CONFIDENTIAL December 20, 2002 John Prufeta Re: Separation Agreement and General Release Dear John: This letter proposes the following Separation Agreement and General Release ("Agreement") between you and Medix Resources, Inc., (the "Company") regarding the terms of your release and separation from Medix. I. Background A. You were employed by the Company as Chief Executive Officer. B. Your employment has been terminated. II. Terms of Agreement To effect the termination of your employment and to provide you with certain benefits that you would not otherwise be entitled to, you and the Company agree as follows: 1. On September 24, 2002 your services with the Company officially terminated. 2. You shall resign your position on the Medix Board of directors effective upon signing this Agreement. 3. Your termination from the Company will be categorized as termination-without-cause, the Employment Agreement dated February 1, 2002 is all aspects null and void. This Agreement supersedes any and all other agreements between you and Medix with the exception of the OPTION PLAN. 4. This Agreement shall not be in any way construed as an admission by either party that it has acted wrongfully with respect to the other or any other person or entity, or that either party has any rights whatsoever against the other. 5. Even if you do not sign this Agreement, you will be offered benefits to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), and you retain all benefits under the Company's 401(k) Plan if you are a participant. 6. In the event you do not sign this Agreement or revoke your signature after signing, the Company will not convert your ISO options to NQO's and you will have 30 days from your revocation date to exercise those options and the requisite provisions of your employment agreement are in effect including non-competition, confidentiality and non solicitation. Notwithstanding the additional 30 days within which your options ISO options may be exercised, you acknowledge that you shall not be permitted to exercise your unexercised options pursuant to the Option Plan until the expiration of the revocation period described in Paragraph 15 below. In the event you revoke this Agreement, the Company reserves all rights to consider your termination as either a resignation or a termination for cause under either the Option Plan or your Employment Agreement and reserves all of it's rights with respect to your NQO and ISO options, including considering your termination as for cause. 7. In exchange for the promises contained in this Agreement and release of claims as set forth below, and provided that you sign this Agreement and return it to me by December 22, 2002, and do not revoke this Agreement as set forth in Paragraph 15(d): a. The Company will commencing with the next payroll period, pay you twelve months of continued salary in the amount of your current base monthly salary beginning to be paid on a bi-weekly basis and in accordance with the Company's normal payroll process. b. The Company shall at its option pay you for your unused vacation of 19 days either at the next payroll period or ratably during the twelve-month salary continuation. c. The Company will within 5 days of the expiration of the revocation period herein, reimburse your expenses, in an amount not to exceed $7,150.00, during the week of January 1, 2003. d. Upon the expiration of the revocation period provided you have not revoked the Agreement, the Company will take steps to convert your ISO stock options to NQO's. e. The Company will within 5 days of the expiration of the revocation period herein pay you $3,900 for reimbursement of furniture expenses. f. The Company will within 30 days of the expiration of the revocation period herein pay you $4,500 as an incentive to execute this Agreement. g. The Company will beginning on January 1, 2003 commence to pay you $5,000 per month towards the principal on your two loans to the Company in the amounts of $65,000 each, made separately on May 2002 and August 2002. The loan shall be due in full on May 1, 2003. Each payment hereunder shall have a 15-day grace period. Interest shall accrue at the rate of 5% from the respective dates the books and records of the Company reflect receipt of the funds. In the event of a default under the terms of the loan provision herein, the loan shall accelerate and interest shall be computed at the rate of 15%. h. In recognition of your willingness to lend the Company money at a time when the prospect of repayment was dim, as well as you deferral of salary continuation from September until the next pay period the Company shall accelerate the vesting of 250,000 options at $.50, such vesting to occur as of the date this Agreement becomes effective. i. The Company will indemnify you and hold you harmless to the fullest extent permitted by law and the by-laws of the corporation provided same does not conflict with the Company's Directors and Officers insurance policy. j. (i) The Company, it's officers and Directors (the "Company Releasors") hereby release you from any and all claims, liabilities, promises, actions, damages and the like, known or unknown, which they ever had against you arising out of or relating to your employment with the Company and/or the termination of your employment with the Company. This release is intended to be comprehensive, except that it shall not apply to any fraudulent actions or failures to act, any willful misconduct or willful failure to act, for which you would not be entitled to indemnification as provided in Paragraph 7(i), above (the "Excepted Claims"). (ii) The Company Releasors shall not bring any legal action against you for any claim waived and released under this Agreement. The Company Releasors represent and warrant that no such claim has been filed to date. The Company Releasors further agree that should they bring any type of proceeding of any kind, administrative or legal action arising out of claims waived under this Agreement, or out of any claims or facts arising during the course of your employment they will bear all legal fees and costs, including those you incur. The Company Releasors further covenant not to bring any claim or testify against you absent legal process. (iii)Provided that you are not in material breach of this Agreement, the Company Releasors agree that they will not file or commence any complaint, charge, or action against you alleging wrongdoing pertaining to your employment with the Company or the termination thereof, other than with respect to any Excepted Claims. The Company Releasors agree that if any governmental agency or any court or arbitrator hereafter assumes jurisdiction of any complaint, charge, or action against you, that they will not participate in such proceeding or action, as a witness or otherwise, unless compelled by subpoena or court order to do so and only after giving you immediate advance written notice of such subpoena or order and all cooperation reasonably required by you, at your expense (unless covered by the indemnification provisions of this Agreement), to challenge or limit the same. (iv) If in the course of any litigation, the release and waiver contained in this Agreement is deemed to be valid by a court of competent jurisdiction and is thereby a bar to a claim by the Company Releasors, then the Company Releasors shall pay your reasonable costs and attorney's fees pertaining to the investigation and defense of such action or proceeding. (v) Nothing contained herein shall be deemed to release or discharge any claim based upon a breach of this Agreement 8. In consideration of the promises contained in this Agreement, you agree: a. On behalf of yourself, individually in your capacity as a shareholder or option holder and anyone claiming through you or who's rights emanated from you, irrevocably and unconditionally to release, acquit and forever discharge the Company and/or its parent corporation, subsidiaries, divisions, predecessors, successors and assigns, as well as each of their respective past and present officers, directors, employees, shareholders, trustees, joint venturers, partners, and anyone claiming through them (hereinafter "Releasees" collectively), in each of their individual and/or corporate capacities, from any and all claims, liabilities, promises, actions, damages and the like, known or unknown, which you ever had against any of the Releasees arising out of or relating to your employment with the Company and/or the termination of your employment with the Company. Said claims include, but are not limited to: (1) employment discrimination (including claims of sex discrimination and/or sexual harassment) and retaliation under Title VII (42 U.S.C.A. 2000e etc.) and under 42 U.S.C.A. section 1981 and section 1983, age discrimination under the Age Discrimination in Employment Act (29 U.S.C.A. sections 621-634) and/or any other relevant federal, state statutes or municipal ordinances; (2) any and all claims under the Americans with Disabilities Act (3) disputed wages; (4) wrongful discharge and/or breach of any alleged employment contract; and (5) claims based on any tort, such as invasion of privacy, defamation, fraud and infliction of emotional distress or any other theory or concept or cause of action in law or equity. b. That you shall not bring any legal action against any of the Releasees for any claim waived and released under this Agreement and that you represent and warrant that no such claim has been filed to date. You further agree that should you bring any type of proceeding of any kind, administrative or legal action arising out of claims waived under this Agreement, or out of any claims or facts arising during the course of your employment you will bear all legal fees and costs, including those of the Releases. In the event you initiate a proceeding contemplated to be waived and released herein you agree that as a condition precedent to same you shall return to Medix the full amount of any salary continuation payments and surrender any unexercised converted ISO's In the event you have exercised the converted ISO's you shall transfer to Medix the exercised stock or the fair market value in cash or Medix stock as of the day you exercised the options. You further covenant not to bring any claim or testify against the company absent legal process. c. You agree that if any governmental agency or any court or arbitrator hereafter assumes jurisdiction of any complaint, charge, or action against the Company you will not participate in such proceeding or action, as a witness or otherwise, unless compelled by subpoena or court order to do so and only after giving the Company immediate advance written notice of such subpoena or order and all cooperation reasonably required by the Company, at its expense, to challenge or limit the same. The Company will provide you with defense with respect to prior conduct of your as a company employee, but no defense will be provided respecting conduct involving your individual, ultra vires the Company conduct or conduct otherwise prohibited herein. d. Provided the company is not in material breach of this Agreement, you agree that you will not file or commence any complaint, charge, or action against the Company alleging wrongdoing pertaining to your employment with the Company or the termination thereof, except that, in the event the only <U>such</U> breach at issue is a default under Paragraph 7(g), your remedy shall be an action to collect the amount due thereunder in the event of default. e. Notwithstanding the execution of this Agreement, should you commence any action or proceeding against the Company pertaining to the subject matter of the release or any waiver contained in this Agreement, you shall as a condition precedent to the prosecution of such action cause to be returned to the Company the full amount of any profits realized by you in the course of exercising any ISO's that were converted to NQO's and all remaining unexercised options shall immediately expire. f. If in the course of any litigation, the release and waiver contained in this Agreement is deemed to be valid by a court of competent jurisdiction and is thereby a bar to your claim, then you shall pay the Company's reasonable costs and attorney's fees pertaining to the investigation and defense of such action or proceeding. g. Nothing contained herein shall be deemed to release or discharge any claim based upon a breach of this Agreement. 9. This Agreement shall be binding on the parties and upon their heirs, administrators, representatives, executors, successors and assigns and shall inure to their benefit and to that of their heirs, administrators, representatives, executors, successors and assigns. 10. On or before December 22, 2002 you will return all of the Company's property in your possession including, but not limited to, things such as financial documents, business models, contracts, customer lists, mailing lists, account information, price lists and pricing information and all of the tangible and intangible property belonging to the Company and relating to your employment with the Company. You further represent and warrant that you have not retained any copies, electronic or otherwise, of such property. 11. You will cooperate fully, at reasonable times and places, with the Company in its defense of or other participation in any administrative, judicial or other proceeding arising from any charge, complaint or other action that has been or may be filed. Out-of-pocket expenses you may incur in connection with the foregoing shall be reimbursed by the Company. In addition, should efforts on your part in connection with this paragraph exceed a total of one (1) business day, then your services thereafter shall be compensated at a reasonable per diem rate. 12. You warrant and represent that you have not filed any complaint, action or any other matter nor initiated any proceeding with any administrative or regulatory body on either a municipal, state or federal level. 13. You and the Company agree that neither will make any comments relating to the other or, in your case, the Company's employees or directors which are critical, derogatory to the other or which may tend to injure the business of the other, to anyone outside of the senior management and directors of the Company, unless required by law or in connection with any action or proceeding to enforce this Agreement. 14. In the event either party materially breaches any of his or its obligations under this Agreement (subject to Paragraph 8(d)), including specifically Paragraph 13 above, any outstanding obligations of the non-breaching party hereunder shall immediately terminate and, in your case any payments previously made to you pursuant to Paragraph 3 shall be returned to the Company (other than loan repayment). 15. You also acknowledge that you have been informed pursuant to the federal Older Workers Benefit Protection Act of 1990 that: a. You have the right to consult with an attorney before signing this Agreement. You have been represented by Ira Sessler, Esq, and Maury Josephson, Esq. and you are satisfied with the advice and counsel they have provided you; b. You do not waive rights or claims under the federal Age Discrimination in Employment Act that may arise after the date this waiver is executed; c. You have had twenty-one (21) days to consider this Agreement; and d. You have seven (7) days after signing this Agreement to revoke the Agreement, and the Agreement will not be effective until that revocation period has expired. 16. The provisions of this Agreement are severable. If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision. 17. This Agreement sets forth the entire agreement between you and the Company and supersedes any and all prior oral or written agreements or understandings between you and the Company concerning the subject matter of this Agreement. This Agreement may not be altered, amended or modified, except by a further written document signed by you and the Company. 18. Each party agrees that at any time, and from time to time, before and after the consummation of the transactions contemplated by this Agreement, it will do all such things and execute and deliver all such other agreements, instruments and other documents and other assurances, as the other party or its counsel reasonably deems necessary or desirable in order to carry out the terms and conditions of this Agreement and the transactions contemplated hereby or to facilitate the enjoyment of any of the rights created hereby or to be created hereunder. 19. The validity, interpretation, construction and performance of this Agreement shall be governed by, and construed in accordance with, the applicable laws of the United States of America and the laws of the State of New York applicable to contracts made and performed in such State and, in any event, without giving effect to any choice or conflict of laws provision or rule that would cause the application of domestic substantive laws of any other jurisdiction. 20. You represent that you fully understand your right to review all aspects of this Agreement with an attorney of your choice, that you have had the opportunity to consult with an attorney of your choice, that you have carefully read and fully understand all the provisions of this Agreement and that you are freely, knowingly and voluntarily entering into this Separation Agreement and General Release. If you are willing to enter into this Agreement, please signify your acceptance in the space indicated below, and return to me. As I noted earlier, this Agreement will not become effective until seven (7) days after the date you sign this Agreement. PLEASE READ CAREFULLY. YOU ARE GIVING UP ANY LEGAL CLAIMS THAT YOU HAVE AGAINST THE COMPANY BY SIGNING THIS AGREEMENT. Very truly yours, ---------------- Patrick W. Jeffries Chairman of the Board Accepted and agreed to on this ____ day of ____________, 2002 ------------------- John Prufeta
Source: OneCLE Business Contracts.