FILED: NASSAU COUNTY CLERK 12/14/ :53 PM INDEX NO /2018 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/14/2018

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU X Index No. PRACTICE PROVIDER CORPORATION, Date of Purchase: Plaintiff, SUMMONS - against - Plaintiff designates Nassau County as the place of trial. AXON HEALTHCARE SERVICES, LLC, Venue is based on Defendant. plaintiffs address listed on the Certificate of X Incorporation TO THE ABOVE-NAMED DEFENDANT: YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the plaintiffs attorney with twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this summons is not personally delivered to you within the State of New York); and in the case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. Dated: Uniondale, New York December, 2018 RU COU CHEK P.C. By: Mark S. Mulholland, Esq. John A. DeMaro, Esq. Attorney for Plaintiff East Tower, 15th Floor 1425 RXR Plaza Uniondale, New York (516) of 17

2 TO: Axon Healthcare Services, LLC 515 West Southlake Boulevard Suite 173 Southlake, Texas of 17

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU X PRACTICE PROVIDER CORPORATION, Plaintiff, VERIFIED COMPLAINT -against- Index No. AXON HEALTHCARE SERVICES, LLC, Defendant X Plaintiff Practice Provider Corporation ("Practice Provider"), by its attorney Ruskin Moscou Faltischek, P.C., as and for its complaint against defendant Axon Healthcare Services, LLC ("Axon"), alleges as follows: NATURE OF ACTION 1. This action arises from defendant Axon's failure to compensate plaintiff for development, hosting and maintenance services relating to the online version of plaintiffs proprietary Clinnection software, and from defendant's unfounded claim of ownership in plaintiffs proprietary source code. 2. Plaintiff Practice Provider seeks money damages along with declaratory relief adjudicating and determining that plaintiff owns the source code and all intellectual property rights in the online "SaaS" (software as a service) version of its proprietary Clinnection software system. 3 of 17

4 NYSCEF. DOC. NO. 1 RECEIVED NYSCEF: 12/14/2018 THE PARTIE_S 3. Plaintiff Practice Provider is a corporation organized and doing business under the laws of the State of New York with a certificate of incorporation designating its principal place of business as Nassau County. 4. Defendant Axon upon information and belief is a limited liability corporation organized under the laws of the State of Delaware with its principal place of business at 515 West Southlake Boulevard, Suite 173, Southlake, Texas BACKGROUND 5. Plaintiff Practice Provider offers technological and consulting support to healthcare providers, aimed at delivering practice management benefits including enhanced clinical quality, strengthened patient relationships and improved billing efficiency. 6. At all relevant times from 2012 to the present, Practice Provider has owned and maintained its proprietary "Clinnection" software system, which offers a robust suite of practice management tools for healthcare providers nationwide. 7. Upon information and belief, defendant Axon is a start-up company funded by venture capitalists, and promotes itself on its web site located at as a provider of technological support to medical providers of 17

5 8. In 2013, during in-person meetings held on Long Island in New York Axon requested that Practice Provider develop an online SaaS version of Practice Provider's already existing proprietary Clinnection software, for use by Axon in providing internet-based prior authorization support to pharmaceutical healthcare providers. 9. Defendant described Axon as a start-up business with minimal or no cash flow, and represented to Practice Provider that Axon did not have adequate funds to pay currently for Provider Practice's services and support. 10. Axon specifically represented that as a start-up, it did not have sufficient capital to fund Practice Provider's development of an online SaaS version of Clinnection, nor to fund the anticipated monthly hosting and maintenance that Axon would want Practice Provider to furnish at its New York facility, once the SaaS version of Clinnection went live. 11. As an alternative to making traditional, monthly payments in exchange for Practice Provider's development, hosting and maintenance services to be rendered in New York, defendant and its equity owners offered instead to compensate Practice Provider with equity in Axon, in the range of 5%. 12. To induce and encourage Practice Provider to perform the substantial development, hosting and maintenance services necessary to create and bring live an online SaaS version of Clinnection, Axon's of 17

6 representative observed that the online version of Clinnection would be tantamount to "lightening in a bottle," with unlimited capital value. 13. In response to the offer of a 5% equity stake in Axon as compensation for services, Practice Provider requested a compensatory stake in the range of 15%. 14. Axon's representatives urged Practice Provider to dedicate the necessary manpower and resources to develop and host the envisioned SaaS system, with the understanding and assurance that Practice Provider would receive equity in Axon, but no concrete understanding as to the precise amount of the equity stake in Axon ultimately to be transferred to Practice Provider. 15. Axon's representatives assured Practice Provider that the specifies regarding Practice Provider's compensatory equity stake in Axon would be negotiated and worked out in due course. 16. At Axon's request, and in reliance on defendants' promise of fair compensation including equity in Axon, Practice Provider thus agreed to develop an SaaS version of its existing Clinnection software, and to host and maintain the program on a month-to-month basis for an unfixed period of time. 17. Working under the parties' agreement, Practice Provider in 2013 successfully developed an SaaS version of Practice Provider's existing of 17

7 Clinnection software, capable of furnishing online preauthorization support to Axon's pharmaceutical healthcare customers. 18. Also as agreed between the parties, in 2013 Provider Practice on a month-to-month basis commenced hosting and maintaining the online SaaS model of Clinnection, for Axon's use and exploitation. 19. Throughout 2013, Practice Provider successfully developed and brought live the online SaaS version of its proprietary Clinnection software with zero remuneration from Axon, and with the reasonable expectation of a still-to-be determined percentage equity stake in Axon. 20. After 2013 and continuing through the ensuing years and on until November 2018, Practice Provider at all relevant times has continued to host and maintain the SaaS version of Clinnection at Practice Provider's New York facility, for Axon's use and exploitation. 21. At all relevant times from 2013 and continuing until the present, Practice Provider has incurred and paid substantially all of the direct, indirect and out-of-pocket expenses associated with the development, hosting and maintenance of the SaaS version of Clinnection, for Axon (except for certain monthly payments that Axon made to Practice Provider in order to offset Practice Provider's mounting and substantial losses starting in 2015, as alleged further below) of 17

8 22. By 2015, Practice Provider's investment in the development, hosting and maintenance of the SaaS version of Clinnection had grown to be substantial, and yet Practice Provider had received zero compensation and none of the equity stake in Axon that Practice Provider had been promised. 23. At Practice Provider's request, Axon in 2015 agreed to begin making monthly payments to Practice Provider to offset Practice Provider's mounting losses attributable to the ongoing, monthly development, hosting and maintenance of the SaaS version of Clinnection. 24. In 2016, at Axon's request, plaintiff successfully performed an SOC2 Type 2 Audit in support of Axon's effort to sell Clinnection SaaS services to the CVS national pharmaceutical retail chain, leading to Axon becoming an authorized CVS vendor. 25. Provider Practice performed 100% of the SOC2 Type 2 Audit work and incurred significant indirect costs - but was compensated for only 50% of its out-of-pocket costs and expenses. 26. In 2017 Axon further requested that Provider Practice implement an SAML authentication system and mobile-responsive GUI (graphic user interface) in order to meet Axon's client requirements. 27. Plaintiff accommodated Axon's request and successfully implemented the SAML authentication system and GUI necessary to meet Axon's customer requirements of 17

9 28. Also during relevant times Practice Provider attended in-person meetings with potential Axon customers, in New Jersey and Florida, in order to help Axon close sales. 29. During the period 2015 to January 2018, in total Axon made monthly payments ranging from $5,000 to $7,800 to defray Practice Provider's ongoing, monthly costs and expenses in the development, hosting and maintenance of the SaaS Clinnection system. 30. Axon failed to tender the agreed monthly payments to Practice Provider on a consistent basis however, missed m~ki~g any payments for large stretches of time, and altogether ceased making the monthly payments in November The on-again off-again payments from Axon were altogether inadequate to compensate Practice Provider for its substantial, direct and indirect investment in developing, hosting and maintaining the SaaS version of Clinnection for Axon's use and benefit. 32. Practice Provider's direct and indirect investment in the development, hosting and maintenance services furnished to Axon at Axon's specific request as of November 2018 has included: (i) software development services rendered on a continuing basis for 72 months; (ii) hosting services rendered for 72 months; and (iii) chief technology officer (CTO) support provided for 72 months of 17

10 33. In or about September 2018 a dispute arose between the parties when Axon demanded that it owned or "must own" the source code for the SaaS version of Practice Provider's proprietary Clinnection program. 34. Axon's demand that it owned or "must own" the source code created by Practiced Provider lacks any lawful or factual basis. 35. At all relevant times, Practice Provider has performed all services and fulfilled all obligations owed to Axon pursuant to the parties' agreements surrounding the month-to-month development, hosting and maintenance of the SaaS version of Practice Provider's Clinnection software system. 36. In the wake of the parties' dispute concerning Axon's failure to compensate Practice Provider, defendant Axon suddenly has disavowed any promise to transfer to Practice Provider an equity membership interest in Axon. 37. Confronted with Axon's repudiation of its original promise of an equity stake as compensation, confronted as well with Axon's unfounded claim of ownership over plaintiffs proprietary source code, plaintiff is constrained to seek a determination of its rights and interests through the commencement of this action. AS AND FOR A FIRST CAUSE OF ACTION (Declaratory Relief Under CPLR 3001) 38. Plaintiff repeats and realleges the foregoing paragraphs 1 to 37 with the same force and effect as if set forth fully and at length hereat of 17

11 39. A justiciable controversy exists requiring determination and adjudication by the Court concerning the parties' respective rights and interests in the online SaaS version of plaintiffs propriety Clinnection software, at issue herein. 40. At all relevant times, plaintiff Practice Provider exclusively has owned all right, title and interest in its proprietary Clinnection software. 41. Commencing in 2013, plaintiff created, wrote and developed source code to allow use of its Clinnection software in an SaaS online environment. 42. Plaintiff and its agents exclusively created, wrote and developed the source code for the SaaS version of Clinnection. 43. Despite that defendant Axon has no title, ownership interest or other right in or to the SaaS version of Clinnection, defendant Axon has stated that it owns or "must be" the owner of the Clinnection SaaS code. 44. Plaintiff Practice Provider is entitled to a judgment pursuant to CPLR 3001 declaring and adjudicating that plaintiff is the owner of all right, title and intellectual property interests in the SaaS version of Clinnection at issue herein, including all underlying source code. 45. Plaintiff has no adequate remedy at law. AS AND FOR A SECOND CAUSE OF ACTION (Unjust Enrichment) 46. Plaintiff repeats and realleges the foregoing paragraphs 1 to 45 with the same force and effect as if set forth fully and at length hereat of 17

12 47. During the approximately five-year period from 2013 to the present plaintiff provided development, hosting and maintenance services on a month-to-month basis to and for the benefit of defendant Axon. 48. Plaintiff provided the aforesaid services at Axon's specific request and instance. 49. Defendant Axon has benefited from plaintiffs monthly software development, hosting and maintenance services insofar as defendant has been able to exploit, market and resell successfully the SaaS version of plaintiffs proprietary Clinnection program. 50. Defendant has not paid plaintiff the fair market value of the services rendered to date. 51. By reason of the foregoing, defendant has been enriched unjustly. 52. Defendant's enrichment has been at plaintiffs expense. 53. It is against equity and good conscience to permit defendant to retain the benefit and value of the services rendered without compensating plaintiff therefor. 54. By virtue of the foregoing, plaintiff is entitled to an award of general, monetary damages in an amount to be determined at trial, together with interest thereon as provided by law of 17

13 . AS AND FOR A THTRD CAUSE OF ACTION (Quantum Meruit) 55. Plaintiff repeats and realleges the foregoing paragraphs 1 to 54 with the same force and effect as if set forth fully and at length hereat. 56. Defendant Axon requested that Practice Provider develop an SaaS version of Practice Provider's proprietary Clinnection program. 57. Defendant Axon further requested that Practice Provider furnish monthly hosting and development services for Axon. 58. Plaintiff in good faith performed and rendered all of the aforesaid services requested by Axon. 59. Axon accepted the aforesaid development, hosting and maintenance services. 60. Plaintiff performed the aforesaid development, hosting and maintenance services with an expectation of compensation therefor. 61. The reasonable value of the services rendered to Axon equals an amount to be proven at trial based on prevailing market rates. 62. By reason of the foregoing, plaintiff has sustained damages in an amount to be proven at trial. AS AND FOR A FOURTH CAUSE OF ACTIO_N (Breach of Contract) 63. Plaintiff repeats and realleges the foregoing paragraphs 1 to 62 with the same force and effect as if set forth fully and at length hereat of 17

14 64. Plaintiff Practice Provider and defendant Axon entered into an agreement whereby plaintiff agreed (i) to develop an online SaaS version of Practice Provider's proprietary Clinnection program; (ii) to host the SaaS system on a month-to-month basis; and (iii) to maintain the SaaS system on a month-to-month basis. 65. As and in consideration for plaintiff's agreements to provide the aforesaid development, hosting and maintenance services, defendant Axon agreed to pay plaintiff a monthly fee in the approximate amount of $5,000 to $7,800, in addition to an equity membership stake in Axon. 66. The parties' agreement constituted a binding and enforceable month-to-month contract under New York law. 67. Plaintiff at all relevant times fully performed and fulfilled all of its obligations and duties under the parties' software agreement. 68. Defendant Axon has breached its obligation to pay plaintiff by failing to remit the monthly payments as agreed. 69. Defendant Axon's failure to remit payment to plaintiff constitutes a breach of defendant's obligations under the parties' agreement, and breach of contract as a matter of basic New York law. 70. Defendant Axon's breach has caused plaintiff to suffer general contract damages in an amount to be proven at trial of 17

15 AS AND FOR A FIFTH CAUSE OF ACTION (Promissory Estoppel) 71. Plaintiff repeats and realleges the foregoing paragraphs 1 to 70 with the same force and effect as if set forth fully and at length hereat. 72. Defendant Axon promised Practice Provider that Axon would fairly compensate Practice Provider, in exchange for Practice Provider's month-to-month development, hosting and maintenance services relating to an online SaaS version of Practice Provider's proprietary Clinnection program. 73. Defendants' promise aforesaid was a clear and unambiguous promise. 74. Plaintiff reasonably and forseeably relied on defendants' promise aforesaid, in determining and agreeing to render valuable monthly software development, hosting and maintenance services to defendant Axon for a period of approximately five years. 75. By reason of plaintiffs reliance on defendants' promise aforesaid, and as a proximate result of defendants' promise, plaintiff has sustained damages in an amount to be proven at trial. WHEREFORE, plaintiff respectfully demands judgment against defendant awarding to plaintiff: a. Declaratory relief adjudicating and determining that plaintiff Provider Practice is the owner of all right, title and intellectual of 17

16 property interests in the online SaaS version of plaintiffs Clinnection software, including the underlying source code; b. Money damages including general damages in an amount to be proven at trial; c. Pre-judgment and post-judgment interest as provided by law; and d. Such other and further relief as to the Court seems just, equitable, and fair, including the costs and expenses of this action. Dated: Uniondale, New York December N, 2018 RUSKIN MOSCOU FALTISCHEK P.C. By: Mark S. Mulholland John A. DeMaro Attorney for Plaintiff Practice Provider Corporation 1425 RXR Plaza East Tower, 15th Floor Uniondale, New York (516) of 17

17 VERIFICATION STATE OF NEW YORK ) COUNTY OF SUFFOLK ) ) ss.: Nancy Rowe, being duly sworn, deposes and says: I am an the president of the plaintiff in this matter. I have read the foregoing Verified Complaint and know the contents thereof, and the same are true to my knowledge, except those matters therein which are stated to be alleged upon information and belief and as to those matters, I believe them to be true. ANCY-ROWE // Sworn to before me this day of December 2018 UDIAVARGAS Notary Public - 5tate of New York NO. 01VA Qualified in Suffolk County My CommissionExpires May 1, 2022 Notary Public of 17