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September 8, 1999 WellPoint Pharmacy Management 4553 La Tienda Drive Thousand Oaks, CA 91362 Attention: Michael Nameth, General Manager Re: Binding Letter of Intent for Pilot and Production Programs Ladies and Gentlemen: This letter summarized the proposed terms for the implementation of a pilot program (the "Pilot Program") by Professional Claims Services, Inc., doing business as WellPoint Pharmacy Management ("WPM"), for the introduction of the pharmacy management component (the "RX Software") of Cymedix.com, a proprietary software product (the "Software") developed by Cymedix Lynx Corporation ("Cymedix"), and the integration of the RX Software with the data systems of WPM and providers identified by WPM ("Pilot Providers"). This letter also summarizes the general terms of the production programs (the "Production Programs") that WPM will assist Cymedix in implementing with WellPoint (Blue Cross of California and Unicare) and other health plans (collectively, the "Health Plans"), with the intent to expand the product and product applications among other physicians and industry service providers under contract with the Health Plans. Objective of the Pilot Program. The Pilot Program will establish an electronic communication link between WPM and the Pilot Providers, enabling WPM to evaluate the viability of the link and the value of the RX Software to the Health Plans and determine whether to seek further participation by Health Plans in the introduction of the Software pursuant to the Production Programs. Objective of the Production Programs. Each Production Program will establish an electronic communication link for use of the Software by the Health Plan, WPM and the providers under contract with the Health Plan ("Production Providers"). Overview of Cymedix.com. As discussed with representatives of WPM, the Software employs Internet technology to enable industry participants to effectively communicate vital medical, financial and administrative information over the Internet on a secure basis. The Software is designed to allow users to expedite standard administrative transactions, simplify communications, improve patient care and reduce the cost of that care. Because of the Software's modular architecture, health plan insurers sponsoring the implementation of Cymedix.com with their participating physicians and industry service providers can elect to introduce specific functionality modules of the Software ("Modules") in phases. Cymedix represents and warrants that the Software, as installed for the Pilot Program and, if implemented, the Production Providers, will meet or exceed the requirements for encryption of authentications and identifications as set forth in the HCFA Internet Security Policy issued on November 24, 1998. Pilot Procedures. During the period of up to 30 days following your acceptance of this proposal, representatives of Cymedix and WPM will exchange relevant information and confer on a regular basis to develop more definitive terms and conditions for the Pilot Program , with a view to completing a detailed document describing the Pilot Program (the "Pilot Agreement") by the end of the period and commencing installation procedures immediately thereafter. The Pilot Agreement will set forth objective criteria for determining the success of the Pilot Program (the "Pilot Criteria"). Pilot Objectives and Issues. In developing the Pilot Agreement, the objective of the parties will be to identify the intended scope and parameters of the Pilot Program and resolve the following issues: o Applications - Identification of specific applications to be tested during the Pilot Program o Pilot Participants - Confirmation and consent of the Pilot Providers and identification of responsible personnel in each organization o System Analysis - Completion of technical analysis (hardware, software and platforms) for WPM and each Pilot Provider o Tasks - Identification of specific tasks necessary for implementation and management of the Pilot Program and assignment of personnel responsible for each task, including WellPoint's best efforts to complete the information system issues outlined in Schedule A o Systems Modifications - Identification of any additional hardware requirements, technical development or software programming needed for completion of tasks o Scheduling - Specification of time frames anticipated for completion of each task Summary of the Pilot Program. At the commencement of the Pilot Program, the RX Software will be installed by Cymedix on site at the Pilot Providers. Arrangements for installation and utilization of the RX Software at the Pilot Providers will be made by WPM, which will use its best efforts to obtain the cooperation of the appropriated personnel at tall Pilot Provider organizations. Cymedix will make its technical personnel available to assist in installing and testing of the RX Software, which will initially be limited to the pharmacy management applications to be specified in the Pilot Agreement. The Pilot Program will be conducted for a period specified in the Pilot Agreement, not to exceed five months (the "Pilot Period"). At any time during the Pilot Period, additional Modules may be added if agreed upon by WPM and Cymedix. At the end of the Pilot Period, if the Pilot Criteria are satisfied, WPM will assist Cymedix in securing definitive agreements with Health Plans for the implementation of Production Programs (the "Production Program Agreements"). It is anticipated that the Production Program Agreements will provide for terms ending no earlier than December 31, 2000, with automatic annual renewal terms subject to termination by the Health Plans only upon 60 days' notice prior to the end of the current term. Documentation for the Pilot Program. It is anticipated that the Pilot Agreement will cover the following points in addition to those addressed elsewhere in this letter: o Personnel - Identification of technical and business contact personnel at each organization participating in the Pilot Program o Marketing - Specifications for sharing of sales and marketing expenses and responsibilities o Technical Map - Specification of installation tasks and requirements, including any requirements by WPM for Software customization o Scheduling - Specification of time frames and target completion dates for each identified task o Budgeting - Memorialization of any cost sharing arrangements for the Pilot Program o Transaction Fees - Specification of transaction fees to apply during the Pilot Period Fees for the Production Programs. During the continuation of each Production Program, Cymedix intends to invoice the Health Plan for a monthly fee equal to the greater of (a) $100 for each Production Provider location covered thereunder or (b) the total of all transactions by those Production Providers at $.50 per transaction (collectively, the "Production Fee Target"). Revenue Sharing. If WPM agrees to utilize Cymedix as it preferred Internet transaction service provider, Cymedix will provide WPM with 40% of the revenue received by Cymedix for each completed Production Program transaction with a Health Plan affiliated (by ownership) with WPM's parent company and 25% of the revenue for all Production Program transactions with other (nonaffiliated) Health Plans referred by WPM. These sharing arrangements will be contingent on achieving the Production Fee Target. If transaction fees are negotiated below the Production Fee Target for any reason, the foregoing sharing rations will be reduced to 20% for affiliated Health Plans and 12.5% for nonaffiliated Health Plans. Cymedix will make these payments monthly within 15 days after receiving revenues from invoiced transactions. WPM Warrants. Upon your acceptance of this proposal, Medix Resources, Inc., the parent company of Cymedix ("Medix"), will issue to WPM five-year warrants (the "Warrants") to purchase up to 6,000,000 shares of Medix common stock (the "Warrant Shares") a the exercise prices set forth below. The number of warrants available to WellPoint will be equal to 19.9%, on a fully diluted basis calculated as of the date of issuance, of the total number of outstanding shares of Medix common stock. The warrants will contain customary antidilution provisions for extraordinary transactions and issuance of stock below fair market value. The Warrants will be transferable in whole or in part only to affiliates of WPM and will vest incrementally as follows: Number of Warrant Shares Exercise Price Vesting Event --------------- -------------- ------------------------------------------------ 1,000,000 $ .30 Completion by WPM of tasks set forth on Schedule A hereto 1,000,000 .30 Execution of the Pilot Agreement by WPM and Cymedix 1,000,000 .30 25,000 total Providers in the Production Programs 1,000,000 .50 50,000 total Providers in the Production Programs 1,000,000 .50 75,000 total Providers in the Production Programs 1,000,000 .50 100,000 total Providers in the Production Programs Board Seats. Medix will nominate a WellPoint designee for membership on its Board of Directors. Confidentiality. The parties acknowledge that their discussions and implementation of the Pilot Program may entail the exchange of confidential information, including technical specifications for the Software and information about business methods, operations and prospects, costs, markets, pricing policies, technical processes and applications and confidential patient records ("Information"). Each party agrees that, subject to the exceptions set forth below, for five years after the date hereof, it will (a) keep all Information confidential, (b) refrain from disclosing any Information to any person or firm, other their respective employees and agents having a need to know and (c) refrain from using any Information, directly or indirectly, for its own benefit or the benefit of any affiliate. For purposes of this undertaking, Information shall not include information that (a) is in the public domain at the time of disclosure to a party, (b) becomes part of the public domain after disclosure to a party through no fault, act or failure to act, error or breach of this undertaking by the recipient, (c) is known to the party at the time of disclosure, (d) is discovered by the party independently, (e) is required by order, stature or regulation of any government authority to be disclosed to any court or other body, provided that the party shall notify the other party thereof to provide or afford it the opportunity to obtain a protective order or other relief, or (f) is obtained from a third party who has acquired a legal right to disclose the specific information. In addition to any other remedies for breach of the foregoing confidentiality undertakings, the parties will be entitled to equitable relief in the event of any breach or threatened breach thereof. In the event of litigation relating thereto, the prevailing party shall be entitled to recover the reasonable legal fees incurred in connection therewith, including any appeal therefrom. Publicity. Neither party shall use the name of the other party in any marketing, advertising or other public announcement about the subject matter of this letter without the other party's written consent. A party desiring to make a public disclosure shall submit a draft thereof for prior approval by the other party, which will use its best efforts to provide comments thereon within 48 hours. We appreciate the opportunity to work with you on this project. Please acknowledge your acceptance of this letter of intent on the foregoing terms by countersigning a copy of this letter in the space provided and returning the countersigned copy to us. Sincerely yours, CYMEDIX LYNX CORPORATION MEDIX RESOURCES, INC. By:/s/John P. Yeros By:/s/John P. Yeros John P. Yeros, John P. Yeros, Chief Executive Officer Chief Executive Officer AGREED TO AND ACCEPTED This 8th day of September, 1999 PROFESSIONAL CLAIMS SERVICES, INC. By:/s/Michael Nameth Michael Nameth General Manager Schedule A Initial Pilot Tasks for WellPoint Pharmacy Management WellPoint Pharmacy Management ("WPM") will be responsible for completing the following tasks as soon as practicable after acceptance of the accompanying letter agreement. Capitalized terms used in this Schedule A and not otherwise defined shall have the respective meanings ascribed to them in the letter of intent. 1. WPM will provide a secured, non-dial up Internet access to the Cymedix host PC located on site at WPM, within WellPoint security policy. 2. WPM will replace current pilot equipment from Cymedix with equivalent or better equipment to serve as the WPM PC and Cymedix host PC dedicated to the Pilot Program. 3. WPM and Cymedix will create a task plan (Project Plan) outlining the remaining information systems issues to be resolved for the Pilot and Production Programs. Both parties will work together to resolve those issues to meet the time schedule and responsibilities outlined in the Project Plan.