Exhibit 10.1
EMPLOYMENT SEPARATION AGREEMENT
     This EMPLOYMENT SEPARATION AGREEMENT (this “Agreement”) is made by and
between Healthaxis, Ltd., a Texas limited partnership (the “Company”) and an
indirect wholly owned subsidiary of HealthAxis Inc., a Pennsylvania corporation
(the “Parent”), and Lawrence F. Thompson (“Thompson”), as of the 10th day of
March, 2008.
     WHEREAS, Healthaxis and Thompson are parties to that certain Employment
Agreement dated as of May 13, 2005, as amended by that Certain First Amendment
to Employment Agreement dated as of April 20, 2007 (collectively, the
“Employment Agreement”) which sets forth, among other things, the terms and
conditions pursuant to which Healthaxis or its successor will continue to employ
Thompson and/or the amount of certain payments that would be made to Thompson
upon certain events;
     WHEREAS, the Company and Thompson have mutually agreed to terminate the
Employment Agreement and Thompson’s employment with the Company on the terms
provided in this Agreement.
     NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Healthaxis and Thompson do hereby agree as follows:
1. Termination of Employment Agreement and Thompson’s Employment. The Company
and Thompson hereby agree that effective as of March 10, 2008, the Employment
Agreement is terminated and shall be of no further force or effect, and this
Agreement shall hereafter govern the relative rights, duties and obligations of
the parties. In addition, effective as of March 15, 2008 (the “Termination
Date”), Thompson’s employment with the Company is hereby terminated by mutual
agreement. Following the Termination Date, Thompson will cooperate with the
Company regarding outstanding business opportunities or issues to the extent
reasonably requested by the Company.
2. Severance and Other Post-Termination Payments and Rights. Thompson will
receive his normal base salary through the Termination Date, and a maximum of 80
hours of accrued but unused vacation pay per the standard vacation policy. In
addition, Thompson will be entitled to receive the following additional
post-termination payments and benefits:
(a) Severance Pay. Thompson will be paid a total of $100,000 in severance
payable in twelve (12) equal semi-monthly installments of $8,333.33 beginning on
March 31, 2008, and continuing thereafter on the 15th and the last day of each
month through the final payment date on September 15, 2008. These severance
payments will be subject to normal tax withholding and for Thompson’s portion of
the medical/dental benefits to the extent continued under Subsection 2(c) below.
Upon Thompson’s execution and delivery to human resources of the appropriate
election form, 401(k) plan deductions will no longer be made;
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(b) Final Commission Payment. On March 31, 2008, Thompson will receive a final
commission payment of $9,375 (subject to normal tax withholding). This
negotiated payment amount shall be final, and is in lieu of any other
post-termination commissions and/or accrued but unpaid minimum guaranteed
commission or bonus due or to become due under the Employment Agreement and/or
the Company’s sales compensation plan. Thompson expressly acknowledges and
agrees that no other past or future bonuses or commissions are owed to him or
will be claimed by him on any basis.
(c) Benefits Continuation. The following benefits will be continued until the
first to occur of either (x) six (6) months from the Termination Date, or
(y) the date Thompson becomes eligible for a similar benefit offered through a
subsequent employer:
(i) Health and Dental Insurance. To the extent permitted by the specific benefit
plan, Thompson will continue to be covered under the Company’s health and dental
plans to the extent of coverage on the Termination Date, and subject to the
normal withholding for an amount equal to the standard “employee contribution
amount” for the benefit coverage selected. To the extent the benefit plan does
not permit the Company to continue the coverage by virtue of Thompson no longer
being an employee, then Thompson may elect to continue coverage under COBRA and
the Company will reimburse Thompson for the amount of the COBRA premium that
exceeds the standard “employee contribution amount” for the benefit coverage
selected; and
(ii) Life & AD&D Insurance. To the extent permitted by the specific benefit
plan, Thompson will continue to be covered under the Company’s basic life
insurance and accidental death and dismemberment plans to the extent of coverage
on the Termination Date at the Company’s cost. Thompson does not subscribe for
any supplemental life coverage. To the extent the benefit plan does not permit
the Company to continue the coverage by virtue of Thompson no longer being an
employee, then the coverage will not be continued beyond the Termination Date.
All other benefits will terminate in accordance with standard policies and
practices as of the Termination Date. For example, Company matching
contributions in the 401(k) plan will not be made on final commission payment,
severance or other post termination payments.
(d) Stock Options. Thompson currently holds 50,000 stock options issued pursuant
to the Healthaxis Inc. 2000 Stock Option Plan with an exercise price of $1.80
per share. These options have previously fully vested. Consistent with the
original Employment Agreement and the original option award, these options shall
remain outstanding according to the original terms and shall be exercisable for
a period of thirty-six (36) months after the Termination Date.
(e) Restricted Stock. Thompson currently holds 41,000 shares of restricted stock
issued pursuant to the Healthaxis Inc. 2005 Stock Incentive Plan, of which 6,250
shares have previously vested. Consistent with the original Employment Agreement
and the original restricted stock award, all of the remaining 34,750 shares of
restricted stock will become fully vested as of the Termination Date, and
Thompson shall make a tax election regarding this vesting in accordance with the
Company’s standard procedure.
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(f) Final Expenses. Thompson shall be entitled to reimbursement for all Company
business expenses incurred in the normal course prior to the Termination Date.
In addition, the Company will reimburse Thompson for (x) his local apartment
rent for the months of April through June 2008, (y) his local auto lease for the
months of April through May 2008, plus ordinary and reasonable lease termination
fees, and his local furniture lease for the months of April through May 2008.
The standard March 2008 living expense reimbursement will also apply. Thompson
shall be solely responsible for giving adequate written notice of termination of
each of these leases, and the Company will not be responsible for rents, lease
payments, fees or expenses except as expressly provided above related to these
leases or any other personal contractual obligations of Thompson. The Company
will also reimburse Thompson’s airfare and reasonable living expenses incurred
for up to two (2) additional trips to Dallas from his home in California to wind
up his local affairs after his regular commute on March 14, 2008. All requests
for reimbursement shall be submitted according to the Company’s current expense
reimbursement practices. To the extent any of these expense reimbursements are
taxable to Thompson, then the standard tax gross up amount will also be paid
consistent with past practices.
(g) Cell Phone. Thompson’s cell phone and existing number will be transferred
into a personal account in Thompson’s name. The Company will cooperate with
Thompson in attempting to transfer the account on or before April 15, 2008.
3. Non-Compete. In consideration of the Company’s obligations and payments to be
made under Section 2 above, Thompson hereby agrees that during the period
beginning on the Termination Date and ending twelve (12) months thereafter (the
“Covered Time”), Thompson will not compete with the business of the Company. For
purposes hereof, “competition” shall mean any engaging, directly or indirectly,
in the “Covered Business” (as hereinafter defined) in any state of the United
States of America (the “Covered Area”). For purposes of this Agreement, “Covered
Business” shall mean providing health insurance administration and claims
processing systems and front-end claim scanning and data capture systems and
services to the Healthcare payer market consisting of insurance companies and
third party administrators. For purposes of this Section 3, the phrase
“engaging, directly or indirectly” shall mean engaging directly or having an
interest, directly or indirectly, as owner, partner, shareholder, agent,
representative, employee, officer, director, independent contractor, capital
investor, lender, renderer of consultation services or advice or otherwise
(other than as the holder of less than 2% of the outstanding stock of a
publicly-traded corporation), either alone or in association with others, in the
operation of any aspect of any type of business or enterprise engaged in the
Covered Business. The Company acknowledges and agrees that nothing contained in
this Agreement shall be construed to prohibit Thompson from performing the
following business, activities, functions, or services during the Covered Time
(a) As an independent consultant to third party administrators, technology
vendors or insurance payers in a manner substantially the same as Thompson
engaged in immediately prior to joining the Company on June 1, 2005;
(b) Owning, operating or employed by a third party administrator, insurance
company, stop loss company, insurance agency, consulting firm, or other
insurance enterprise; or
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(c) Employment with any technology or services vendor that provides systems or
services that are ancillary to or used in combination with core claims,
administration and front end services.
     Thompson understands that the provisions of this Section 3 may limit his
ability to earn a livelihood in a business similar to the business of the
Company but nevertheless agrees and hereby acknowledges that the restrictions
and limitations thereof are reasonable in scope, area, and duration, are
reasonably necessary to protect the goodwill and business interests of the
Company, and that the consideration provided under this Agreement is sufficient
to justify the restrictions contained in such provisions. Accordingly, in
consideration thereof and in light of the Thompson’s education, skills and
abilities, Thompson agrees that he will not assert that, and it should not be
considered that, such provisions are either unreasonable in scope, area, or
duration, or will prevent him from earning a living, or otherwise are void,
voidable, or unenforceable or should be voided or held unenforceable.
4. Non-Solicitation. In consideration of the Company’s obligations and payments
to be made under Section 2 above, Thompson hereby agrees that during the Covered
Time, he shall not (i) directly or indirectly solicit or attempt to solicit any
of the employees, agents, independent contractors, or representatives of the
Company or its affiliates to leave any of such entities; or (ii) directly or
indirectly solicit or attempt to solicit any of the employees, agents,
independent contractors or representatives of the Company or its affiliates to
become employees, agents, representatives or independent contractors of any
other person or entity.
5. Protection of Confidential Information; Non-Disparagement. Thompson shall
hold in a fiduciary capacity for the benefit of the Company all confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which was obtained by Thompson
during the his employment by the Company. Thompson agrees that he will not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it, or
otherwise use or exploit such information on behalf of himself or any third
party. Thompson and the Company agree that each will not make any public or
private statements, comments, or communications about each other, including the
Company or its officers, directors or employees, that could constitute
disparagement or that may be considered to be derogatory or detrimental to the
good name or business reputation of Thompson or the Company or such officers,
directors or employees.
6. Enforcement. Thompson agrees that the covenants and undertakings contained in
Sections 3, 4 and 5 of this Agreement relate to matters which are of a special,
unique and extraordinary character and that the Company may not be reasonably or
adequately compensated in damages in an action at law in the event Thompson
breaches any of these covenants or undertakings. Therefore, Thompson agrees that
the Company shall be entitled, as a matter of course, without the need to prove
irreparable injury, to an injunction, restraining order or other equitable
relief from any court of competent jurisdiction, restraining any violation or
threatened violation of any of such terms by Thompson and such other persons as
the court shall order. Thompson agrees to pay costs and legal fees incurred by
the Company in obtaining such injunction. Rights and remedies provided for in
this Section 6 are cumulative and shall be in addition to rights and remedies
otherwise available to the parties under any other agreement or applicable law.
In the event that any provision of this Agreement shall to any extent be held
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invalid, unreasonable or unenforceable in any circumstances, the parties hereto
agree that the remainder of this Agreement and the application of such provision
of this Agreement to other circumstances shall be valid and enforceable to the
fullest extent permitted by law. If any provision of this Agreement, or any part
thereof, is held to be unenforceable because of the scope or duration of or the
area covered by such provision, the parties hereto agree that the court or
arbitrator making such determination shall reduce the scope, duration and/or
area of such provision (and shall substitute appropriate provisions for any such
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law, and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced. The
parties hereto recognize that if, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants contained in this Agreement,
then that unenforceable covenant contained in this Agreement shall be deemed
eliminated from these provisions to the extent necessary to permit the remaining
separate covenants to be enforced. In the event that any court or arbitrator
determines that the time period or the area, or both, are unreasonable and that
any of the covenants is to that extent unenforceable, the parties hereto agree
that such covenants will remain in full force and effect, first, for the
greatest time period, and second, in the greatest geographical area that would
not render them unenforceable.
     7. Mutual Release. In consideration of the covenants and agreements
contained herein, including the Company’s obligations and payments to be made
under Section 2 above, Thompson on behalf of himself, and his respective heirs,
executors, administrators, affiliates, successors and assigns, hereby releases,
acquits, and forever releases and discharges the Company and the Parent and each
of their former and present agents, directors, officers, stockholders,
employees, servants, parent, affiliates, owners, subsidiaries, divisions,
successors, predecessors and assigns (all such entities and individuals
hereinafter collectively referred to as the “Released Parties”) of and from any
and all claims, actions, causes of action, demands, rights, damages, debts,
compensation, costs, or other expenses, including without limitation attorneys’
fees, of any nature whatsoever, whether known or unknown, which Thompson ever
had, now has, or which he, his heirs, executors, administrators, successors and
assigns hereafter can, shall or may have against the Released Parties arising
out of any matter, cause, acts, conduct, claims or events, including but not
limited to, each and every claim, demand or cause of action which Thompson ever
had or now has arising out of the Employment Agreement or Thompson’s association
or employment with Released Parties, as an employee, officer, independent
contractor or consultant, or the cessation thereof, and any written or oral
representations made to Thompson thereby, and any federal, state, or local
statute, rule, regulation or principle of common law, including, but not limited
to, any claims under Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. §§ 2000e et seq.; the Age Discrimination in Employment Act (and Older
Worker Benefits Protection Act), as amended, 29 U.S.C. §§ 621 et seq.; the
Americans with Disabilities Act, 42 U.S.C. §§ 12101 et seq.; the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq.;
or under any other federal, state or local statute, rule or regulation or
principle of employment or contract law.
     Thompson acknowledges and agrees that he has had an opportunity to
participate in and review all strategic discussions and activity of the Company
and the Parent regarding their exploration of strategic alternatives and that he
has made the decision to proceed to enter into this Agreement at this time
without reliance on any representation or warranty by the Released Parties
regarding the status or likely outcome or timing of the ongoing strategic
activities.
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Thompson also acknowledges and agrees that he has no right to participate in any
executive compensation plan or equity awards for 2008 that may be approved on or
after the Termination Date. Thompson agrees that the release contained in this
Section 7 includes a full release of any and all claims actions, causes of
action, demands, rights, damages, compensation, or other benefits that Thompson
may now or hereafter have or claim to have arising out of or based on the
relative timing of the entry into this Agreement with the timing of the
consummation of a strategic transaction by the Released Parties or the
establishment or approval of any compensation plan or equity awards to Company
executives for 2008.
     In consideration of the covenants and agreements contained herein, the
Company on behalf of itself and all its affiliates constituting the Released
Parties, and their successors and assigns, hereby releases, acquits, and forever
releases and discharges Thompson of and from any and all claims, actions, causes
of action, demands, rights, damages, debts, compensation, costs, or other
expenses, including without limitation attorneys’ fees, of any nature
whatsoever, whether known or unknown, which any such parties ever had, now has,
or which they or their successors and assigns hereafter can, shall or may have
against Thompson arising out of any matter, cause, acts, conduct, claims or
events, including but not limited to, each and every claim, demand or cause of
action which they ever had or now has arising out of the Employment Agreement or
Thompson’s association or employment with Released Parties, as an employee,
officer, independent contractor or consultant, or the cessation thereof, and any
written or oral representations made to them by Thompson, and any federal,
state, or local statute, rule, regulation or principle of common law or
regulation or principle of employment or contract law.
     Nothing contained in this Section 7 shall release, acquit, or discharge any
claims, actions, causes of action, demands, rights, damages, debts,
compensation, costs, or other expenses, including without limitation, attorneys’
fees, arising out of or relating to this Agreement.
8. Successors. This Agreement is personal to Thompson and without the prior
written consent of the Company shall not be assignable by Thompson otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Thompson’s legal representatives. This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and/or the Parent
to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
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9. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Thompson:
Lawrence F. Thompson
8282 N Fourth Street
Fresno CA 93720
With a copy to:
Brian J. Stack, Esq.
Stack Fernandez Anderson & Harris P.A.
1200 Brickell Avenue, Suite 950
Miami, Florida 33131
If to the Company:
Healthaxis, Ltd.
7301 N. State Highway 161, Suite 300
Irving, Texas 75039
           Attention: President
With Copy to:
Healthaxis, Inc.
7301 N. State Highway 161, Suite 300
Irving, Texas 75039
           Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
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(c) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(d) Waiver. Thompson’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right Thompson
or the Company may have hereunder shall not be deemed to be a waiver of such
provision or right under this Agreement, unless such waiver is expressly made in
writing signed by the party waiving its right hereunder.
(e) Entire Agreement. Thompson and the Company acknowledge that this Agreement
constitutes the entire agreement between them and shall supersede any other
agreement between the parties with respect to the subject matter hereof.
     IN WITNESS WHEREOF, the parties are executing this Agreement to be
effective as of the day and year first above written.

            THOMPSON:
      /s/Lawrence F. Thomspon       Lawrence F. Thompson             
HEALTHAXIS:

Healthaxis, Ltd.
      By:   /s/John M. Carradine         John M. Carradine        Its: President
& CEO     

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