Exhibit 10.1

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

This Settlement Agreement and Mutual Release (“Settlement Agreement”) is made as
of this 31st day of July, 2006, by and between Prescient Applied Intelligence,
Inc., a Delaware corporation (“Prescient”), TAK Investments, LLC., a Delaware
limited liability company, and Healthcare BPO Partners, a Texas limited
partnership (“Healthcare BPO”). Unless otherwise stated herein or the context
otherwise requires, TAK Investments, LLC and Healthcare BPO are hereinafter
referred to as “TAK”.

RECITALS

WHEREAS, TAK Investments, LLC, Prescient and certain holders of Prescient’s
Series F Preferred Stock entered into a Common Stock and Warrant Purchase
Agreement, dated as of May 4, 2005 (“Purchase Agreement”), whereby TAK
Investments, LLC purchased, for and in consideration for the payment to
Prescient of a total of $2.25 million, a total of 5,117,976 shares of Common
Stock of Prescient (“Original Shares”), and Warrants to purchase 1,534,091
shares of Common Stock (“Original Warrant”);

WHEREAS, concurrent with the execution of the Purchase Agreement, Prescient and
Healthcare BPO, an affiliate of TAK Investments, LLC, entered into a Remote
Outsourcing Agreement, dated as of May 4, 2005 (the “Outsourcing Agreement”),
pursuant to which Healthcare BPO agreed to provide certain outsourcing services
to Prescient;

WHEREAS, as a result of Prescient’s inability to complete a subsequent equity
financing, Prescient issued, under the terms of the Purchase Agreement, an
additional 5,113,636 shares of Common Stock to TAK Investments, LLC (“Additional
Shares”), and lowered the exercise price of the Original Warrant to $0.50 per
share;

 

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WHEREAS, a dispute has arisen between Prescient, and TAK with respect to the
Outsourcing Agreement, among other issues;

WHEREAS, Prescient and Tak have agreed to the resolution of such dispute as more
fully set forth herein, which resolution requires the approval of 2/3 of the
issued and outstanding Series E preferred shares, par value $.001, of the
Company (the “Series E Approval”).

NOW, THEREFORE, in order to fully and finally resolve their disputes, and in
consideration of the mutual promises, covenants, and conditions herein
contained, Prescient and TAK agree as follows:

AGREEMENT

1. Exchange of Documents. Effective upon the execution of this Settlement
Agreement by all parties and the Series E Approval, Prescient shall deliver to
TAK (i) a Promissory Note, in a principal amount which shall be $2,547,980 if
such Promissory Note is executed and delivered on August 1, 2006 and which
principal amount will increase by $432 dollars every day thereafter until such
Promissory Note is executed and delivered, a form of which is attached hereto as
Exhibit A (the “Note”); (ii) a Security and Subordination Agreement, a form of
which is attached hereto as Exhibit B (the “Security Agreement”); and (iii) a
Common Stock Purchase Warrant, a form of which is attached hereto as Exhibit C
(the “Warrant”), and TAK shall deliver to Prescient (y) certificates
representing the Original Shares and the Additional Shares; and (z) the Original
Warrant.

 

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2. Termination of Purchase Agreement and Outsourcing Agreement. Effective upon
the Series E Approval and the execution of this Settlement Agreement and
delivery of the documents set forth in Section 1 above, the Purchase Agreement
and Outsourcing Agreement shall terminate and be of no further force and effect;
provided, however, nothing in this Settlement Agreement shall affect the rights
and obligations of any other parties to the Purchase Agreement. As a result of
the foregoing, neither party to this Settlement Agreement shall have any
obligation or liability to the other under the terms of the Purchase Agreement
or Outsourcing Agreement.

3. Termination of Original Shares and Original Warrant. The parties agree and
acknowledge that upon the delivery, and as a result of such delivery, to
Prescient by TAK of certificates representing the Original Shares and the
Additional Shares, and the Original Warrant, TAK shall have no rights as a
shareholder of Prescient, based on ownership of the Original Shares, the
Additional Shares, or rights under the Warrant, and the Original Shares,
Additional Shares and Original Warrant shall be cancelled on the books and
records of Prescient, and the same may be maintained by the transfer agent for
Prescient’s issued shares of Common Stock.

4. Release by TAK. Upon the i) Series E Approval and ii) the execution by
Prescient and delivery to Tak of this Settlement Agreement, the Note, the
Security Agreement and the Warrant (collectively, the “Settlement Documents”),
TAK shall release and forever discharge Prescient and each of its parents,
subsidiaries, affiliates, predecessors, successors, past and present officers,
directors, and employees (in their representative capacities on behalf of
Prescient), and assigns from all claims, damages, actions, obligations,
attorneys fees, indemnities, subrogations, duties, demands, controversies and
liabilities of every nature, at law and equity, whether known or unknown,
suspected or unsuspected, whether arising out of, or in

 

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connection with the Purchase Agreement, the Outsourcing Agreement, or otherwise
(hereinafter the “TAK Claims”), except that the Tak Claims shall not include any
claims, damages, actions, obligations, attorneys fees, indemnities,
subrogations, duties, demands, controversies or liabilities arising out of or in
connection with the Settlement Documents. Except insofar as may be necessary to
enforce its rights pursuant to the Settlement Documents, TAK covenants with
Prescient that it will forever refrain from instituting, pursuing or in any way
asserting in any jurisdiction, federal, state or local, foreign or domestic, any
TAK Claim which exists or has existed or may hereafter exist, and that the
Settlement Documents constitute a full and complete defense to any such claim,
demand, action or other proceeding which may be brought by or on behalf of TAK.

5. Release by Prescient: Upon the i) Series E Approval and ii) the execution by
Tak and delivery to Prescient of the Settlement Documents, Prescient shall
release and forever discharge TAK and each of its parents, subsidiaries,
affiliates, predecessors, successors, past and present officers, directors,
members and employees (in their representative capacities on behalf of TAK), and
assigns from all claims, damages, actions, obligations, attorneys fees,
indemnities, subrogations, duties, demands, controversies and liabilities of
every nature, at law and equity, whether known or unknown, suspected or
unsuspected, whether arising out of, or in connection with, the Purchase
Agreement, the Outsourcing Agreement or otherwise (hereinafter the “Prescient
Claims”), except that the Prescient Claims shall not include any claims,
damages, actions, obligations, attorneys fees, indemnities, subrogations,
duties, demands, controversies or liabilities arising out of or in connection
with the Settlement Documents. Except insofar as may be necessary to enforce its
rights pursuant to the Settlement Agreements, Prescient covenants with TAK that
it will forever refrain from instituting, pursuing or in any way asserting in
any

 

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jurisdiction, federal, state or local, foreign or domestic, any Prescient Claim
which exists, has existed or may hereafter exist, and that the Settlement
Documents constitute a full and complete defense to any such claim, demand,
action or other proceeding which may be brought by or on behalf of Prescient.

6. Mutual Representations, Covenants and Warranties: Each of the parties to this
Settlement Agreement represents, warrants and agrees as follows:

(a) Each party has received independent legal advice from its attorneys with
respect to each of the matters contained herein, including the advisability of
making the settlement provided for herein, and the advisability of executing
this Settlement Agreement.

(b) No party (nor any officer, agent, partner, employee, representative, or
attorney of or for any party) has made any statement or representation to any
other party regarding any fact relied upon in entering into this Settlement
Agreement, and no party is relying upon any statement, representation or promise
of any other party (or of any officer, agent, employee, representative, or
attorney for any other party) in executing this Settlement Agreement, except as
expressly stated in this Settlement Agreement.

(c) Each party to this Settlement Agreement has made such investigation of the
facts pertaining to this settlement and this Settlement Agreement and of all the
matters pertaining thereto as it deems necessary.

(d) Each party or responsible officer or agent thereof has read this Settlement
Agreement and understands the contents hereof.

 

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(e) Each term of this Settlement Agreement is contractual and not merely a
recital.

(f) Each of the parties is aware that it may hereafter discover claims or facts
in addition to or different from those it now knows or believes to be true with
respect to the matters referenced in this Settlement Agreement. Nevertheless, it
is the intention of the parties to fully, finally and forever settle and release
the TAK Claims and the Prescient Claims described herein. In furtherance of such
intention, the releases given herein shall be and remain in effect
notwithstanding the discovery or existence of any additional or different claims
or facts relative thereto.

(g) Each of the parties hereto represents and warrants that there has been no
assignment, sale or transfer, by operation of law or otherwise, of any claim,
right, cause of action, demand, obligation, liability or interest released by
any of them as provided herein.

7. Series E Approval: Prescient covenants and agrees that it shall as soon as
reasonably possible, but in no event later than ten (10) days after the
execution of this Settlement Agreement, give all required notices and complete
all required filings and actions required in order to obtain the Series E
Approval. Prescient agrees to provide TAK a copy of all such filings and notices
promptly after making such filing or delivering such notice.

8. No Adverse Construction: This Settlement Agreement and the releases and other
terms provided for herein are made, executed, given and accepted as part of a
compromise and settlement of disputed claims. No provision(s) of this Settlement
Agreement, nor any acceptance of the benefits thereof, by or on behalf of any of
the parties hereto, shall be construed or deemed to be evidence of an admission
of any fact, matter, thing or liability of any

 

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kind to any other party. Each of the parties hereto denies any liability of any
kind to any other party for any purpose, and this settlement is made solely and
entirely as a compromise and for the purpose of fully and finally resolving the
disputed matters referred to herein. Neither this Settlement Agreement nor any
term(s) hereof shall be offered or received as evidence in any proceeding in any
forum as an admission of any liability or wrongdoing on the part of any of the
parties hereto.

9. Waiver of Costs: Except for those costs already paid by one party to the
other and for up to $100,000 of expenses incurred in connection with the
Outsourcing Agreement as set forth in the Note, each party hereto shall be
responsible for its own attorneys’ fees incurred to date and/or accrued by it in
connection with the matters related hereto and specifically waives any and all
claim(s) against any other party hereto for the recovery of the same.

10. Attorneys Fees: In the event of any litigation arising under or concerning
the enforcement of the Settlement Documents, the prevailing party shall be
entitled to recover attorneys’ fees and costs from the non-prevailing party in
such litigation.

11. Entire Settlement Agreement: This Settlement Agreement and the Settlement
Documents are the entire agreements between the parties with respect to the
subject matter hereof and supersedes any and all prior or contemporaneous oral
and written agreements and discussions between or among any of them. The parties
hereto acknowledge and agree that there are no conditions, covenants, agreements
or understandings between or among any of them except as set forth in this
Settlement Agreement and the Settlement Documents. This Settlement Agreement may
be amended only by a further writing signed by the party to be charged.

 

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12. Governing Law: This Settlement Agreement shall be governed, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of choice of law or conflicts of law.

13. Counterparts: This Settlement Agreement may be signed in counterparts and by
facsimile.

14. Headings: Captions and paragraph headings used herein are for convenience
only and are not a part of this Settlement Agreement. Such headings shall not be
used in construing this Settlement Agreement.

IN WITNESS WHEREOF, this Settlement Agreement and Mutual Release has been
executed by and/or on behalf of the parties as set forth below.

 

DATED: 7/31/06  

PRESCIENT APPLIED INTELLIGENCE, INC.

  By:  

/s/ Jane F. Hoffer

  Its:  

 

DATED: 7/31/06  

TAK INVESTMENTS, LLC

  By:  

/s/ Sharad Tak

  Its:  

 

DATED: 7/31/06  

HEALTHCARE BPO PARTNERS

  By:  

/s/ Sharad Tak

  Its:  

 

 

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