-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IUb1w/xkWZDYpDPxOSPvjRaPVP8xHG/GuSo/vXgQhpl7dkj8oWrmnVZr/hYujgrS yQ1w288b4f40Wsqz5sPO7w== 0000948830-99-000163.txt : 19990403 0000948830-99-000163.hdr.sgml : 19990403 ACCESSION NUMBER: 0000948830-99-000163 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990319 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: E-MEDSOFT COM CENTRAL INDEX KEY: 0000800181 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841037630 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 033-08420 FILM NUMBER: 99585682 BUSINESS ADDRESS: STREET 1: 20750 VENTURA BOULEVARD STREET 2: SUITE 202 CITY: WOODLAND HILLS STATE: CA ZIP: 91364 BUSINESS PHONE: 8187109813 MAIL ADDRESS: STREET 1: 20750 VENTURA BOULEVARD STREET 2: SUITE 202 CITY: WOODLAND HILLS STATE: CA ZIP: 91364 FORMER COMPANY: FORMER CONFORMED NAME: MEDTECH INC DATE OF NAME CHANGE: 19990119 FORMER COMPANY: FORMER CONFORMED NAME: HIGH HOPES INC DATE OF NAME CHANGE: 19920703 8-K 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 March 19, 1999 ------------------------------------------------ Date of Report (date of earliest event reported) e-MedSoft.com ---------------------------------------------------- Exact name of Registrant as Specified in its Charter Nevada 33-8420-D 84-1037630 - --------------------------- --------------- --------------------------- State or Other Jurisdiction Commission File IRS Employer Identification of Incorporation Number Number 20750 Ventura Boulevard, Suite 202 Woodland Hills, California 91364 ---------------------------------------------------------- Address of Principal Executive Offices, Including Zip Code (818) 710-9813 -------------------------------------------------- Registrant's Telephone Number, Including Area Code ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On March 19, 1999 e-MedSoft.com (the "Company") completed the acquisition of all of the issued and outstanding stock of Palm Technology Holdings Ltd. ("Palm"), a UK based company which owns all of the issued and outstanding stock of UK based Relay Business Systems Ltd.("Relay"). The Company purchased the stock from the eight private shareholders of Palm pursuant to a Share Acquisition Agreement which was originally entered into on July 22, 1998 between the shareholders and Sanga International, Inc. This agreement was subsequently amended three times before the final closing. On January 23, 1999 Sanga International, Inc. assigned all of its rights and obligations under this agreement to the Company. Relay is a diversified computer services company, providing consulting services, training, technical support, computer software and computer hardware to a broad range of customers in a number of market sectors, including finance, academia, telecommunications and healthcare. Relay's customers include Coopers & Lybrand, Cambridge University, Panasonic, Sony, GE Capital, Mercedes Benz and British Telecom. Relay's annual revenues for last 12 months months ended February 28, 1999 were approximately $22,000,000. Relay is one of the first companies to have created an Authorized JAVA Centre in the United Kingdom and it operates throughout the UK as a partner within both Sun Microsystems' and Oracle Corporation's third party channel of resellers. Relay has also become one of the first resellers to be accepted as a partner on the Sun/Oracle Internet Centric Excellence (ICE) program and Relay is an accredited Sun Internet Associate. At the closing the Company paid approximately $2,200,000 in cash. Of this amount $1,500,000 was borrowed from two private investors and the balance was paid from the Company's working capital. Sanga International transferred to the Company its rights to buy Palm on January 23, 1999, in exchange for 3,000,000 shares of the Company's Common Stock. The 3,000,000 shares were contributed by Sanga e-Health, the Company's parent, and thus this payment was non-dilutive to the Company and its shareholders. Prior to assigning the rights to the Company, Sanga had paid approximately $2,400,000 to the shareholders of Palm as the initial installments on the purchase price. John Andrews, the president of the Company is also the president of Sanga. The $1,500,000 was borrowed from Trammel Investors LLC ($750,000) and Donald H. Ayers ($750,000) pursuant to a loan agreement which provided that the loans would be evidenced by secured promissory notes due in 60 days and in the following amounts: Trammel - $1,000,000 and Ayers - $750,000. Trammel's note was for $250,000 more than the amount of its loan as payment of a finders fee and as a lost opportunity cost incurred by Trammel regarding another transaction. The Company also agreed to pay an origination fee to each lender in the amount of fifteen percent of the amount of the promissory notes with such fees to be payable in fifteen equal monthly payments with the first payment due April 19, 1999. In connection with this financing the Company issued to each lender five year warrants to purchase 250,000 shares of the Company's common stock at a price equal to the average of the closing bid and asked prices of the Company's common stock during the five trading days before March 19, 1999. In addition, Sanga e-Health LLC, the Company's majority shareholder guaranteed the loans and transferred to each lender one million restricted shares of the Company's common stock as an inducement to make the loans. The Company also entered into a registration rights agreement which provides certain registration rights to the lenders with respect to the two 2 million shares and the shares underlying the warrants. For further details on the registration rights and other terms and conditions of this financing please refer to the documents attached as exhibits to this Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL INFORMATION OF BUSINESSES ACQUIRED. The financial statements required by Rule 3-05(b) of Regulation S-X for Palm Technology Holdings Ltd. are not yet available, and will be filed by amendment on or before June 2, 1999. (b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial information required by Article 11 of Regulation S-X is not yet available, and will be filed by amendment on or before June 2, 1999. (c) EXHIBITS. The following exhibits are filed herewith: EXHIBIT NUMBER DESCRIPTION LOCATION - ------- ----------- -------- 10.1 Loan and Security Agreement dated March Filed herewith March 19, 1999 among the Company, Trammel electronically Investors LLC and Donald H. Ayers 10.2 Registration Rights Agreement among Filed herewith the Company, Trammel Investors LLC electronically and Donald H. Ayers 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized. e-MedSoft.com Dated: March 31, 1999 By:/s/ John F. Andrews John F. Andrews, President 4 EX-10.1 2 Trammel Investors LLC Attention: Frank Wilson 8306 Wilshire Boulevard Suite 7056 Beverly Hills, California 90211 Donald H. Ayers c/o 6125 Memorial Drive Dublin, Ohio 43017 March 18, 1999 e-MedSoft.com John F. Andrews, President 20750 Ventura Boulevard, Suite 202 Woodland Hills, CA 91364 Sanga e-Health, LLC John F. Andrews, President 20750 Venture Boulevard, Suite 202 Woodland Hills, CA 91364 Re: Loan and Security Agreement Ladies and Gentlemen: Pursuant to the terms and subject to the conditions set forth in this letter agreement (this "Agreement"), Trammel Investors LLC and Donald H. Ayers ("Lenders") hereby agree to make a term loan to e-Medsoft.com, a Nevada corporation ("Borrower"), in the aggregate principal amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00)(the "Loan"). The breakdown of the Loan among Lenders is set forth in the signature block hereof. All references to $ or Dollars herein shall mean United States dollars. The terms and conditions of the Loan shall be as follows: 1. Advance of Loan Proceeds. Subject to Borrower's fulfillment of each of the conditions precedent set forth below, Lenders shall advance the proceeds of the Loan (in the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00)) to or for the benefit of Borrower precisely in the manner set forth below; provided that the Lenders shall be jointly and severally obligated to advance the full loan proceeds in the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) hereunder. The Loan shall be advanced by Lenders to permit the Borrower to purchase all of the outstanding equity securities of the businesses in the United Kingdom referred to as Palm Technologies Holdings Limited (and with it its wholly-owned subsidiary, Relay Systems) on account of the purchase price under the Purchase Agreement (as hereinafter defined) in one disbursement in the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) Dollars by wire transfer initiated before 10:05 A.M. Eastern Standard Time on March 19, 1999 (the "Closing Date") to the following account: Name: Firstar Bank Milwaukee, NA Address: 777 East Wisconsin Ave. Milwaukee, WI Routing Numbers: 075000022 For Further Credit To: Firstar Minnesota ABA: 091015224 Beneficiary: Oppenheimer, Wolff and Donnelly Beneficiary Account: 1070176 The Lenders understand that time is of the essence regarding this advance as Borrower will be unable to close the purchase of the aforesaid shares unless Lenders initiate their $1.5 million wire transfer to the above account prior to 10:05 A.M. Eastern Standard Time on March 19, 1999. 2. Financing Documents. The Loan shall be evidenced by two promissory notes payable to the order of Lenders in the total principal sum of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) (the "Notes" appended hereto as Exhibit "A"). The principal amount of the Loan and interest thereon, calculated as provided in the Notes, shall be payable as set forth more particularly therein. The two Notes shall be in the amount of $750,000.00 to Donald H. Ayers and $1,000,000 to Trammel Investors, LLC, respectively. As an inducement to Lenders to make the Loan, Borrower shall grant to Trammel Investors LLC and Donald H. Ayers each a warrant to purchase an aggregate amount of two hundred fifty thousand (250,000) shares of Borrower's common stock, $.001 par value per share ("Common Stock") pursuant to the terms and subject to the conditions set forth in the Warrant Agreement (the "Warrant") attached hereto as Exhibit "B". Borrower and Lenders shall enter into Registration Rights Agreements in the form of Exhibit "C" attached hereto (the "Registration Rights Agreements"). Borrower shall cause Sanga e-Health, L.L.C. to transfer one million restricted shares of the Borrower's common stock (the "Shares") each to Trammel Investors LLC and Donald H. Ayers on the Closing. This Agreement, the Note, the Warrants, and the Registration Rights Agreement and each other document executed in connection with the Loan and/or contemplated hereby are hereinafter collectively referred to as the "Financing Documents." 3. Collateral. As security for the performance of the Borrower's obligations under this Agreement and/or any of the other Financing Documents, the payment of principal and interest under the Loan and the payment of all other liabilities of Borrower to Lenders arising hereunder, under any of the other Financing Documents, or in connection with any of the transactions described herein or therein, whether absolute or contingent, matured or unmatured, direct or indirect, similar or dissimilar, due to become due or heretofore or hereafter, contracted or acquired (collectively, the "Obligations"), Borrower hereby grants, pledges and assigns to Lenders a security interest in all of Borrower's now owned or hereafter acquired accounts, inventory, equipment, general intangibles, documents, instruments, chattel paper and all other personal property of Borrower, in whatever capacity owned by Borrower, and all proceeds and products of the foregoing including proceeds of proceeds (collectively, the "Collateral"). Borrower will also take such commercially reasonable steps either Lender determines are necessary to perfect and protect such Lender's rights in and to the Collateral including, without limitation, executing and delivering to Lender UCC-1 financing statements and UCC-3 continuation statements and assignments and shall pay the reasonable costs and expenses thereof. 2 4. Surety. As an additional inducement to the Lenders to make the Loan to Borrower, Surety shall execute and deliver to Lenders the Surety Agreement, a copy of which is attached hereto as Exhibit D. 5. Fees and other Compensation to Lenders. (a) As an inducement to Lenders to make the Loan, Borrower shall pay to Lenders the following fees (the "Origination Fees"): Trammel Investors LLC $150,000 Donald H. Ayers $112,500 which fees shall be deemed fully earned upon the closing and nonrefundable when paid, and issue to Lenders warrants in the form of Exhibit "B" hereto to purchase an aggregate of five hundred thousand (500,000) shares of Common Stock (the "Origination Warrant"). The Origination Fee shall be paid to each Lender in 15 equal payments over the next fifteen months with the first payment due April 19, 1999. In addition, Sanga e-Health LLC shall transfer one million (1,000,000) restricted shares of the Borrower's common stock each to Trammel Investors LLC and Donald H. Ayers on the Closing. (b) Borrower represents that other than the fees expressly payable pursuant to this Agreement, no party is entitled to any finders, brokers or similar fees or commissions as a result of the transactions contemplated hereby. 6. Conditions Precedent. The obligation of Lenders to make the Loan is subject to (a) Borrower's duly executing and/or delivering (or causing to be executed and/or delivered) each of the following (all documents to be in form and substance satisfactory to Lenders and its counsel): (i) This Agreement, (ii) the Note, (iii) the Warrant, (iv) the Registration Rights Agreement, (v) the Surety Agreement (vi) A certified copy of the resolutions of the board of directors of each of Borrower and Surety, dated as of the Closing Date, authorizing the execution, delivery and performance of this Agreement (in the case of Borrower) and the other Financing Documents to which it is a party; (vii) The written opinion of Borrower's and Surety's counsel dated as of the Closing Date covering the matters listed on Exhibit "E" attached hereto; and (viii) each other instrument, agreement and document to be executed and/or delivered pursuant to this Agreement and/or the instruments, agreements and documents referred to in this Agreement; and 7. Conditions Subsequent. Within fifteen (15) days after the Closing Date, Borrower shall deliver to Lender each of the following (all documents to be in form and substance satisfactory to Lender and its counselor). 3 (a) Certified copies of the Articles or Certificate of Incorporation and Bylaws of each of Borrower and Surety, in each case with all amendments thereto; (b) The certificate of the corporate secretary of each of Borrower and Surety as to the incumbency and specimen signatures of the officers of Borrower and Surety executing this Agreement (in the case of Borrower) and the other Financing Documents to which it is a party; (c) A certificate, as of the most recent date practicable, of the Secretary of State of each of Borrower's and Surety's state of formation as to the good standing or subsistence (as applicable) of Borrower and Surety in such state; and (d) Such other instruments, documents and agreements as Lender may reasonably request. (e) The written opinion of Borrower's and Surety's counsel dated as of the Closing Date covering such matters as are normally covered in such opinions, including, without limitation, due authorization, corporate good standing, execution and delivery, legal, valid and binding opinion. Such opinion shall be in a form satisfactory to the Lender and if such is not completed within the period set out herein Borrower shall be immediately deemed in default hereunder. 8. Representations. To induce Lenders to make the Loan, Borrower hereby represents and warrants to the Lenders that at and as of the date hereof: (a) Borrower is a corporation duly organized under laws of Nevada and Borrower is qualified to do business and in good standing in each jurisdiction where the nature of its business or the ownership of its properties requires that it be so qualified, except where the failure so to qualify would not have a material adverse effect on the business, assets or financial condition of the Borrower, as the case may be, and has complied in all material respects with all laws applicable to the conduct of its business as presently conducted; (b) Each of Borrower and Surety has organizational authority, and has completed all proceedings and obtained all approvals and consents necessary, to execute, deliver, and perform this Agreement and the other Financing Documents to which it is a party and the transactions contemplated hereby and thereby; (c) Such execution, delivery, and performance will not contravene, or constitute a default under or result in a lien upon assets of Borrower or Surety pursuant to, any applicable law or regulation, any charter document of Borrower or Surety, or any contract, agreement or other instrument or any judgment, order or decree, binding upon or affecting Borrower or Surety or their respective properties which default or lien would have a material adverse effect on Borrower's or Surety's business, assets or financial condition; (d) Each of the Financing Documents to which Borrower or Surety is a party constitutes the legal, valid, and binding obligations of Borrower or Surety, as the case may be, enforceable in accordance with their respective terms, except to the extent the enforceability thereof may be limited by 4 applicable bankruptcy, insolvency, moratorium, reorganization or other laws affecting the enforcement of creditors' rights generally and by equitable principles of general applicability, regardless of whether enforcement is sought in an action at law or a proceeding in equity; (e) Except as previously disclosed to Lenders in writing, there is no action, suit, or proceeding pending or, to the knowledge of Borrower, threatened against Borrower or Surety or their respective properties that might adversely affect Borrower or Surety in any material respect; (f) Neither Borrower nor Surety is in default, breach or violation of any instrument, document or agreement to which Borrower is a party which default, breach or violation could have a material adverse affect on Borrower's or Surety's business, property, operations or prospects. (g) Borrower has furnished Lenders with balance sheets and income statements as requested by Lenders which fairly present the financial position and results of operations of Borrower as of the dates and for the periods covered thereby, subject, in the case of interim statements, to normal year-end audit adjustments; (h) Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940; (i) The authorized capital stock of Borrower consists of one hundred million (100,000,000) shares of Common Stock, of which fifty-one million seven hundred seventy-one thousand four hundred seventy (51,771,470) shares are issued and outstanding. All issued shares of Common Stock have been duly and validly issued and are fully paid and nonassessable. Except for the warrants, options and convertible securities set forth on Schedule 8(j), there are no outstanding options, warrants, rights, puts, calls, commitments, conversion rights, plans or other agreements of any character to which Borrower is a party or by which it is otherwise bound which provide for the acquisition, disposition or issuance of any issued but not outstanding, or authorized and unissued of Borrower's Common Stock. All of such options, warrants, rights, puts, calls, commitment, conversion rights, were duly authorized; (j) All tax returns required to have been filed by Borrower have been filed, there is no proposed material tax assessment or liability against Borrower or its property, and no extension of time for the assessment of any tax of Borrower is in effect or has been requested, except, in each case, as disclosed in financial statements previously furnished to Lenders; and (k) The proceeds of the Loan shall be used by Borrower solely for the purpose of funding Borrower's purchase of all of the outstanding equity securities of the businesses in the United Kingdom referred to as Palm Technologies Holdings Limited and with it its wholly-owned subsidiary, Relay Systems. (l) Borrower represents and warrants that it has access to and custody and control over the sum of at least $690,072 so that Borrower may and shall initiate a wire transfer to the Account set out in Section 1 above at the opening of business on March 19, 1999. 9. Affirmative Covenants. So long as any part of the indebtedness contemplated hereby shall remain unpaid, Borrower will: 5 (a) Maintain accurate books and records in accordance with generally accepted accounting principles ("GAAP"), and permit inspection of same and any properties of Borrower by Lenders during normal business hours at Lenders' request and permit Lenders to make abstracts and copies of Borrower's books and records; (b) Furnish to Lenders such monthly financial statements and information, in form satisfactory to Lenders, as Lenders may from time to time reasonably request; (c) Maintain in form, with companies reasonably acceptable to Lenders and with Lenders named third loss payee, adequate fire with extended coverage and public liability insurance in amounts customarily carried by others engaged in a like or similar business and operating in similar markets and similar geographic locations and such additional insurance as Lenders from time to time may reasonably require, and upon demand, within a commercially reasonable time deliver to Lenders the policies concerned or a schedule of all insurance in force; (d) Discharge all liens and pay all taxes, assessments, and other governmental charges imposed on the assets of or assessed against Borrower; (e) Promptly notify Lenders of the occurrence of an Event of Default or of any event which, with the giving of notice and/or the passage of time would constitute an Event of Default; and (f) Promptly reimburse Lenders for all reasonable expenses, including the fees and expenses of legal counsel for Lenders, incurred in connection with the preparation, negotiation, amendment, modification or enforcement of this Agreement and the other Financing Documents and the Note. 10. Negative Covenants. So long as any part of the indebtedness contemplated hereby shall remain unpaid Borrower will not, directly or indirectly, without the prior written consent of Lenders: (a) Create or permit to exist against any of Borrower's assets, now or hereafter acquired, any lien other than liens approved by in writing and Permitted Liens. For the purposes of this Agreement and the other Financing Documents, "Permitted Liens" means: (i) liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on Borrower's books; (ii) liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on Borrower's books; (iii) judgment liens in existence less than 30 days after the entry thereof; (iv) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of the Borrower taken as a whole; and 6 (v) any interest or title of a lessor secured by a lessor's interest under any lease. (b) Sell, assign, transfer, or dispose of any of its accounts receivable or any substantial portion of its other assets other than the disposition in the ordinary course of business of assets which are obsolete or have no remaining useful life; (c) Become liable in any manner for the debts or obligations of others, except in the ordinary course of business as currently conducted; (d) Make loans or advances of credit to others; (e) Engage in any business other than that in which it is currently engaged and businesses related thereto; (f) Repay the principal or interest on the Notes to the respective Lenders in any fashion other than dollar for dollar, which means that for each dollar that is paid pursuant to the Note to Trammel Investors LLC, the Borrower shall pay the same amount pursuant to the Note to Donald H. Ayers and, accordingly, all principal amounts owing under the Note to Donald H. Ayers shall be paid in full before the final $250,000 in principal is paid on the Note to Trammel Investors LLC; or (g) Without limiting the restrictions set forth elsewhere herein, receive debt or equity financing within one year after the Closing Date upon terms and conditions that are more favorable to the lender or investor providing such financing than the terms and conditions in favor of Lenders hereunder. 11. Events of Default; Remedies. Upon the occurrence of any of the following (each, an "Event of Default"): (a) Failure by Borrower to make any payment of principal or interest on the Note when due; (b) Failure by Borrower to observe or perform any covenant, other term or provision of this Agreement, the Note or any other Financing Document within five (5) business days of the earlier of Borrower's knowledge of such failure and receipt by Borrower of written notice from the Lenders of such failure; (c) Any representation made by or on behalf of Borrower or Surety in this Agreement, the Note or any Financing Document shall be inaccurate in any material respect; (d) Borrower shall admit in writing its inability to pay its debts as they become due or shall become insolvent (however evidenced) or there shall be commenced any bankruptcy, insolvency, arrangement, reorganization, or other debtor-relief proceedings by or against Borrower, and, if such case or proceeding is not commenced by Borrower, or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by Borrower, or shall result in the entry of an order for relief or shall remain for 60 days undismissed, or Borrower shall dissolve or terminate its existence; 7 (e) The making of demand by any lender or other creditor of Borrower for payment of any indebtedness of Borrower for borrowed money, which is payable upon demand, or the acceleration of the maturity of any indebtedness of Borrower for borrowed money upon default by Borrower, in each case in a principal amount in excess of Twenty-Five Thousand ($25,000.00) Dollars; or (f) Entry of any judgment against Borrower which, to the extent not covered by insurance, equals or exceeds Twenty-Five Thousand ($25,000.00) Dollars and within thirty (30) days from the date of entry, such judgment shall not have been discharged or execution thereof stayed pending appeal, or, within 30 days after the expiration of any such stay, such judgment shall not have been discharged; THEN, Either Lender may, at its election and without demand or notice of any kind, each of which are hereby waived by Borrower, declare the unpaid balance of their respective Note and the accrued interest thereon, immediately due and payable, proceed to collect the same and exercise any and all other rights, powers and remedies given it by this Agreement, the Note, the Surety Agreement, or any other financing document or otherwise available at law or in equity. 12. Miscellaneous. (a) The representations and warranties of Borrower contained herein shall survive the making of the Loan and shall remain effective until all indebtedness contemplated hereby shall have been paid by Borrower in full. (b) This Agreement shall be governed and construed in accordance with the laws of the State of Ohio applicable to contracts made and to be performed in the State of Ohio. Borrower irrevocably consents to the jurisdiction of the courts located in Columbus, Ohio, or Los Angeles, California in any suit or proceeding based on or arising under this Agreement and irrevocably agrees that all claims in respect of such suit or proceeding may be determined in such courts. Borrower irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding. Borrower agrees that service of process upon Borrower mailed by first class mail shall be deemed in every respect effective service of process upon Borrower in any such suit or proceeding. Nothing herein shall affect the Lenders' right to serve process in any other manner permitted by law. Borrower agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. (c) Any forbearance, failure, or delay by Lenders in exercising any right, power, or remedy on behalf of Lenders shall not preclude the further exercise thereof, and all of Lenders' rights, powers, and remedies shall continue in full force and effect until specifically waived by Lenders. (d) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. (e) The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 8 (f) If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. (g) Borrower shall reimburse Lenders, on demand, for all fees and costs incurred by Lenders (including fees and costs of Lenders' counsel) in connection with the drafting, negotiation and closing of the Financing Documents and the enforcement of Lenders' rights and remedies thereunder. (h) This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein. There have been no oral agreements of any kind pertaining to the topic herein set out. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. (i) Any notices, demands or waivers required or permitted to be given under the terms of this Agreement shall be in writing and sent by mail or delivered personally or by courier and shall be effective five business days after being placed in the mail, if mailed, or upon receipt, if delivered personally or by courier, in each case addressed to a party. The addresses for such communications shall be: If to Borrower: e-MedSoft.com 20750 Ventura Boulevard, Suite 202 Woodland Hills, California 91364 Attn: John F. Andrews, President With a copy to: Krys Boyle Freedman & Sawyer, P.C. Dominion Plaza, Suite 2700 South Tower 600 Seventeenth Street Denver, Colorado 80202 Attn: Jon D. Sawyer, President If to Lenders: Trammel Investors LLC 8306 Wilshire Boulevard Suite 7056 Beverly Hills, California 90211 Donald H. Ayers c/o 6125 Memorial Drive Dublin, Ohio 43017 With a copy to: Purcell & Scott, L.P.A. 6035 Memorial Drive Dublin, Ohio 43017 Attn: Timothy J. Kincaid 9 Each party shall provide notice to the other party of any change in address, such notice to become effective upon receipt. (j) This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Borrower shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of Lenders. Notwithstanding the foregoing, Lenders and Lenders may assign their respective rights hereunder to any other Lender, without the consent of Borrower, provided, however, nothing herein shall be construed to limit Lenders' right to dispose of the Collateral upon the occurrence and during the continuance of an Event of Default by way of assignment, sale or other means of conveyance to a third party including, without limitation, a competitor of Borrower. (k) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person, provided, however, notwithstanding the foregoing, ZSC shall be deemed a third party beneficiary solely with respect to the Origination Fee and the Origination Warrant. Very truly yours, TRAMMEL INVESTORS LLC DONALD H. AYERS $1,000,000 $750,000 By:/s/ Tracy Hampton /s/ Donald H. Ayers Its: Manager By executing the appropriate signature line below, Borrower, intending to be legally bound hereby, agrees to the terms and conditions of this Agreement as of the date appearing opposite such party's signature. BORROWER: e-Medsoft.com Date: 3/18/99 By: /s/ John F. Andrews Name: John F. Andrews Title: Chief Executive Officer By its signature below, Sanga e-Health, L.L.C. agrees to transfer one million restricted shares of the Borrower's common stock (the "Shares") each to Trammel Investors LLC and Donald H. Ayers on the Closing, as described in Sections 2 and 5(a) of the foregoing Agreement. SANGA e-HEALTH, L.L.C. By: /s/ Mitchell J. Stein Name: Mitchell J. Stein Title: Chairman 10 EX-10.2 3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 18, 1999, by and among e-MedSoft.com, a corporation organized under the laws of the State of Nevada (the "Company"), and the undersigned (the "Lenders"). WHEREAS: A. In connection with the Loan Agreement of even date herewith by and between the Company and the other signatories thereto (the "Loan Agreement"), (i) the Company has agreed, upon the terms and subject to the conditions contained therein, to issue and sell to the Lenders warrants (the "Warrants") to acquire shares (the "Warrant Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), and (ii) Sanga e-Health, LLC, a California limited liability company ("SEH") has agreed to transfer 1,000,000 shares of Common Stock to each of the two lenders (the "SEH Shares"). B. To induce the Lenders to execute and deliver the Loan Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws; and NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Lenders hereby agree as follows: 1. DEFINITIONS. a. As used in this Agreement, the following terms shall have the following meanings: (i) "Lenders" means the Lenders and any transferees or assignees who agree to become bound by the provisions of this Agreement in accordance with Section 9 hereof. (ii) "register," "registered," and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC"). (iii) "Registrable Securities" means the SEH Shares and the Warrant Shares issued or issuable with respect to the Warrants and any shares of capital stock issued or issuable, from time to time (with any adjustments), as a distribution on or in exchange for or otherwise with respect to any of the foregoing. (iv) "Registration Statement" means a registration statement of the Company under the Securities Act. b. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement. 2. REGISTRATION. a. Mandatory Registration. The Company shall prepare, and, on or before the thirtieth (30th) day following the date of the Closing under the Loan Agreement (the "Filing Date"), file with the SEC a Registration Statement on Form S-1 covering the resale of 2,500,000 Registrable Securities. The Registration Statement filed hereunder, to the extent allowable under the Securities Act and the Rules promulgated thereunder (including Rule 416), shall state that the Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon exercise of the Warrants to prevent dilution resulting from stock splits, stock dividends or similar transactions. The Registrable Securities included in the Registration Statement filed hereunder shall be allocated to the Lenders as set forth in Section 11(k) hereof. The Registration Statement filed hereunder (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided to (and subject to the approval of) the Lenders and their counsel prior to its filing or other submission. b. Underwritten Offering. If any offering pursuant to the Registration Statement pursuant to Section 2(a) hereof involves an underwritten offering, the Lenders who hold a majority in interest of the Registrable Securities subject to such underwritten offering, with the consent of the Lenders, shall have the right to select one legal counsel to represent the Lenders and an investment banker or bankers and manager or managers to administer the offering, which investment banker or bankers or manager or managers shall be reasonably satisfactory to the Company. In the event that any Lenders elect not to participate in such underwritten offering, the Registration Statement covering all of the Registrable Securities shall contain appropriate plans of distribution reasonably satisfactory to the Lenders participating in such underwritten offering and the Lenders electing not to participate in such underwritten offering (including, without limitation, the ability of nonparticipating Lenders to sell from time to time and at any time during the effectiveness of such Registration Statement). c. Payments by the Company. The Company shall cause the Registration Statement required to be filed pursuant to Section 2(a) hereof to become effective as soon as practicable, but in no event later than the one hundred twentieth (120th) day following the date hereof (the "Registration Deadline"). If (i) (A) the Registration Statement required to be filed by the Company pursuant to Section 2(a) hereof is not declared effective by the SEC on or before the Registration Deadline, or (ii) if, after any such Registration Statement has been declared effective by the SEC, sales of all of the Registrable Securities required to be covered by such Registration Statement (including any Registrable Securities required to be registered pursuant to Section 3(b) hereof) cannot be made pursuant to such Registration Statement (by reason of a stop order or the Company's failure to update the Registration Statement or any other reason outside the control of the Lenders) or (iii) the Common Stock is not listed or included for quotation on the OTC Bulletin Board (the "Bulletin Board"), Nasdaq SmallCap Market ("SmallCap") , the American Stock Exchange (the "AMEX"), the New York Stock Exchange (the "NYSE") or the Nasdaq National Market ("NNM") at any time after the initial Registration Deadline hereunder, then the Company will make payments to the Lenders in such amounts and at such times as shall be determined pursuant to 2 this Section 2(c) as partial relief for the damages to the Lenders by reason of any such delay in or reduction of their ability to sell the Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity). The Company shall pay to each Investor an amount equal to $3,000, in each case for each thirty (30) day period (or portion thereof) (A) after the Registration Deadline and prior to the date the Registration Statement filed pursuant to Section 2(a) is declared effective by the SEC, and (b) during which sales of any Registrable Securities cannot be made pursuant to any such Registration Statement after the Registration Statement has been declared effective or the Common Stock is not listed or included for quotation on the Bulletin Board, SmallCap, AMEX, NYSE or NNM; provided, however, that there shall be excluded from each such period any delays which are solely attributable to changes (other than corrections of Company mistakes with respect to information previously provided by the Lenders) required by the Lenders in the Registration Statement with respect to information relating to the Lenders, including, without limitation, changes to the plan of distribution and delays caused by the SEC beyond their normal processing time. (For example, if the Registration Statement is not effective by the Registration Deadline, the Company would pay $3,000 to each Investor for each thirty (30) day period thereafter until the Registration Statement becomes effective.) Payments of cash pursuant hereto shall be made within five (5) days after the end of each period that gives rise to such obligation, provided that, if any such period extends for more than thirty (30) days, interim payments shall be made for each such thirty (30) day period. d. Piggy-Back Registrations. If at any time prior to the expiration of the Registration Period (as hereinafter defined) the Company shall file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities (other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall send to each Investor who is entitled to registration rights under this Section 2(d) written notice of such determination and, if within fifteen (15) days after the date of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, except that if, in connection with any underwritten public offering, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)' judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Investor has requested inclusion hereunder as the underwriter shall permit. Any exclusion of Registrable Securities shall be made pro rata among the Lenders seeking to include Registrable Securities, in proportion to the number of Registrable Securities sought to be included by such Lenders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities; and provided, further, however, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the Registration Statement other than holders of securities entitled to inclusion of their securities in such Registration Statement by 3 reason of demand registration rights. No right to registration of Registrable Securities under this Section 2(d) shall be construed to limit any registration required under Section 2(a) hereof. If an offering in connection with which an Investor is entitled to registration under this Section 2(d) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. e. Eligibility for Form S-3. The Company represents and warrants that when it meets the requirements for the use of Form S-3 it shall use Form S-3 for registration of the sale by the Lenders and any other Investor of the Registrable Securities and the Company shall file all reports required to be filed by the Company with the SEC in a timely manner so as to maintain such eligibility for the use of Form S-3. 3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities, the Company shall have the following obligations: a. The Company shall prepare and file with the SEC the Registration Statement required by Section 2(a) (but in no event later than the Filing Date), and cause such Registration Statement relating to Registrable Securities to become effective as soon as practicable after such filing (but in no event later than the Registration Deadline), and keep such Registration Statement effective pursuant to Rule 415 at all times until such date as is the earlier of (i) the date on which all of the Registrable Securities have been sold and (ii) the date on which all of the Registrable Securities (in the reasonable opinion of counsel to the Lenders) may be immediately sold to the public without registration or restriction pursuant to Rule 144(k) under the Securities Act or any successor provision (the "Registration Period"), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein and all documents incorporated by reference therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading. b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement. c. The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement and its legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and each amendment or supplement thereto, and, in the case of the Registration Statement referred to in Section 2(a), each letter written by or on behalf of 4 the Company to the SEC or the staff of the SEC (including, without limitation, any request to accelerate the effectiveness of the Registration Statement or amendment thereto), and each item of correspondence from the SEC or the staff of the SEC, in each case relating to the Registration Statement (other than any portion, if any, thereof which contains information for which the Company has sought confidential treatment), (ii) on the date of effectiveness of the Registration Statement or any amendment thereto, a notice stating that the Registration Statement or amendment has been declared effective, and (iii) such number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor. d. The Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as each Investor who holds Registrable Securities being offered reasonably requests, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (a) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (b) subject itself to general taxation in any such jurisdiction, (c) file a general consent to service of process in any such jurisdiction, (d) provide any undertakings that cause the Company undue expense or burden, or (e) make any change in its charter or bylaws, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders. e. In the event the Lenders who hold a majority in interest of the Registrable Securities being offered in an offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering. f. As promptly as practicable after becoming aware of such event, the Company shall notify each Investor of the happening of any event, of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to each Investor as such Investor may reasonably request. g. The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, and, if such an order is issued, to obtain the withdrawal of such order at the earliest practicable moment (including in each case by amending 5 or supplementing such Registration Statement) and to notify each Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof (and if such Registration Statement is supplemented or amended, deliver such number of copies of such supplement or amendment to each Investor as such Investor may reasonably request). h. The Company shall permit a single firm of counsel designated by the Lenders to review the Registration Statement and all amendments and supplements thereto a reasonable period of time prior to its filing with the SEC, and not file any document in a form to which such counsel reasonably objects and will not request acceleration of the effectiveness of any Registration Statement without prior notice to such counsel. i. The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement. j. At the request of any Investor, the Company shall furnish, on the date of effectiveness of the Registration Statement (i) an opinion, dated as of such date, from counsel representing the Company addressed to the Lenders and in form, scope and substance as is customarily given in an underwritten public offering and (ii) in the case of an underwriting, a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and the Lenders. k. The Company shall make available for inspection by (i) any Investor, (ii) any underwriter participating in any disposition pursuant to the Registration Statement, (iii) one firm of attorneys and one firm of accountants or other agents retained by the Lenders, and (iv) one firm of attorneys retained by all such underwriters (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and shall not make any disclosure (except to an Investor) of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (b) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector shall have entered into confidentiality agreements (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3(k). Each Investor agrees that it shall, upon learning that 6 disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein shall be deemed to limit the Lenders' ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations. l. The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement, or (v) such Investor consents to the form and content of any such disclosure. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Investor prior to making such disclosure, and allow the Investor, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. m. The Company shall use its best efforts to promptly either (i) cause all of the Registrable Securities covered by the Registration Statement to be listed on the AMEX, NNM or the NYSE or another national securities exchange and on each additional national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure the designation and quotation of all of the Registrable Securities covered by the Registration Statement on the Bulletin Board, SmallCap or NNM and, without limiting the generality of the foregoing, to arrange for or maintain at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. n. The Company shall provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement. o. The Company shall cooperate with the Lenders who hold Registrable Securities being offered and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or the Lenders may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Lenders may request, and, within three (3) business days after the Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Lenders whose Registrable Securities are included in such Registration Statement) an opinion of such counsel in the form attached hereto as Exhibit 1. 7 p. At the request of any Investor, the Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary in order to change the plan of distribution set forth in such Registration Statement. q. The Company shall comply with all applicable laws related to a Registration Statement and offering and sale of securities and all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC.) r. The Company shall take all such other actions as any Investor or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of the Registrable Securities. s. From and after the date of this Agreement, the Company shall not, and shall not agree to, allow the holders of any securities of the Company to include any of their securities in the Registration Statement under Section 2(a) hereof or any amendment or supplement thereto under Section 3(b) hereof without the consent of the holders of a majority in interest of the Registrable Securities. 4. OBLIGATIONS OF THE LENDERS. In connection with the registration of the Registrable Securities, the Lenders shall have the following obligations: a. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) business days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor of the information the Company requires from each such Investor. b. Each Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from such Registration Statement. c. In the event Lenders holding a majority in interest of the Registrable Securities being offered determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor has notified the Company in writing of such Investor's election not to participate in such underwritten distribution. 8 d. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 3(f) or 3(g), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Sections 3(f) or 3(g) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. e. No Investor may participate in any underwritten distribution hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions and any expenses in excess of those payable by the Company pursuant to Section 5 below. 5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company and the fees and disbursements contemplated by Section 3(k) hereof shall be borne by the Company. In addition, the Company shall pay all of the Lenders' costs and expenses (including legal fees) incurred in connection with the enforcement of the rights of the Lenders hereunder. 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: a. To the extent permitted by law, the Company will indemnify, hold harmless and defend (i) each Investor who holds such Registrable Securities, and (ii) the directors, officers, partners, members, employees, agents and each person who controls any Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any, and underwriters for Lenders and such underwriters' directors, officers, partners, members, employees, agents and each person who controls any such underwriter within the meaning of Section 15 of the Exchange Act (each, an "Indemnified Person"), against any joint or several losses, claims, damages, liabilities or expenses (collectively, together with actions, proceedings or inquiries by any regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof, "Claims") to which any of them may become subject insofar as such Claims arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any filing made in connection with qualification under state securities laws or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading, (ii) any 9 untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other applicable securities law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities or (iv) any material breach of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, "Violations"). Subject to the restrictions set forth in Section 6(c) with respect to the number of legal counsel, the Company shall reimburse the Lenders and each other Indemnified Person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; and (iii) with respect to any preliminary prospectus, shall not inure to the benefit of any Indemnified Person if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and such Indemnified Person, notwithstanding such advice, used it. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Lenders pursuant to Section 9 hereof. b. In connection with any Registration Statement in which an Investor is participating, each such Investor agrees severally and not jointly to indemnify, hold harmless and defend, to the same extent and in the same manner set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, its employees, agents and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and subject to Section 6(c) such Investor will reimburse any legal or other expenses (promptly as such expenses are incurred and are due and payable) reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without 10 the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Agreement (including this Section 6(b) and Section 7) for only that amount as does not exceed the net proceeds actually received by such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Lenders pursuant to Section 9 hereof. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, and the Indemnified Party failed to utilize such corrected prospectus. c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that such indemnifying party shall not be entitled to assume such defense and an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential conflicts of interest between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding or the actual or potential defendants in, or targets of, any such action include both the Indemnified Person or the Indemnified Party and the indemnifying party and any such Indemnified Person or Indemnified Party reasonably determines that there may be legal defenses available to such Indemnified Person or Indemnified Party which are different from or in addition to those available to such indemnifying party. The indemnifying party shall pay for only one separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such legal counsel shall be selected by Lenders holding a majority-in-interest of the Registrable Securities included in the Registration Statement to which the Claim relates (with the approval of the Lenders if they hold Registrable Securities included in such Registration Statement), if the Lenders are entitled to indemnification hereunder, or by the Company, if the Company is entitled to indemnification hereunder, as applicable. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is actually prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 11 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6, (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (iii) contribution (together with any indemnification or other obligations under this Agreement) by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to the Registration Statement. 8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the Lenders the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Lenders to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: a. file with the SEC in a timely manner and make and keep available all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 4(c) of the Loan Agreement) and the filing and availability of such reports and other documents is required for the applicable provisions of Rule 144; and b. furnish to each Investor so long as such Investor owns Warrants or Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Lenders to sell such securities under Rule 144 without registration. 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Lenders hereunder, including the right to have the Company register Registrable Securities pursuant to this Agreement, shall be automatically assignable by each Investor to any transferee of all or any portion of the Warrants or the Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, and (iv) the transferee or assignee agrees in writing for the benefit of the Company to be bound by all of the provisions contained herein. 12 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with written consent of the Company and Lenders who hold a majority in interest of the Registrable Securities; provided, however, that no amendment hereto which restricts the ability of an Investor to elect not to participate in an underwritten offering shall be effective against any Investor which does not consent in writing to such amendment; provided, further, however, that no consideration shall be paid to an Investor by the Company in connection with an amendment hereto unless each Investor similarly affected by such amendment receives a pro-rata amount of consideration from the Company. Unless an Investor otherwise agrees, each amendment hereto must similarly affect each Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. 11. MISCELLANEOUS. a. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. b. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier or by confirmed telecopy, and shall be effective upon receipt or refusal of receipt, if delivered personally or by courier or confirmed telecopy, in each case addressed to a party. The addresses for such communications shall be: If to the Company: e-MedSoft.com 20750 Ventura Boulevard, Suite 202 Woodland Hills, CA 91364 Facsimile: (818) 710-9885 Attention: Chief Financial Officer and if to any Investor, at such address as such Investor shall have provided in writing to the Company, or at such other address as each such party furnishes by notice given in accordance with this Section 11(b). c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. d. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in the State of California. The Company irrevocably consents to the jurisdiction of the courts located in the State of California in any suit or proceeding based on or arising under this Agreement and irrevocably agrees that all claims in respect of such suit or proceeding may be determined in 13 such courts. The Company irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or proceeding. The Company further agrees that service of process upon the Company, mailed by first class mail shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. Nothing herein shall affect the Lenders' right to serve process in any other manner permitted by law. The Company agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. e. This Agreement, the Loan Agreement (including all schedules and exhibits thereto and documents contemplated thereby) and the Warrants constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. f. Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. h. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. i. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. j. All consents, approvals and other determinations to be made by the Lenders or the Lenders pursuant to this Agreement shall be made by the Lenders or the Lenders holding a majority in interest of the Registrable Securities (determined as if all Warrants then outstanding had been exercised for Registrable Securities and all SEH Shares were then held by the Lender) held by all Lenders or Lenders, as the case may be. k. The initial number of Registrable Securities included on any Registration Statement and each increase (if any) to the number of Registrable Securities included thereon shall be allocated pro rata among the Lenders based on the number of Registrable Securities held by each Investor at the time of such establishment or increase, as the case may be. In the event an Investor shall sell or otherwise transfer any of such holder's Registrable Securities, each transferee shall be allocated a pro rata portion of the number of Registrable Securities included on a Registration Statement for such transferor. Any shares of Common Stock included on a Registration Statement and which remain allocated to any person or entity which does not hold any Registrable Securities shall be allocated to the remaining Lenders, pro rata 14 based on the number of shares of Registrable Securities then held by such Lenders. For the avoidance of doubt, the number of Registrable Securities held by any Investor shall be determined as if the SEH Shares were held by the Lender and all Warrants then outstanding were exercised for Registrable Securities. l. Each party to this Agreement has participated in the negotiation and drafting of this Agreement. As such, the language used herein shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party to this Agreement. m. For purposes of this Agreement, the term "business day" means any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law, regulation or executive order to close. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 15 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. e-MedSoft.com By: /s/ John F. Andrews Name: John F. Andrews Its: Chief Executive Officer Lenders: Trammel Investors LLC By: /s/ Tracy Hampton Name: Tracey Hampton Its: Manager /s/ Donald H. Ayers Donald H. Ayers 16 EXHIBIT 1 to Registration Rights Agreement [Date] [Name and address of transfer agent] RE: e-MedSoft.com Ladies and Gentlemen: We are counsel to e-MedSoft.com, a corporation organized under the laws of the State of Nevada (the "Company"), and we understand that, [Name of Investor] (the "Holder") has (i) purchased from the Company warrants (the "Warrants") to acquire shares of the Company's common stock, par value $.001 per share (the "Common Stock") and/or (ii) exercised its rights with respect to the Pledged Securities (as defined in the Registration Rights Agreement (defined below). Pursuant to a Registration Rights Agreement, dated as of March 18, 1999, by and among the Company and the signatories thereto (the "Registration Rights Agreement"), the Company agreed with the Holder, among other things, to register the Registrable Securities (as that term is defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the "Securities Act"), upon the terms provided in the Registration Rights Agreement. In connection with the Company's obligations under the Registration Rights Agreement, on __________, the Company filed a Registration Statement on Form S-___ (File No. 333- _____________) (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities, which names the Holder as a selling stockholder thereunder. The Registration Statement was declared effective by the SEC on _____________, 1999. [Other customary introductory and scope of examination language to be inserted] Based on the foregoing, we are of the opinion that the Registrable Securities have been registered under the Securities Act. [Other customary language to be included.] Very truly yours, cc: [Name of Investor] -----END PRIVACY-ENHANCED MESSAGE-----