended toimplement, and not supersede, the provisions of the Subcontract Agreement andshall not be construed to enhance, extend or limit the rights or obligations ofthe parties thereunder, or extinguish any of the representations or warranties(whether or not so captioned) set forth therein, except as expressly set forthherein.

 

**BACKGROUND**

 

WHEREAS,CCRX and MHRX are parties to the Subcontract Agreement pursuant to which CCRXprovides certain services to MHRX;

 

WHEREAS,CCRX and Ventures are both wholly owned subsidiaries of NCPA;

 

WHEREAS,CCRX desires to assign to NCPA, and NCPA has agreed to assume and perform,certain of CCRX’s rights, duties, and obligations under the SubcontractAgreement;

 

WHEREAS,CCRX desires to assign to Ventures, and Ventures has agreed to assume andperform, certain of CCRX’s rights, duties, and obligations under theSubcontract Agreement and that certain Business Associate Agreement dated October 21,2005 by and between MHRX and CCRX (the “Business Associate Agreement”);

 

WHEREAS,pursuant to the terms of the Subcontract Agreement, CCRX is permitted to assignor transfer, in whole or in part, its obligations, interest in, and any claimunder the Subcontract Agreement to an Affiliate without the consent of MHRX.

 

**AGREEMENT**

 

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged:

 

1.             Assignment toand Assumption by NCPA.

 

(a)           CCRXhereby assigns to NCPA, and NCPA hereby assumes and agrees to discharge orperform when due, punctually and in full, all of CCRX’s rights, duties, andobligations under Section 1.03 of the Subcontract Agreement.

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

----

 

(b)           CCRXhereby assigns to NCPA, and NCPA accepts such assignment of, all of CCRX’sright, title, and interest in and to any annual royalty fee payable pursuant tothe first Section 3 (Annual Royalties) of Attachment 2 to the SubcontractAgreement.

 

2.             Assignment toand Assumption by Ventures. Except as set forth in Paragraph 1above, CCRX hereby assigns the Subcontract Agreement and Business AssociateAgreement to Ventures, and Ventures hereby assumes and agrees to discharge orperform when due, punctually and in full, all of CCRX’s rights, duties, andobligations under the Subcontract Agreement and Business Associate Agreementfrom and as of the date hereof.

 

3.             Indemnification.

 

(a)           NCPAshall and hereby agrees to indemnify and hold harmless CCRX and Ventures andtheir respective affiliated entities, predecessors, successors, assigns,officers, directors, managers, members, employees, independent consultants,attorneys, agents and representatives from and against all claims, demands,rights, actions, causes of action, suits, damages, charges, losses and expenses(including reasonable attorneys’ fees) (“Claims”) arising out of or relating toNCPA’s performance under Section 1.03 of the Subcontract Agreementpursuant to Paragraph 1 above from and as of the date hereof.

 

(b)           Venturesshall and hereby agrees to indemnify and hold harmless CCRX and NCPA and theirrespective affiliated entities, predecessors, successors, assigns, officers,directors, managers, members, employees, independent consultants, attorneys,agents and representatives from and against all Claims arising out of orrelating to Ventures’ performance under the Subcontract Agreement and BusinessAssociate Agreement pursuant to Paragraph 2 above from and as of the datehereof.

 

(c)           CCRXshall and hereby agrees to indemnify and hold harmless NCPA and Ventures andtheir respective affiliated entities, predecessors, successors, assigns,officers, directors, shareholders, employees, independent consultants,attorneys, agents and representatives from and against all Claims arising outof or relating to CCRX’s performance (or non-performance) under the SubcontractAgreement and Business Associate Agreement prior to the date hereof.

 

(d)           NCPA,Ventures and CCRX shall and hereby agree to indemnify and hold harmless MHRXand its respective affiliated entities, predecessors, successors, assigns,officers, directors, shareholders, employees, independent consultants,attorneys, agents and representatives from and against all claims, losses,liabilities, costs, fees, arising from or relating to the assignment of theSubcontract Agreement contemplated herein.

 

4.             Governing Law. ThisAssignment Agreement shall be governed by and construed and enforced inaccordance with the laws of the Commonwealth of Virginia, without regard toconflict of laws principles.

 

5.             Amendment. No amendmentor modification of this Assignment Agreement shall be effective unless it isset forth in writing and signed by both parties to this Assignment Agreement.

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

2

----

 

6.             Counterparts.This Assignment Agreement may be executed in one or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constituteone and the same instrument.

 

7.             Successors andAssigns. This Assignment Agreement shall be binding upon the partieshereto, and their respective successors and assigns.

 

IN WITNESS WHEREOF, this Assignment Agreement has been duly executed bythe parties hereto as of the date first above written.

 

 
|   | **COMMUNITY CARE RX, L.L.C.**                   |
|--------|-------------------------------------------------|
|   |                                            |
|   |                                            |
|   | By:                                             | /s/ Kurt A. Proctor |   |
|   | Name:                                           | Kurt A. Proctor |   |
|   | Title:                                          | Chief Operation Officer |   |
|   |                                            |
|   |                                            |
|   | **COMMUNITY PHARMACY VENTURES,  INC.**          |
|   |                                            |
|   |                                            |
|   | By:                                             | /s/ Kurt A. Proctor |   |
|   | Name:                                           | Kurt A. Proctor |   |
|   | Title:                                          | President |   |
|   |                                            |
|   |                                            |
|   | **NATIONAL COMMUNITY PHARMACISTS  ASSOCIATION** |
|   |                                            |
|   |                                            |
|   | By:                                             | /s/ Bruce T. Roberts |   |
|   | Name:                                           | Bruce T. Roberts |   |
|   | Title:                                          | EVP & CEO |   |
|        |                                                 |  |  |  |  |

 

**ACKNOWLEDGED AND AGREED****:**

 

 

**MEMBERHEALTH, INC.**

 

 
| By:    | /s/ Charles E. Hallberg |   |
|--------|-------------------------|--------|
| Name:  | Charles E. Hallberg     |   |
| Title: | President & CEO     |   |

 

----

***Material has been omitted pursuant to a request for confidential treatment andfiled separately with the SEC.

 

3

----