-----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, McHvgpTB7czL+WvpDWvTvh1y/c9r1S3TE6dDGfu9xesWy39/6pLEzFDhIGyiVk7c 02ZCNppt3ZrE/0m3mtxMZw== 0000950144-02-000191.txt : 20020413 0000950144-02-000191.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950144-02-000191 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20011213 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROXYMED INC /FT LAUDERDALE/ CENTRAL INDEX KEY: 0000906337 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 650202059 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22052 FILM NUMBER: 2505806 BUSINESS ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FORT LAUDERDALE STATE: FL ZIP: 33317-7424 BUSINESS PHONE: 9544731001 MAIL ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FT LAUDERDALE STATE: FL ZIP: 33317 FORMER COMPANY: FORMER CONFORMED NAME: HMO PHARMACY INC DATE OF NAME CHANGE: 19930601 8-K 1 g73653e8-k.txt PROXYMED,INC. - FORM 8-K 12/13/01 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): DECEMBER 13, 2001 ----------------- PROXYMED, INC. -------------- (Exact name of registrant as specified in its charter) FLORIDA 0-22052 65-0202059 ------- ------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 2555 DAVIE ROAD, SUITE 110, FT. LAUDERDALE, FLORIDA 33317-7424 --------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (954) 473-1001 -------------- ITEM 5. OTHER EVENTS. On December 21, 2001 ProxyMed, Inc. (the "Company"), sold 483,414 shares of common stock at $16.50 per share in a private placement to nine U.S. and Canadian institutional and accredited investors, resulting in net proceeds to the Company of approximately $7,247,500 after costs of $728,800. Commonwealth Associates, L.P. acted as placement agent in the transaction for which it received 7% of the gross proceeds of the shares sold plus their actual out-of-pocket expenses incurred in connection with the private placement. Certain executive officers, directors and controlling persons of the Company have agreed to a lock-up on all shares owned or beneficially owned by them until a registration statement covering the shares sold in the private placement is declared effective. The Company's registration statement covering the resale of the Shares must be declared effective by the SEC on or before March 20, 2002, or the Per Share Purchase Price will be reduced by 5% for each month (or on a pro rata basis for any portion thereof) thereafter until such time as the registration statement is effective; provided, however, that the maximum reduction in the Per Share Purchase Price shall be 25%. The reduction in the Per Share Purchase Price shall be evidenced by the issuance of additional Shares (the "Adjustment Shares") to the investors within five days following the effective date of the registration statement. Additionally, on December 13, 2001, the Company offered to convert the 203,799 shares outstanding of its Series C 7% Convertible Preferred Stock (the "Series C Preferred") into shares of common stock at a reduced conversion price (the "Conversion Offer"). For a period of sixty days ending February 11, 2002, the holders of the Series C Preferred shares may convert such shares at a reduced conversion price of $13.05 per share instead of the conversion price of $15.00. If all Series C Preferred shares are converted, the Company will issue a total of 1,561,678 shares of common stock, inclusive of an additional 203,018 shares of common stock as a result of the reduced conversion price. The Company is expected to record a deemed dividend charge of approximately $2.99 for each converted share as a result of the inducement to convert. Charges of approximately $3.4 million will be recorded in the fourth quarter of 2001 for conversions consummated before the 2001 year end and any additional conversions in 2002 will result in charges recorded in the first quarter of 2002. As of December 31, 2001, holders of approximately 83% of the outstanding Series C Preferred had converted their shares. In addition, holders of more than two-thirds of the outstanding Series C Preferred have voted to amend the Articles of Designation governing the Series C Preferred and the Subscription Agreement dated as of June 15, 2000. These amendments eliminate certain rights of the Series C Preferred shareholders, including anti-dilution provisions, voting rights and certain restrictive covenants agreed to by the Company, and will apply to those Series C Preferred shareholders who decide not to participate in the Conversion Offer. The Company has agreed to file a registration statement covering the resale of the private placement shares of the investors, the Adjustment Shares, and the resale of the additional shares issuable to the holders of the Series C Preferred shares electing to convert at the reduced conversion price pursuant to the Conversion Offer. 2 As a result of the reduced conversion price in the Conversion Offer, 85,689 warrants with an exercise price of $15.00 per share issued in connection with our Series B 6% Convertible Preferred Stock were reset into 98,493 warrants with a new exercise price of $13.05 per share as a result of anti-dilution provisions relating to the Series B Preferred Stock. As a result of this reset, the Company will record a deemed dividend charge of approximately $207,800 in the fourth quarter of 2001. ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS. (c) The following exhibits are included herein: Exhibit 3.1 - Articles of Amendment to Articles of Incorporation of ProxyMed, Inc. dated December 21, 2001. Exhibit 10.1 - Form of Subscription Agreement dated December 21, 2001 for the private placement issuance of up to $8,000,000 of ProxyMed, Inc. common stock. Exhibit 10.2 - Placement Agency Agreement dated December 18, 2001 between ProxyMed, Inc. and Commonwealth Associates, L.P. for the private placement issuance of up to $8,000,000 of ProxyMed, Inc. common stock. Exhibit 10.3 - Form of Conversion Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001. Exhibit 10.4 - Form of Designation and Subscription Amendment Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001. Exhibit 99.1 - Press Release dated December 28, 2001. 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. PROXYMED, INC. Date January 10, 2002 /s/ Judson E. Schmid --------------------------------------- Judson E. Schmid, Executive Vice President and Chief Financial Officer 4 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION -------------- ----------- 3.1 Articles of Amendment to Articles of Incorporation of ProxyMed, Inc. dated December 21, 2001. 10.1 Subscription Agreement dated December 21, 2001 for the private placement issuance of up to $8,000,000 of ProxyMed, Inc. common stock. 10.2 Placement Agency Agreement dated December 18, 2001 between ProxyMed, Inc. and Commonwealth Associates, L.P. for the private placement issuance of up to $8,000,000 of ProxyMed, Inc. common stock. 10.3 Conversion Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001. 10.4 Designation and Subscription Amendment Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001. 99.1 Press Release dated December 28, 2001.
5 EX-3.1 3 g73653ex3-1.txt PROXYMED - AMENDED ARTICLES OF INCORPORATION EXHIBIT 3.1 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF PROXYMED, INC. Pursuant to provisions of Sections 607.1006 and 607.0602 of the Florida Business Corporation Act, ProxyMed, Inc., a corporation organized and existing under the laws of the State of Florida (the "Company"), does hereby adopt the following articles of amendment to its Articles of Incorporation, which was approved (i) by the Board of Directors at a meeting held on December 12, 2001, and (ii) by two-thirds of the holders of the Company's Series C 7% Convertible Preferred Stock by written consent on December 21, 2001, which is sufficient for approval of this amendment pursuant to the Company's Articles of Incorporation. ARTICLE 3 Article 3 of the Articles of Incorporation of the Company establishing the Series C 7% Convertible Preferred Stock is hereby amended as follows: 1. Section 4(C) is hereby substituted in its entirety with the following: (C) Conversion Price. Commencing on December 13, 2001, and ending on February 11, 2002, the Conversion Price of each share of Series C Preferred Stock shall be equal to $13.05 (as such conversion price may be adjusted hereunder, the "Conversion Price") after giving effect to the 1-for-15 reverse stock split of the Common Stock effective August 21, 2001. After 5:00 p.m. Eastern Standard Time on February 11, 2002, the Conversion Price shall be $15.00. 2. Section 6(D) entitled "Sale of Securities" is hereby deleted in its entirety and any references to it or to Section 6.4(D) are hereby declared null and void. 3. Section 7(B) is hereby deleted in its entirety. 4. Section 8 is hereby deleted in its entirety. IN WITNESS WHEREOF, ProxyMed, Inc. has caused these Articles of Amendment to be signed on behalf of the Company, on this 21st day of December 2001. PROXYMED, INC. By: /s/ Judson E. Schmid --------------------------------- Name: Judson E. Schmid Title: Executive Vice-President, Chief Financial Officer, Treasurer and Acting Secretary EX-10.1 4 g73653ex10-1.txt PROXYMED - SUBSCRIPTION AGREEMENT 12/21/01 EXHIBIT 10.1 SUBSCRIPTION AGREEMENT This Subscription Agreement (the "Agreement") is made as of this 21st day of December, 2001 between ProxyMed, Inc., a corporation organized under the laws of the State of Florida with offices at 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317 (the "Company"), and the undersigned (the "Subscriber", and together with each of the other subscribers in the Offering (defined below), the "Subscribers"). WHEREAS, subject to the terms and conditions set forth herein, the Company proposes to issue and sell to the Subscribers units (the "Units") in a private placement (the "Offering"), each Unit consisting of that number of shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), which equals $100,000 divided by the Per Share Purchase Price. The "Per Share Purchase Price" shall be determined by negotiation by and among the Company, the Placement Agent (as defined below) and the Subscribers, but in no event shall the Per Share Purchase Price be less than $15.00 per share; and WHEREAS, the Company will offer a minimum of 50 Units ($5,000,000) (the "Minimum Offering") and a maximum of 70 Units ($7,000,000) (the "Maximum Offering"), with an over-subscription option of 10 additional Units ($1,000,000) subject to the mutual agreement of the Company and the Placement Agent (as defined below); and WHEREAS, the Shares are entitled to registration rights on the terms set forth in this Agreement; and WHEREAS, Commonwealth Associates, L.P. is acting as placement agent (the "Placement Agent") in the Offering pursuant to a placement agency agreement dated December 18, 2001 between the Company and the Placement Agent (the "Agency Agreement"); and WHEREAS, the Subscriber is delivering simultaneously herewith a completed confidential investor questionnaire (the "Questionnaire"). NOW, THEREFORE, for and in consideration of the promises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND COVENANTS OF SUBSCRIBER 1.1 SUBSCRIPTION FOR UNITS. Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company such number of Units as is set forth upon the signature page hereof at a price equal to $100,000 per Unit and the Company agrees to sell such Units to the Subscriber for said purchase price subject to the Company's right to sell to the Subscriber such lesser number of Units as the Company may, in its sole discretion, deem necessary or desirable. The purchase price is payable by certified or bank check made payable to "American Stock Transfer & Trust Company" as escrow agent (the "Escrow Agent") for the Company or by wire transfer of funds, contemporaneously with the execution and delivery of this Agreement. The Escrow Agent shall act as such in accordance with the terms and conditions of an escrow agreement to be entered into among the Placement Agent, the Company and the Escrow Agent. Certificates representing the Shares shall be delivered by the Company within five (5) business days following the consummation of the Offering as set forth in Article III hereof. 1.2 RELIANCE ON EXEMPTIONS. The Subscriber acknowledges that this Offering has not been reviewed by the United States Securities and Exchange Commission (the "SEC") or any state agency because of the Company's representations that this is intended to be a nonpublic offering exempt from the registration requirements of the Securities Act of 1933, as amended (the "1933 Act") and state securities laws. The Subscriber understands that the Company is relying in part upon the truth and accuracy of, and the Subscriber's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of the Subscriber to acquire the Shares. 1.3 INVESTMENT PURPOSE. The Subscriber represents that the Shares are being purchased for its own account, for investment purposes only and not for distribution or resale to others in contravention of the registration requirements of the 1933 Act. The Subscriber agrees that it will not sell or otherwise transfer the Shares unless they are registered under the 1933 Act or unless an exemption from such registration is available. 1.4 ACCREDITED INVESTOR. The Subscriber represents and warrants that he/she/it ("it") is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the 1933 Act, as indicated by its responses to the Questionnaire, and that it is able to bear the economic risk of any investment in the Shares. The Subscriber further represents and warrants that the information furnished in the Questionnaire is accurate and complete in all material respects. 1.5 RISK OF INVESTMENT. The Subscriber recognizes that the purchase of Shares involves a high degree of risk in that: (i) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; (ii) transferability of the Shares is limited; and (iii) the Company will require substantial additional funds to operate its business and there can be no assurance that the Maximum Offering will be completed or that any other funds will be available to the Company, in addition to all of the other risks set forth in the Company's SEC Documents (as defined in Section 2.5 hereof). 1.6 INFORMATION. The Subscriber acknowledges careful review of: (a) the Company's Annual Report on Form 10-K for the year ended December 31, 2000, (b) the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2001, (c) the Company's Proxy Statement for the Annual Meeting of Shareholders held on July 25, 2001, (d) the Company's Current Report on Form 8-K filed with the SEC on December 10, 2001, (e) the Confidential Investor Term Sheet dated December 18, 2001 (the "Investor Term Sheet"), (f) this Agreement, and (g) all exhibits, schedules and appendices which are part of or referenced in any of the aforementioned documents (the Investor Term Sheet and this Agreement, collectively referred to herein as, the "Offering Documents"), and hereby represents that: (i) the Subscriber has been furnished by the Company during the course of this transaction with all information regarding the Company which it has requested; (ii) that the Subscriber has been afforded the 2 opportunity to ask questions of and receive answers from duly authorized officers of the Company concerning the terms and conditions of the Offering, and any additional information which it has requested; and (iii) the Subscriber has been given the opportunity by the Placement Agent to review the Agency Agreement if it has so requested. 1.7 NO REPRESENTATIONS. The Subscriber hereby represents that, except as expressly set forth in the Offering Documents, no representations or warranties have been made to the Subscriber by the Company or any agent, employee or affiliate of the Company, including the Placement Agent, and in entering into this transaction the Subscriber is not relying on any information other than that contained in the Offering Documents and the results of independent investigation by the Subscriber. 1.8 TAX CONSEQUENCES. The Subscriber acknowledges that the Offering may involve tax consequences and that the contents of the Offering Documents do not contain tax advice or information. The Subscriber acknowledges that it must retain its own professional advisors to evaluate the tax and other consequences of an investment in the Shares. 1.9 TRANSFER OR RESALE. The Subscriber understands that Rule 144 (the "Rule") promulgated under the 1933 Act requires, among other conditions, a one-year holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the 1933 Act. The Subscriber understands that the Company makes no representation or warranty regarding its fulfillment in the future of any reporting requirements under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or its dissemination to the public of any current financial or other information concerning the Company, as is required by the Rule as one of the conditions of its availability. The Subscriber understands and hereby acknowledges that the Company is under no obligation to register the Shares comprising the Units under the 1933 Act, with the exception of certain registration rights set forth in Article IV herein. The Subscriber consents that the Company may, if it desires, permit the transfer of the Shares out of the Subscriber's name only when the Subscriber's request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the 1933 Act or any applicable state "blue sky" laws. 1.10 PLACEMENT AGENT. The Subscriber agrees that neither the Placement Agent or any of its directors, officers, employees or agents shall be liable to any Subscriber for any action taken or omitted to be taken by it in connection herewith, except for willful misconduct or gross negligence. 1.11 LEGENDS. The Subscriber understands that the certificates representing the Shares, until such time as they have been registered under the 1933 Act, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such certificates or other instruments): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE 3 OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Shares upon which it is stamped, if (a) such Shares are registered under the 1933 Act, (b) such holder delivers to the Company an opinion of counsel, in a reasonably acceptable form, to the Company that a disposition of the Shares may be made pursuant to an exemption from such registration, or (c) such holder provides the Company with reasonable assurance that a disposition of the Shares may be made pursuant to the Rule without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold. 1.12 NO GENERAL SOLICITATION. The Subscriber represents that the Subscriber was not induced to invest by any form of general solicitation or general advertising including, but not limited to, the following: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the news or radio; and (ii) any seminar or meeting whose attendees were invited by any general solicitation or advertising. 1.13 VALIDITY; ENFORCEMENT. If the Subscriber is a corporation, partnership, trust or other entity, the Subscriber represents and warrants that: (a) it is authorized and otherwise duly qualified to purchase and hold the Units; and (b) that this Agreement has been duly and validly authorized, executed and delivered and constitutes the legal, binding and enforceable obligation of the undersigned. 1.14 ADDRESS. The Subscriber hereby represents that the address of Subscriber furnished by the Subscriber at the end of this Agreement is the undersigned's principal residence if the Subscriber is an individual or its principal business address if it is a corporation or other entity. 1.15 FOREIGN SUBSCRIBER. If the Subscriber is not a United States person, such Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares comprising the Units or any use of this Agreement, including: (a) the legal requirements within its jurisdiction for the purchase of the Units; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Shares comprising the Units. Such Subscriber's subscription and payment for, and its continued beneficial ownership of the Shares, will not violate any applicable securities or other laws of the Subscriber's jurisdiction. 4 1.16 NASD MEMBER. The Subscriber acknowledges that if it is a Registered Representative of a NASD member firm, the Subscriber must give such firm notice required by the NASD's Rules of Fair Practice, receipt of which must be acknowledged by such firm on the signature page hereof. 1.17 INCREaSE IN MAXIMUM OFFERING. The Subscriber acknowledges that the Maximum Offering may be increased by up to 10 Units ($1,000,000) without notice to Subscribers. II. REPRESENTATIONS BY THE COMPANY The Company represents and warrants to the Subscriber, except as set forth in the disclosure schedules attached hereto: 2.1 ORGANIZATION AND QUALIFICATION. The Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is organized, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company, or on the transactions contemplated hereby, or by the other Offering Documents or the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Offering Documents. The Company has one wholly-owned operating subsidiary, Key Communications Service, Inc., and one wholly-owned inactive subsidiary, WPJ, Inc. d/b/a/ Integrated Medical Systems. 2.2 AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Offering Documents, to file and perform its obligations under the Offering Documents, and to issue the Shares in accordance with the terms of the Offering Documents. The execution and delivery of the Offering Documents by the Company and the consummation by the Company of the transactions contemplated by the Offering Documents, including without limitation the issuance of the Shares, have been duly authorized by the Company's board of directors and no further consent or authorization is required by the Company, its board of directors or its shareholders. 2.3 ISSUANCE OF SECURITIES. The issuance, sale and delivery of the Shares have been duly authorized by all requisite corporate action by the Company and, upon issuance in accordance with the Offering Documents, shall be (a) duly authorized, validly issued, fully paid and non-assessable, and (b) free from all taxes, liens and charges with respect to the issue thereof. 2.4 NO CONFLICTS. The execution, delivery and performance of the Offering Documents by the Company and the consummation by the Company of the transactions contemplated therein, will not (a) result in a violation of the Company's Articles of Incorporation, any certificate of designations, preferences and rights of any outstanding series of preferred stock of the Company, or the Company's bylaws, (b) conflict with, or constitute a default or an event which with notice 5 or lapse of time or both would become a default under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, lease, license or instrument (including without limitation, any document filed as an exhibit to any of the Company's SEC Documents (as defined below)), or (c) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Nasdaq National Market ("Nasdaq") applicable to the Company or by which any property or asset of the Company is bound or affected). 2.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. Since September 30, 2001, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC Documents"). The Company has made available to the Subscriber or its representatives copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments that will not be material). As of the date hereof, the Company meets the requirements for the use of Form S-3 for registration of the resale of the Shares and has no reason to believe it will not continue to remain so eligible. 2.6 ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry or investigation before or by Nasdaq, any court, public board, government agency, self-regulatory organization or body, or arbitrator pending or, to the knowledge of the Company, threatened against the Company or any of the Company's officers or directors in their capacities as such which would have a Material Adverse Effect. 2.7 SECURITIES LAW COMPLIANCE. The offer, offer for sale, and sale of the Units have not been registered with the SEC. The Units are to be offered for sale and sold in reliance upon the exemptions from the registration requirements of Section 5 of the 1933 Act. The Company will conduct the Offering in compliance with the requirements of Regulation D under the 1933 Act, and the Company will file all appropriate notices of offering with the SEC. 2.8 DISCLOSURE. None of the representations and warranties of the Company appearing in this Agreement or any information appearing in any of the Offering Documents or SEC Documents, 6 when considered together as a whole, contains, or on any Closing Date (as defined in Section 3.1 below) will contain, any untrue statement of a material fact or omits, or on any Closing Date will omit, to state any material fact required to be stated herein or therein in order for the statements herein or therein, in light of the circumstances under which they were made, not to be misleading. 2.9 ABSENCE OF CHANGES. Except as set forth on Schedule 2.9 to this Agreement, since September 30, 2001 the Company has not (i) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except current liabilities incurred in the usual and ordinary course of business and consistent with past practices, having individually or in the aggregate a Material Adverse Effect, (ii) made or suffered any changes in its contingent obligations by way of guaranty, endorsement (other than the endorsement of checks for deposit in the usual and ordinary course of business), indemnity, warranty or otherwise, (iii) discharged or satisfied any liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the balance sheet dated as at September 30, 2001 and forming part of the SEC Documents, and current liabilities incurred since September 30, 2001, in each case in the usual and ordinary course of business and consistent with past practices, (iv) mortgaged, pledged or subjected to lien any of its assets, tangible or intangible, (v) sold, transferred or leased any of its assets except in the usual and ordinary course of business and consistent with past practices, (vi) cancelled or compromised any debt or claim, or waived or released any right, of material value, (vii) suffered any physical damage, destruction or loss (whether or not covered by insurance) adversely affecting the properties, business or prospects of the Company, (viii) entered into any transaction other than in the usual and ordinary course of business except for this Agreement, the other Offering Documents and the related agreements referred to herein and therein, (ix) encountered any labor difficulties or labor union organizing activities, (x) made or granted any wage or salary increase or entered into any employment agreement, (xi) issued or sold any shares of capital stock or other securities or granted any options with respect thereto, or modified any equity security of the Company, (xii) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding equity securities, (xiii) suffered or experienced any change in, or condition affecting, its condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of its business and consistent with past practices, having (either by itself or in conjunction with all such other changes, events and conditions) a Material Adverse Effect, (xiv) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, or (xv) entered into any agreement, or otherwise obligated itself, to do any of the foregoing. III. TERMS OF SUBSCRIPTION 3.1 OFFERING PERIOD. The subscription period will begin as of December 18, 2001 and will terminate at 11:59 PM Eastern time on February 18, 2002, unless extended by mutual agreement of the Company and the Placement Agent for up to an additional 30 days (the "Termination Date"). Provided the Minimum Offering shall have been subscribed for, funds representing the sale thereof shall have cleared, all conditions to closing set forth in the Agency Agreement have been satisfied or waived and neither the Company nor the Placement Agent have notified the 7 other that they do not intend to effect the closing of the Minimum Offering, a closing (the "Initial Closing") shall take place at the offices of counsel to the Placement Agent, Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, within three business days thereafter (but in no event later than three days following the Termination Date, which closing date may be accelerated or adjourned by agreement between the Company and the Placement Agent. At the Initial Closing, payment for the Units issued and sold by the Company shall be made against delivery of the Shares comprising such Units. Subsequent closings (each of which shall be deemed a "Closing" hereunder) shall take place by mutual agreement of the Company and the Placement Agent. The date of the last closing of the Offering is hereinafter referred to as the "Final Closing" and the date of any Closing hereunder is hereinafter referred to as a "Closing Date". 3.2 EXPENSES; FEES. Simultaneously with payment for and delivery of the Units at each Closing, the Company shall pay to the Placement Agent under the Agency Agreement a cash fee equal to 7% of the gross proceeds of the Units sold. The Company shall also reimburse the Placement Agent for its actual out-of-pocket expenses incurred in connection with the Offering, including, without limitation, the reasonable fees and disbursements of its counsel (Loeb & Loeb LLP), due diligence expenses, travel and road-show expenses, and printing and mailing expenses, up to an aggregate maximum of $50,000. 3.3 ESCROW. Pending the sale of the Units, all funds paid hereunder shall be deposited by the Company in escrow with the Escrow Agent. If the Company shall not have obtained the Minimum Offering on or before the Termination Date, then this subscription shall be void and all funds paid hereunder by the Subscriber, without interest, shall be promptly returned to the Subscriber, subject to Section 3.5 hereof. 3.4 CERTIFICATES. The Subscriber hereby authorizes and directs the Company, upon each Closing in the Offering, to deliver the Shares to be issued to such Subscriber pursuant to this Agreement either (a) to the Subscriber's address indicated in the Questionnaire, or (b) directly to the Subscriber's account maintained with the Placement Agent, if any. 3.5 RETURN OF FUNDS. The Subscriber hereby authorizes and directs the Company to return any funds for unaccepted subscriptions to the same account from which the funds were drawn, including any customer account maintained with the Placement Agent. IV. REGISTRATION RIGHTS 4.1 AUTOMATIC REGISTRATION. The Company hereby agrees with the Subscribers or their permitted transferees (other than a transferee who acquires shares pursuant to the Rule or an effective registration statement) (collectively, the "Holders") that no later than 45 days following the earlier of (a) the date of the Final Closing or (b) two weeks following the date of the Initial Closing, the Company shall prepare and file a registration statement under the 1933 Act with the SEC covering the resale of the Shares, and the Company will use its best efforts to cause such registration to become effective within 75 days after the earlier of (a) the date of the Final Closing or (b) two weeks following the date of the Initial Closing. In the event that the Company's registration statement covering the resale of the Shares has not been declared effective by the SEC within 75 day period set forth above, the Per Share Purchase Price shall be 8 reduced by 5% for each month (or on a pro rata basis for any portion thereof) thereafter until such time as the registration statement is effective; provided, however, that the maximum reduction in the Per Share Purchase Price shall be 25%; and provided, further, that any day during which the SEC is closed due to war, terrorism or national emergency shall be excluded from the calculation of the delay period. The reduction in the Per Share Purchase Price shall be evidenced by the issuance of additional Shares (the "Adjustment Shares") to the Holders within five days following the effective date of the registration statement. The Adjustment Shares shall be covered by the registration statement. The Company's obligation to keep the registration statement effective shall continue until the earlier of (a) the date that all of the Shares and Adjustment Shares have been sold pursuant to the Rule under the 1933 Act or an effective registration statement, or (b) such time as the Shares and Adjustment Shares are eligible for immediate resale pursuant to Rule 144(k) under the 1933 Act. For purposes of this Article IV, the term Shares shall be deemed to include the Adjustment Shares. 4.2 "PIGGYBACK" REGISTRATION RIGHTS. At any time commencing after the Final Closing, if the Company shall determine to proceed with the actual preparation and filing of a registration statement under the 1933 Act in connection with the proposed offer and sale of any of its securities by it or any of its security holders (other than a registration statement on Form S-4, S-8 or other limited purpose form), the Company will give written notice of its determination to all record holders of the Shares. Upon the written request from any Holders (the "Requesting Holders"), within 15 days after receipt of any such notice from the Company, the Company will, except as herein provided, cause all of the Shares covered by such request (the "Requested Stock") held by the Requesting Holders to be included in such registration statement, all to the extent requisite to permit the sale or other disposition by the prospective seller or sellers of the Requested Stock; provided, further, that nothing herein shall prevent the Company from, at any time, abandoning or delaying any registration. If any registration pursuant to this Section 4.2 shall be underwritten in whole or in part, the Company may require that the Requested Stock be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. In such event, the Requesting Holders shall, if requested by the underwriters, execute an underwriting agreement containing customary representations and warranties by selling shareholders and a lock-up on Shares not being sold. If in the good faith judgment of the managing underwriter of such public offering the inclusion of all of the Requested Stock would reduce the number of shares to be offered by the Company or interfere with the successful marketing of the shares of stock offered by the Company, the number of shares of Requested Stock otherwise to be included in the underwritten public offering may be reduced pro rata (by number of shares) among the Requesting Holders or excluded in their entirety if so required by the underwriter. To the extent only a portion of the Requested Stock is included in the underwritten public offering, those shares of Requested Stock which are thus excluded from the underwritten public offering and any other securities of the Company held by such Holders shall be withheld from the market by the Holders thereof for a period, not to exceed 90 days, which the managing underwriter reasonably determines is necessary in order to effect the underwritten public offering. The obligation of the Company under this Section 4.2 shall not apply after the earlier of (a) the date that all of the Shares have been sold pursuant to the Rule under the 1933 Act or an effective registration statement, or (b) such time as the Shares are eligible for immediate resale pursuant to Rule 144(k) under the 1933 Act. 9 4.3 REGISTRATION PROCEDURES. To the extent required by Sections 4.1 or 4.2, the Company will: (a) prepare and file with the SEC a registration statement with respect to such securities, and use its best efforts to cause such registration statement to become and remain effective; (b) prepare and file with the SEC such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective; (c) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as the Holders may reasonably request in writing within 20 days following the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (e) notify the Holders, promptly after it shall receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) notify the Holders promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information; (g) prepare and file with the SEC, promptly upon the request of any Holders, any amendments or supplements to such registration statement or prospectus which, in the reasonable opinion of counsel for such Holders (and concurred in by counsel for the Company), is required under the 1933 Act or the rules and regulations thereunder in connection with the distribution of Common Stock by such Holders; (h) prepare and promptly file with the SEC and promptly notify such Holders of the filing of such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the 1933 Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (i) advise the Holders, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of 10 such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. The Holders shall cooperate with the Company in providing the information necessary to effect the registration of their Shares, including completion of customary questionnaires. 4.4 EXPENSES. (a) With respect to the any registration required pursuant to Section 4.1 or 4.2 hereof, all fees, costs and expenses of and incidental to such registration, inclusion and public offering (as specified in paragraph (b) below) in connection therewith shall be borne by the Company, provided, however, that the Holders shall bear their pro rata share of the underwriting discount and commissions and transfer taxes and the cost of their own counsel. (b) The fees, costs and expenses of registration to be borne by the Company as provided in paragraph (a) above shall include, without limitation, all registration, filing, and NASD fees, printing expenses, fees and disbursements of counsel and accountants for the Company, and all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered and qualified (except as provided in 4.4(a) above). Fees and disbursements of counsel and accountants for the Holders and any other expenses incurred by the Holders not expressly included above shall be borne by the Holders. 4.5 INDEMNIFICATION. (a) The Company will indemnify and hold harmless each Holder which is included in a registration statement pursuant to the provisions of Sections 4.1 and 4.2 hereof, its directors and officers, and any underwriter (as defined in the 1933 Act) for such Holder and each person, if any, who controls such Holder or such underwriter within the meaning of the 1933 Act, from and against, and will reimburse such Holder and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Holder or any such underwriter or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expenses arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of such Holder, such underwriter or such controlling person in writing specifically for use in the preparation thereof. (b) Each Holder included in a registration pursuant to the provisions of Sections 4.1 or 4.2 hereof will indemnify and hold harmless the Company, its directors and 11 officers, any controlling person and any underwriter from and against, and will reimburse the Company, its directors and officers, any controlling person and any underwriter with respect to, any and all loss, damage, liability, cost or expense to which the Company or any controlling person and/or any underwriter may become subject under the 1933 Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by or on behalf of such Holder specifically for use in the preparation thereof; provided, that in no case shall the Holder be responsible for any amount in excess of the net proceeds received by it from the sale of the Shares. (c) Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (a) or (b) of this Section 4.5 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of said paragraph (a) or (b), promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, provided, however, if counsel for the indemnifying party concludes that a single counsel cannot under applicable legal and ethical considerations, represent both the indemnifying party and the indemnified party, the indemnified party or parties have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties, it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel as required by the local rules of such jurisdiction) at any time for all such indemnified parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of said paragraph (a) or (b) for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action or (iii) the indemnifying party has, in its sole discretion, authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. 12 V. MISCELLANEOUS 5.1 NOTICE. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party), or (c) one (1) business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, FL 33317 Telephone: (954) 473-1001 Facsimile: (954) 473- 2341 Attention: Judson E. Schmid, Chief Financial Officer With a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, FL 33131 Telephone: (305) 789-7639 Facsimile: (650) 329-2351 Attention: Rodney Bell, Esq. If to the Subscriber, to its address and facsimile number set forth at the end of this Agreement, or to such other address and/or facsimile number and/or to the attention of such other person as specified by written notice given to the Company five (5) days prior to the effectiveness of such change. Written confirmation of receipt (a) given by the recipient of such notice, consent, waiver or other communication, (b) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission, or (c) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (a), (b) or (c) above, respectively. 5.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all other prior oral or written agreements between the Subscriber, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Subscriber makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the holders of at least a majority of the Shares then outstanding (or if prior to the Closing, the Subscribers purchasing at least a majority 13 of the Shares to be purchased at the Closing). No such amendment shall be effective to the extent that it applies to less than all of the holders of the Securities then outstanding. 5.3 SEVERABILITY. 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 in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. 5.4 GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the Southern District of New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereby irrevocably waives any right it may have, and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection with or arising out of this Agreement or any transaction contemplated hereby. 5.5 HEADINGS. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least a majority the Shares then outstanding, except by merger or consolidation. The Subscriber may assign some or all of its rights hereunder without the consent of the Company, provided, however, that any such assignment shall not release the Subscriber from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption, which consent shall not be unreasonably withheld. 5.7 NO THIRD PARTY BENEFICIARIES. 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. 14 5.8 SURVIVAL. The representations and warranties of the Company and the Subscriber contained in Articles I and II and the agreements set forth in this Article V shall survive the Final Closing for a period of two years. 5.9 FURTHER ASSURANCES. 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. 5.10 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 5.11 LEGAL REPRESENTATION. The Subscriber acknowledges that: (a) it has read this Agreement and the exhibits hereto; (b) it understands that the Company has been represented in the preparation, negotiation, and execution of this Agreement by Holland & Knight LLP, counsel to the Company, and that such counsel has not represented and is not representing the Subscriber; (c) it understands that the Placement Agent has been represented by Loeb & Loeb LLP, and that such counsel has not represented and is not representing the Subscriber; (d) it has either been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of its own choice, or has chosen to forego such representation by legal counsel after being advised to seek such legal representation; and (e) it understands the terms and consequences of this Agreement and is fully aware of its legal and binding effect. 5.12 CONFIDENTIALITY. The Subscriber agrees that, at all times during the period ending five (5) business days after the filing by the Company with the SEC of its next Annual Report on Form 10-K or Current Report on Form 8-K following the date hereof, it shall keep confidential and not divulge, furnish or make accessible to anyone, the confidential information concerning or relating to the business or financial affairs of the Company contained in the Offering Documents to which it has become privy by reason of this Agreement. The Company agrees that it shall not disclose the name of the Subscriber in any press release or public filing without the consent of the Subscriber. 5.13 COUNTERPARTS. This Agreement may be executed in two or more identical 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; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. - --------------------------------------------- ------------------------------------------------ Signature of Subscriber Signature of Co-Subscriber - --------------------------------------------- ------------------------------------------------ Name of Subscriber Name of Co-Subscriber [please print] [please print] - --------------------------------------------- ------------------------------------------------ Address of Subscriber Address of Co-Subscriber - --------------------------------------------- ------------------------------------------------ Social Security or Taxpayer Social Security or Taxpayer Identification Identification Number of Subscriber Number of Co-Subscriber - --------------------------------------------- Subscriber's Account Number at Commonwealth Associates, L.P. *If Subscriber is a Registered Representative with an NASD member firm, have the following acknowledgment signed by the appropriate party: The undersigned NASD member firm Subscription Accepted: acknowledges receipt of the notice required by Rule 3040 of the NASD Conduct Rules. PROXYMED, INC. - --------------------------------------------- Name of NASD Member Firm By: By --------------------------------------------- ------------------------------------------- Name: Authorized Officer Title: - --------------------------------------------- Dollar Amount of Units Subscribed For ------------------------------------------------ Dollar Amount of Subscription Accepted
16 EX-10.2 5 g73653ex10-2.txt PROXYMED - PLACEMENT AGENCY AGREEMENT 12/18/01 EXHIBIT 10.2 PROXYMED, INC. PLACEMENT AGENCY AGREEMENT Commonwealth Associates, L.P. 830 Third Avenue New York, New York 10022 December 18, 2001 Ladies and Gentlemen: This Placement Agency Agreement (this "Agreement") confirms the retention by ProxyMed, Inc., a Florida corporation (the "Company"), of Commonwealth Associates, L.P., a New York limited partnership ("Commonwealth" or the "Placement Agent"), to act as the sales agent in connection with a private placement for the Company on the terms set forth below. The Company proposes to offer for sale solely to "accredited investors," as such term is defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the "1933 Act"), in a private placement (the "Offering"), up to 70 units (the "Units") at $100,000 per Unit, each Unit consisting of the number of shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock") equal to $100,000 divided by the Per Share Purchase Price. The "Per Share Purchase Price" shall be determined by negotiation among the Company, the Placement Agent and the Subscribers (defined below) in the Offering, but in no event will the Per Share Purchase Price be less than $15.00 per share. A minimum of 50 Units ($5,000,000) (the "Minimum Offering") and a maximum of 70 Units ($7,000,000) (the "Maximum Offering") will be sold in the Offering. The Maximum Offering may be increased by up to 10 Units ($1,000,000) subject to the mutual agreement of the Company and Placement Agent. The Units will be offered pursuant to those terms and conditions mutually acceptable to Commonwealth and the Company as reflected in a Confidential Investor Term Sheet prepared by the Company in form and substance satisfactory to Commonwealth and its counsel (the "Investor Term Sheet"). The Minimum Offering will be made on a "best efforts -- all-or-none" basis and the balance of the Offering will be made on a "best efforts" basis. The Units are being offered in accordance with Section 4(2) of the 1933 Act and Regulation D promulgated thereunder. The Investor Term Sheet, as it may be amended or supplemented from time to time, and the form of the proposed subscription agreement (the "Subscription Agreement") between the Company and each subscriber for the Offering (the "Subscribers") and the exhibits which are part of the Investor Term Sheet and/or Subscription Agreement are collectively referred to herein as the "Offering Documents." The Offering Documents, together with (i) this Agreement, (ii) the escrow agreement by and among the Company, the Placement Agent and American Stock Transfer & Trust Company (the "Escrow Agreement"), and (iii) any exhibits, schedules and appendices which are part of the Offering Documents, shall be collectively referred to herein as the "Transaction Documents." The Company will prepare and deliver to Commonwealth a reasonable number of copies of the Transaction Documents in form and substance satisfactory to Commonwealth and its counsel. Each Subscriber will be required to deliver, among other things, a Subscription Agreement and a confidential investor questionnaire (the "Questionnaire") in the form to be provided to offerees. Capitalized terms used herein, unless otherwise defined or unless the context otherwise indicates, shall have the same meanings provided in the Transaction Documents. 1. Appointment of Placement Agent. Commonwealth is hereby appointed exclusive placement agent of the Company (subject to Commonwealth's right to have selected dealers ("Selected Dealers") in good standing with the National Association of Securities Dealers ("NASD") participate in the Offering) during the offering period for the Offering herein specified (the "Offering Period") for the purpose of assisting the Company in finding qualified Subscribers. The Offering Period shall commence on the date the Offering Documents are first made available to Commonwealth by the Company for delivery in connection with the Offering and shall continue until the earlier to occur of: (i) the sale of the Maximum Offering; or (ii) February 18, 2002, unless extended by mutual agreement of the Company and the Placement Agent for up to an additional 30 days (the "Termination Date"). If the Minimum Offering is not sold prior to the Termination Date, the Offering will be terminated and all funds received from Subscribers will be returned, without interest and without any deduction. (a) Subject to the performance by the Company of all of its obligations to be performed under this Agreement and to the completeness and accuracy of all representations and warranties of the Company contained in this Agreement, the Placement Agent hereby accepts such agency and agrees to use its best efforts to assist the Company in finding qualified Subscribers. It is understood that the Placement Agent has no commitment to sell the Units. Provided Commonwealth is proceeding in good faith, Commonwealth's agency hereunder is not terminable by the Company prior to the Termination Date. (b) Subscriptions for Units shall be evidenced by the execution by Subscribers of a Subscription Agreement. No Subscription Agreement shall be effective unless and until it is accepted by the Company. The Placement Agent shall not have any obligation to independently verify the accuracy or completeness of any information contained in any Subscription Agreement or the authenticity, sufficiency, or validity of any check delivered by any prospective Subscriber in payment for Units. (c) Without the prior written consent of the Company, none of the Units will be offered or sold to the Placement Agent and/or its officers, directors, employees or affiliates or the Company and/or it officers, directors, employees or affiliates. 2. Representations and Warranties of the Company. The Company represents and warrants to the Placement Agent and each Selected Dealer, if any, as follows: 2 (a) Securities Law Compliance. The offer, offer for sale, and sale of the Units have not been registered with the United States Securities and Exchange Commission (the "SEC"). The Units are to be offered, offered for sale and sold in reliance upon the exemptions from the registration requirements of Section 5 of the 1933 Act. The Company will use its best efforts to conduct the Offering in compliance with the requirements of Regulation D of the General Rules and Regulations under the 1933 Act, and the Company will file all appropriate notices of the Offering with the SEC. The Company has prepared the Offering Documents. None of the representations or warranties of the Company contained in this Agreement or any information appearing in any of the Transaction Documents contains, or on or prior to any Closing (as defined below) will contain, any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading. If at any time prior to the completion of the Offering or other termination of this Agreement any event shall occur as a result of which it might become necessary to amend or supplement the Offering Documents so that they do not include any untrue statement of any material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then existing, not misleading, the Company will promptly notify the Placement Agent and will supply the Placement Agent with amendments or supplements correcting such statement or omission. The Company will also provide the Placement Agent for delivery to all offerees and purchasers and their representatives, if any, any information, documents and instruments which the Placement Agent deems reasonably necessary to comply with applicable state and federal law. (b) Organization. The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was organized, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company or on the transactions contemplated hereby, or on the other Transaction Documents or the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents. (c) Capitalization. The authorized, issued and outstanding capital stock of the Company prior to the consummation of the transactions contemplated hereby is set forth in Schedule 2(c) to this Agreement. All of such outstanding shares have been and are, or upon issuance will be duly authorized, validly issued, fully paid and non-assessable. Except as disclosed in Schedule 2(c), (i) no shares of the Company's capital stock are subject to preemptive rights under Florida law or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding debt securities issued by the Company; (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any 3 character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company; (iv) there are no agreements or arrangements under which the Company is obligated to register the sale of any of their securities under the 1933 Act; (v) there are no outstanding securities of the Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares as described in the Transaction Documents which shall not have been waived prior to the Initial Closing (as defined below) of the Offering; and (vii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. (d) Subsidiaries and Investments. Except as set forth in Schedule 2(d) to this Agreement, the Company has no subsidiaries and the Company does not own, directly or indirectly, any capital stock or other equity ownership or proprietary interests in any other corporation, association, trust, partnership, joint venture or other entity. (e) SEC Documents; Financial Statements. Since September 30, 2001, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC Documents"). The Company has made available on request to the Subscriber or its representatives copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP"), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments that will not be material). As of the date hereof, the Company meets the requirements for the use of Form S-3 for registration of the resale of the Shares. (f) Absence of Changes. Except as set forth on Schedule 2(f) to this Agreement, since September 30, 2001 the Company has not (i) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except current liabilities incurred in the usual and ordinary course of business and consistent with past practices, having individually or in the aggregate a Material Adverse Effect, (ii) made or suffered any 4 changes in its contingent obligations by way of guaranty, endorsement (other than the endorsement of checks for deposit in the usual and ordinary course of business), indemnity, warranty or otherwise, (iii) discharged or satisfied any liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the balance sheet dated as at September 30, 2001 and forming part of the SEC Documents, and current liabilities incurred since September 30, 2001, in each case in the usual and ordinary course of business and consistent with past practices, (iv) mortgaged, pledged or subjected to lien any of its assets, tangible or intangible, (v) sold, transferred or leased any of its assets except in the usual and ordinary course of business and consistent with past practices, (vi) cancelled or compromised any debt or claim, or waived or released any right, of material value, (vii) suffered any physical damage, destruction or loss (whether or not covered by insurance) adversely affecting the properties, business or prospects of the Company, (viii) entered into any transaction other than in the usual and ordinary course of business except for this Agreement, the other Transaction Documents and the related agreements referred to herein and therein, (ix) encountered any labor difficulties or labor union organizing activities, (x) made or granted any wage or salary increase or entered into any employment agreement, (xi) issued or sold any shares of capital stock or other securities or granted any options with respect thereto, or modified any equity security of the Company, (xii) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding equity securities, (xiii) suffered or experienced any change in, or condition affecting, its condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of its business and consistent with past practices, having (either by itself or in conjunction with all such other changes, events and conditions) a Material Adverse Effect, (xiv) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, or (xv) entered into any agreement, or otherwise obligated itself, to do any of the foregoing. (g) Exchange Listing. The Company's Common Stock has been designated for quotation or listed on the Nasdaq National Market ("Nasdaq"), trading in the Common Stock has not been suspended by the SEC or Nasdaq and the Company has received no communication, written or oral, from the SEC or Nasdaq regarding the suspension or delisting of the Common Stock from Nasdaq. Except as disclosed on Schedule 2(g), the Company is not in violation of the listing requirements of Nasdaq as in effect on the date hereof and has no actual knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock by Nasdaq in the foreseeable future. (h) Title. Except as set forth in or contemplated by Schedule 2(h) to this Agreement, the Company has good and marketable title to all properties and assets owned by it, free and clear of all liens, charges, encumbrances or restrictions, except such as are not significant or important in relation to the Company's business; all of the material leases and subleases under which the Company is the lessor or sublessor of properties or assets or under which the Company holds properties or assets as lessee or sublessee are in full force and effect, and the Company is not in default in any material respect with respect to any of the terms or provisions of any of such leases or subleases, and no material claim has been asserted by anyone adverse to rights of the Company as lessor, sublessor, lessee or sublessee under any of the leases or subleases mentioned above, or affecting or questioning the right of the Company to continued possession of the leased 5 or subleased premises or assets under any such lease or sublease. The Company owns or leases all such properties as are necessary to its operations as described in the Offering Documents. (i) Proprietary Rights. Except as set forth in or contemplated by Schedule 2(i) to this Agreement, the Company owns or possesses the requisite and enforceable rights to use all patents, patent applications, trademarks, service marks, copyrights, trade secrets, processes, formulations, technology or know-how used in the conduct of its business (the "Proprietary Rights"). The Company has not received any notice of any claims, nor does it have any knowledge of any threatened claims, and knows of no facts which would form the basis of any claim, asserted by any person to the effect that the sale or use of any product or process now used or offered by the Company or proposed to be used or offered by the Company infringes on any patents or infringes upon the use of any such Proprietary Rights of another person and, to the best of the Company's knowledge, no others have infringed the Company's Proprietary Rights. (j) Litigation. Except as set forth in or contemplated by Schedule 2(j) to this Agreement, there is no material action, suit, investigation, customer complaint, claim or proceeding at law or in equity by or before any arbitrator, court, governmental instrumentality or agency, self-regulatory organization or body or public board now pending or, to the knowledge of the Company, threatened against the Company of any of the Company's officers or directors in their capacities as such (or basis therefor known to the Company), the adverse outcome of which would have a Material Adverse Effect. The Company is not subject to any judgment, order, writ, injunction or decree of any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign which have a Material Adverse Effect. (k) Non-Defaults; Non-Contravention. Except as set forth in or contemplated by Schedule 2(k) to this Agreement, the Company is not in violation of or default under, nor will the execution and delivery of this Agreement or any of the Transaction Documents or consummation of the transactions contemplated herein or therein result in a violation of or constitute a default in the performance or observance of any obligation under: (i) its Articles of Incorporation, or its By-laws; or (ii) any indenture, mortgage, contract, material purchase order or other agreement or instrument to which the Company is a party or by which it or its property is bound, where such violation or default would have a Material Adverse Effect; or (iii) any material order, writ, injunction or decree of any court of any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, where such violation or default would have a Material Adverse Effect, and there exists no condition, event or act which constitutes, nor which after notice, the lapse of time or both, could constitute a default under any of the foregoing, which in either case would have a Material Adverse Effect. (l) Taxes. Except as set forth in or contemplated by Schedule 2(l) to this Agreement, the Company has filed all Federal, state, local and foreign tax returns which are required to be filed by it or otherwise met its disclosure obligations to the relevant agencies and all such returns are true and correct in all material respects. The Company has paid or adequately provided for all tax liabilities of the Company as reflected on such returns or pursuant to any assessments received by it or which it is obligated to withhold from amounts owing to any employee, creditor or third party. The Company has properly accrued all taxes required to be accrued by GAAP consistently applied. To the best of the Company's knowledge, except as set forth in Schedule 2(l) to this Agreement, the tax returns of the Company have never been audited by any state, 6 local or Federal authorities. The Company has not waived any statute of limitations with respect to taxes or agreed to any extension of time with respect to any tax assessment or deficiency. (m) Compliance With Laws; Licenses, Etc. Except as set forth in or contemplated by Schedule 2(m) to this Agreement, the Company has not received notice of any violation of or noncompliance with any Federal, state, local or foreign, laws, ordinances, regulations and orders applicable to its business which has not been cured, the violation of, or noncompliance with which, would have a Material Adverse Effect. The Company has all material licenses and permits and other governmental certificates, authorizations and permits and approvals (collectively, "Licenses") required by every Federal, state and local government or regulatory body for the operation of its business as currently conducted and the use of its properties, except where the failure to be licensed or possess a permit would not have a Material Adverse Effect. The Licenses are in full force and effect and to the Company's knowledge no violations currently exist in respect of any License and no proceeding is pending or threatened to revoke or limit any thereof. (n) Authorization of Agreement, Etc. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated by the Transaction Documents, including without limitation the issuance of the Shares, have been duly authorized by the Company's Board of Directors (the "Board") and no further consent or authorization is required by the Company, the Board or the Company's shareholders. The Transaction Documents have been duly executed and delivered by the Company, and constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. (o) Authorization of Shares. The issuance, sale and delivery of the Shares have been duly authorized by all requisite corporate action of the Company. When so issued, sold and delivered in accordance with the Transaction Documents for the consideration set forth therein, the Shares will be validly issued and outstanding, fully paid and nonassessable, and not subject to preemptive or any other similar rights of the shareholders of the Company or others which rights shall not have been waived prior to the Initial Closing (as defined below). (p) Exemption from Registration. Assuming (i) the accuracy of the information provided by the respective Subscribers in the Offering Documents and (ii) that the Placement Agent has complied in all material respects with the provisions of Regulation D promulgated under the 1933 Act, the offer and sale of the Shares pursuant to the terms of this Agreement are exempt from the registration requirements of the 1933 Act and the rules and regulations promulgated thereunder. The Company is not disqualified from the exemption under Regulation D by virtue of the disqualifications contained in Rule 505(b)(2)(iii) or Rule 507 promulgated thereunder. (q) Brokers. Neither the Company nor any of its officers, directors, employees or stockholders has employed any broker or finder in connection with the transactions contemplated by this Agreement other than the Placement Agent. 7 (r) Title to Securities. When certificates representing the Shares have been duly delivered to the purchasers participating in the Offering and payment shall have been made therefor, the several purchasers shall receive from the Company good and marketable title to such securities free and clear of all liens, encumbrances and claims whatsoever (with the exception of claims arising through the acts or omissions of the purchasers and except as arising from applicable Federal and state securities laws), and the Company shall have paid all taxes, if any, in respect of the original issuance thereof. (s) Consents. Except as contemplated by this Agreement, and except for the filing of the Registration Statement (as defined in the Subscription Agreement) with the SEC, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents. Except as otherwise provided in the Transaction Documents, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the foregoing. (t) No General Solicitation. None of the Company, any of its affiliates, and any person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Shares. (u) No Integrated Offering. None of the Company, any of its affiliates, and any person acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Shares under the 1933 Act or cause the Offering to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable shareholder approval provisions, including without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. Except as set forth in Section 4(j), none of the Company, its affiliates and any person acting on its behalf will take any action or steps referred to in the preceding sentence that would require registration of the Shares under the 1933 Act or cause the Offering to be integrated with other offerings. (v) Application of Takeover Protections; Rights Agreement. The Company and the Board have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the state of its incorporation which is or could become applicable to the Subscriber as a result of the transactions contemplated by this Agreement, including without limitation, the Company's issuance of the Shares and the Subscriber's ownership of the Shares. The Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company. (w) Right of First Refusal. No person, firm or other business entity is a party to any agreement, contract or understanding, written or oral entitling such party to a right of first refusal with respect to offerings by the Company. 8 (x) Foreign Corrupt Practices. Neither the Company nor any director, officer, agent, employee or other person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company, (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (ii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 3. Closing; Placement and Fees. (a) Closing of the Offering. Provided the Minimum Offering shall have been subscribed for and funds representing the sale thereof shall have cleared, a closing (the "Initial Closing") shall take place at the offices of counsel to the Placement Agent, Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, within three business days thereafter (but in no event later than three days following the Termination Date), which closing date may be accelerated or adjourned by agreement between the Company and the Placement Agent. At the Initial Closing, payment for the Units issued and sold by the Company shall be made against delivery of the Shares comprising such Units. Subsequent closings (each of which shall be deemed a "Closing" hereunder) shall take place by mutual agreement of the Company and the Placement Agent. The date of the last closing of the Offering is hereinafter referred to as the "Final Closing" and the date of any Closing hereunder is hereinafter referred to as a "Closing Date". (b) Conditions to Placement Agent's Obligations. The obligations of the Placement Agent hereunder will be subject to the accuracy of the representations and warranties of the Company herein contained as of the date hereof and as of each Closing Date of the Offering, to the performance by the Company of its obligations hereunder and to the following additional conditions: (i) Due Qualification or Exemption. (A) The Offering will become qualified or be exempt from qualification under the securities or "blue sky" laws of the several states pursuant to Section 4(d) below not later than the Closing Date, and (B) at the Closing Date no stop order suspending the sale of the Units shall have been issued, and no proceedings by an governmental agency, self-regulatory organization or any securities exchange for that purpose shall have been initiated or threatened. (ii) No Material Misstatements. Neither the blue sky qualification materials nor the Offering Documents, nor any supplement thereto, will contain any untrue statement of a fact which in the opinion of the Placement Agent is material, or omits to state a fact, which in the opinion of the Placement Agent is material and is required to be stated therein, or is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (iii) Compliance with Agreements. The Company will have complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to each Closing. 9 (iv) Corporate Action. The Company will have taken all necessary corporate action for the execution and delivery of this Agreement, the performance by the Company of its obligations hereunder and the Offering contemplated hereby. (v) Opinion of Counsel. The Placement Agent shall receive the opinion of Holland & Knight LLP, counsel to the Company, addressed to the Placement Agent and the Subscribers, substantially to the effect that: (A) the Company has been incorporated under the Florida Business Corporation Act and its status is active, has all requisite corporate power and authority necessary to own or hold its respective properties and conduct its business as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, and is duly qualified or licensed to do business as a foreign corporation in California, Georgia and Indiana; (B) each of this Agreement, the Subscription Agreement, the Shares, and the Escrow Agreement has been duly and validly authorized, executed and delivered by the Company, and is the valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to any applicable bankruptcy, insolvency or other laws affecting the rights of creditors generally and to general equitable principles; (C) to such counsel's knowledge and without independent investigation, the authorized, issued and outstanding capital stock of the Company as of the date hereof (before giving effect to the transactions contemplated by this Agreement) is as set forth in Schedule 2(c) hereto. To such counsel's knowledge and without independent investigation, there are no outstanding warrants, options, agreements, convertible securities, preemptive rights or other commitments pursuant to which the Company is, or may become, obligated to issue any shares of its capital stock or other securities of the Company other than as set forth in Schedule 2(c); (D) assuming (i) the accuracy of the information provided by the Subscribers in the Offering Documents; and (ii) that the Placement Agent and any applicable Selected Dealer have complied with the requirements of section 4(2) of the 1933 Act (and the provisions of Regulation D promulgated thereunder), the issuance and sale of the Units is exempt from the registration requirements set forth in Section 5 of the 1933 Act; (E) neither the execution and delivery of this Agreement, the Subscription Agreement or the Escrow Agreement, nor compliance with the terms hereof or thereof, nor the consummation of the transactions herein or therein contemplated, nor the issuance of the Shares, will to the best of such counsel's knowledge without independent investigation, conflict with, result in a breach of, or constitute a default under the Articles of Incorporation or By-laws of the Company, or any material contract, instrument or document known to such counsel to which the Company is a party, or by which it or any of its properties is bound or violate any applicable law, rule, regulation, judgment, order or decree known to such counsel of any governmental agency or court having jurisdiction over the Company or any of its properties or business; 10 (F) to the best of such counsel's knowledge and without independent investigation, there are no claims, actions, suits, investigations or proceedings before or by any arbitrator, court, governmental authority or instrumentality pending or, to such counsel's knowledge, threatened against or affecting the Company or involving the properties of the Company which might materially and adversely affect the business, properties or financial condition of the Company or which might materially adversely affect the transactions or other acts contemplated by this Agreement or the validity or enforceability of this Agreement, except as set forth in or contemplated by the Offering Documents or in Schedule 2(j) to this Agreement; and (G) such counsel advises (relying as to materiality upon the opinions of officers and other representatives of the Company), that no facts have come to such counsel's attention which lead them to believe that the Offering Documents contained any untrue statement of a material fact required to be stated therein or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading (except for the financial statements, notes thereto and other financial information and statistical data contained therein, as to which such counsel need express no opinion), provided however that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Offering Documents. (vi) Officers' Certificate. The Placement Agent shall receive a certificate of the Company, signed by the Chief Executive Officer and Chief Financial Officer thereof, that (A) the representations and warranties contained in Section 2 hereof are true and accurate in all material respects at such Closing with the same effect as though expressly made at such Closing, (B) the Company has outstanding no more than 6,000,000 million common shares outstanding on a fully-diluted basis, (C) except as set forth in the SEC Documents, the Company has no outstanding indebtedness other than accounts payable, any capital lease obligations incurred in the ordinary course of business, the $7 million note payable to the former owner of MDP Corporation due in May 2002, and any obligations to be drawn against the $7.5 million asset-based line of credit with Textron Financial Corporation or any other lender. (vii) Due Diligence. The Placement Agent shall have completed and been satisfied with the results of its due diligence investigation of the Company, including, without limitation, the Company's financial statements, projections, expense budgets, business prospects, capital structure, background searches and contractual arrangements. (viii) Escrow Agreement. The Placement Agent shall receive a copy of a duly executed Escrow Agreement regarding the deposit of funds pending the closing(s) of the Offering with a bank or trust company acceptable to the Placement Agent. (ix) Lock-Up Agreements. The Placement Agent shall receive agreements from each executive officer, director and principal shareholder of the Company to the effect that such individual shall not sell, assign or transfer any of their securities of the Company until the registration statement covering the resale of the Shares has been declared effective by the SEC. (c) Blue Sky. The Company (or at the Company's request, counsel to the Placement Agent) will prepare and file the necessary documents so that offers and sales of the securities to 11 be offered in the Offering may be made in certain jurisdictions in the United States. It is understood that such filings may be based on or rely upon: (i) the representations of each Subscriber set forth in the Subscription Agreement and Questionnaire delivered by such Subscriber; (ii) the representations, warranties and agreements of the Company set forth in Section 2 of this Agreement; and (iii) the representations of the Company set forth in the certificate to be delivered at each Closing pursuant to paragraph (vi) of Section 3(b). (d) Placement Fee and Expenses. (i) Offering. Simultaneously with payment for and delivery of the Shares at each Closing of the Offering, the Company shall pay to the Placement Agent a sales concession equal to 7% of the aggregate purchase price of the Units sold. As set forth in Section 4(b), the Company shall also reimburse the Placement Agent for up to $50,000 of its accountable expenses incurred in connection with the Offering. (ii) Interest. In the event that for any reason the Company shall fail to pay to the Placement Agent all or any portion of the fees payable hereunder when due, interest shall accrue and be payable on the unpaid cash balance due hereunder from the date when first due through and including the date when actually collected by the Placement Agent, at a rate equal to two percent above the prime rate of Citibank, N.A., in New York, New York, computed on a daily basis and adjusted as announced from time to time. (e) Bring-Down Opinions and Certificates. If there is more than one Closing, then at each such Closing there shall be delivered to the Placement Agent updated opinion and certificate as described in (v) and (vi) of Section 3(b) above, respectively. (f) No Adverse Changes. There shall not have occurred, at any time prior to the applicable Closing (i) any domestic or international event, act or occurrence which has materially disrupted, or in the Placement Agent's opinion will in the immediate future materially disrupt, the securities markets; (ii) a general suspension of, or a general limitation on prices for, trading in securities on the New York Stock Exchange or the Nasdaq -- Amex Stock Exchange or in the over-the-counter market; (iii) any outbreak of major hostilities or other national or international calamity; (iv) any banking moratorium declared by a state or federal authority; (v) any moratorium declared in foreign exchange trading by major international banks or other persons; (vi) any material interruption in the mail service or other means of communication within the United States; (vii) any material adverse change in the business, properties, assets, results of operations, or financial condition of the Company; or (viii) any change in the market for securities in general or in political, financial, or economic conditions which, in the Placement Agent's reasonable judgment, makes it inadvisable to proceed with the Offering. 4. Covenants of the Company. (a) Use of Proceeds. The net proceeds of the Offering will be used by the Company substantially as set forth in the Investor Term Sheet. The Company shall not use any of the proceeds from the Offering to repay any indebtedness of the Company (other than trade payables in the ordinary course), including but not limited to indebtedness to any current executive officers, directors or principal shareholders of the Company. 12 (b) Expenses of Offering. The Company shall be responsible for, and shall bear all expenses directly incurred in connection with, the proposed Offering including, but not limited to, (i) legal fees of the Company's counsel relating to the costs of preparing the Offering Documents and all amendments, supplements and exhibits thereto and preparing and delivering all Placement Agent and selling documents, and Share certificates; and (ii) blue sky fees, filing fees and the fees and disbursements of Placement Agent's counsel in connection with blue sky matters, as and if applicable. In addition, the Company shall reimburse the Placement Agent for all of its reasonable out-of-pocket expenses incurred in connection with the Offering, including, without limitation, the reasonable fees and disbursements of the Placement Agent's counsel, due diligence expenses, travel and road-show expenses, and printing and mailing expenses, up to an aggregate maximum of $50,000 (the "Placement Agent expenses"). (c) Notification. The Company shall notify the Placement Agent immediately, and in writing, (i) when any event shall have occurred during the period commencing on the date hereof and ending on the later of the Final Closing or the Termination Date as a result of which the Offering Documents would include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) of the receipt of any notification with respect to the modification, rescission, withdrawal or suspension of the qualification or registration of the Shares, or of any exemption from such registration or qualification, in any jurisdiction. The Company will use its best efforts to prevent the issuance of any such modification, rescission, withdrawal or suspension and, if any such modification, rescission, withdrawal or suspension is issued and you so request, to obtain the lifting thereof as promptly as possible. (d) Blue Sky. The Company will use its best efforts to qualify or register the Shares to be offered in the Offering for offering and sale under, or establish an exemption from such qualification or registration under, the securities or "blue sky" laws of such jurisdictions as you may reasonably request; provided however, that the Company will not be obligated to qualify as a dealer in securities in any jurisdiction in which it is not so qualified. The Company will not consummate any sale of securities pursuant to the Offering in any jurisdiction in which it is not so qualified or in any manner in which such sale may not be lawfully made. (e) Form D Filing. The Company shall file five copies of a Notice of Sales of Securities on Form D with the SEC no later than 15 days after the Initial Closing of the Shares. The Company shall file promptly such amendments to such Notices on Form D as shall become necessary and shall also comply with any filing requirement imposed by the laws of any state or jurisdiction in which offers and sales are made. The Company shall furnish the Placement Agent with copies of all such filings. (f) Press Releases, Etc. The Company shall not, during the period commencing on the date hereof and ending on the last to occur of (i) the Termination Date; or (ii) the date on which the Registration Statement is declared effective by the SEC, issue any press release or other communication, or hold any press conference with respect to the Company, its financial condition, results of operations, business, properties, assets, or liabilities, or the Offering, without the prior consent of the Placement Agent, which consent shall not be unreasonably withheld. The Company shall not include information with respect to the Offering or use the Placement Agent's name in any press release, advertisement or on any website maintained by the Company without the prior written consent of the Placement Agent. 13 (g) O&D Insurance; Board Compensation. The Company shall maintain at least $5,000,000 of officers and directors liability insurance (the "O&D Policy") during the longer of such period as the Placement Agent has the right to designate one or more members of the Board or one or more such designees serve as directors. The Company shall not cancel or make substantive changes to the O&D Policy without giving the Placement Agent at least 30 days' prior written notice. The Placement Agent's designees to the Board shall be reimbursed for expenses incurred in attending Board meetings and shall be entitled to such other compensation as is afforded other non-employee members of the Board. (h) Transfer Opinions. The Company shall cause its legal counsel to issue appropriate prospectus sale or Rule 144 opinions by facsimile to the Company's transfer agent (with a copy to the person requesting such opinion) within one business day after counsel's receipt of the following completed documentation (i) for a prospectus sale, a broker's delivery representation letter and (ii) for a Rule 144 sale, a (a) seller's representation letter, (b) broker's representation letter, and (c) copy of the Form 144. (i) Transmittal Letters. Within five days after each Closing of the Offering, the Placement Agent shall receive copies of all letters from the Company to the Subscribers transmitting the securities sold in such Offering and shall receive a letter from the Company confirming transmittal of the securities to the Subscribers. (j) Registration. The Company shall file a registration statement on Form S-3 (the "Registration Statement") with the SEC covering the resale of the Shares within 45 days after the Final Closing and shall use its best efforts to cause the Registration Statement to become effective within 75 days after the Final Closing. The failure to effectuate such registration within the foregoing period shall subject the Company to penalty provisions to be negotiated between the Company and the Subscribers. The Subscribers shall also have unlimited piggy-back registration rights. 5. Representations, Warranties and Covenants of the Placement Agent. The Placement Agent represents, warrants and covenants to the Company as follows: (a) Registered Broker-Dealer Etc. The Placement Agent and any applicable Selected Dealer is (i) a registered broker-dealer under the 1934 Act, and (ii) a member in good standing of the NASD, and (iii) registered as a broker-dealer in each jurisdiction in which it is required to be registered as such in order to offer and sell the Units in such jurisdiction. The Placement Agent will cooperate with the Company to ensure that the offering and sale of the Units will comply with the requirements of Rule 506 under the 1933 Act, including, without limitation, the general conditions contained in Regulation D and the federal securities laws, and will follow the reasonable advise of the Company with respect to the manner in which to offer and sell the Units so as to ensure that the offering and sale thereof will comply with the securities laws in any jurisdiction in which the Units are offered by the Placement Agent. (b) Authorization of this Agreement; Enforceability; Etc. The Placement Agent has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Escrow Agreement. The execution and delivery of this Agreement and the Escrow Agreement by the Placement Agent and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized and no further consent or 14 authorization is required. This Agreement has been duly executed and delivered by the Placement Agent, and this Agreement constitutes the valid and binding obligations of the Placement Agent enforceable against the Placement Agent in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. 6. Indemnification. (a) The Company agrees to indemnify and hold harmless the Placement Agent and each Selected Dealer, if any, and their respective shareholders, directors, officers, agents and controlling persons against any and all loss, liability, claim, damage and expense whatsoever (and all actions in respect thereof), and to reimburse the Placement Agent for reasonable legal fees and related expenses as incurred (including, but not limited to the costs of investigating, preparing or defending any such action or claim whether or not in connection with litigation in which the Placement Agent is a party and the costs of giving testimony or furnishing documents in response to a subpoena or otherwise), caused by or arising out of (i) any untrue statement or alleged untrue statement of a material fact contained in the Transaction Documents or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (provided, however, that the Company shall not be liable in any such case to the extent that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement of a material fact or alleged untrue statement or a material fact provided by the Placement Agent in writing to the Company specifically for use in the Transaction Documents), (ii) any violation by the Company of the federal securities laws or the securities laws of any states, or otherwise arising out of the Placement Agent's engagement hereunder, except in respect of any matters as to which the Placement Agent shall have been adjudicated to have acted with gross negligence or willful misconduct, or (iii) any breach by the Company of any of its representations, warranties or covenants contained in this Agreement. (b) The Placement Agent agrees to indemnify and hold harmless the Company, and each shareholder, director, officer, agent and controlling person against any and all loss, liability, claim, damage and expense whatsoever (and all actions in respect thereof), and to reimburse the Company and such persons for reasonable legal fees and related expenses as incurred (including, but not limited to the costs of investigating, preparing or defending any such action or claim whether or not in connection with litigation in which the Company is a party and the costs of giving testimony or furnishing documents in response to a subpoena or otherwise), caused by or arising out of (i) any breach of any of the agreements, representations or warranties of the Placement Agent contained in this Agreement; or (ii) any untrue statement of a material fact in any information provided to the Company in writing by, and relating to, the Placement Agent or a Selected Dealer, expressly for use in and used in the Offering Documents, or any omission in any information provided to the Company in writing by, and relating to, the Placement Agent or a Selected Dealer, expressly for use in and used in the Offering Documents of any material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading (it being understood and agreed that any such information provided to the Company in writing by, and relating to, the Placement Agent or a Selected Dealer shall be set forth in a separate letter signed by the Placement Agent and delivered to the Company). The Placement Agent agrees to indemnify and hold harmless the Company, and each shareholder, 15 director, officer, agent and controlling person to the same extent as the foregoing indemnity set forth in this Section (b), against any and all loss, liability, claim, damage and expense whatsoever directly arising out of the exercise by any person of any right under the 1933 Act or the 1934 Act or the securities or blue sky laws of any state on account of violations of the representations, warranties or agreements set forth in Section 5 hereof. (c) Promptly after receipt by a party (an "Indemnified Party") under this Section of notice of the commencement of any action, the Indemnified Party will, if a claim in respect thereof is to be made against one or more of the other parties (the "Indemnifying Party") under this Section, notify in writing the Indemnifying Party of the commencement thereof; but the omission so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have to the Indemnified Party otherwise than under this Section except to the extent the defense of the claim is prejudiced. In case any such action is brought against an Indemnified Party, and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate in, and, to the extent that it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense thereof, subject to the provisions herein stated, with counsel reasonably satisfactory to the Indemnified Party, and after notice from the Indemnifying Party to the Indemnified Party of its election so to assume the defense thereof, the Indemnifying Party will not be liable to the Indemnified Party under this Section for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation (provided the Indemnifying Party has been advised in writing that such investigation is being undertaken). The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the Indemnifying Party if the Indemnifying Party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Party; provided that the fees and expenses of such counsel shall be at the expense of the Indemnifying Party if (i) the employment of such counsel has been specifically authorized in writing by the Indemnifying Party; or (ii) the named parties to any such action (including any impleaded parties) include both the Indemnified Party or Parties and the Indemnifying Party and, in the reasonable judgment of counsel for the Indemnified Party, it is advisable for the Indemnified Party or Parties to be represented by separate counsel due to an actual conflict of interest (in which case the Indemnifying Party shall not have the right to assume the defense of such action on behalf of an Indemnified Party or Parties), it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for all the Indemnified Parties. No settlement of any action against an Indemnified Party shall be made unless such an Indemnified Party is fully and completely released in connection therewith. 7. Contribution. To provide for just and equitable contribution, if (i) an Indemnified Party makes a claim for indemnification pursuant to Section 6 but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Agreement expressly provides for indemnification in such case, or (ii) any indemnified or indemnifying party seeks contribution under the 1933 Act, the 1934 Act, or otherwise, then the Company (including for this purpose any contribution made by or on behalf 16 of any officer, director, employee or agent for the Company, or any controlling person of the Company), on the one hand, and the Placement Agent and any Selected Dealers (including for this purpose any contribution by or on behalf of an indemnified party), on the other hand, shall contribute to the losses, liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, in such proportions as are appropriate to reflect the relative benefits received by the Company, on the one hand, and the Placement Agent and the Selected Dealers, on the other hand; provided, however, that if applicable law does not permit such allocation, then other relevant equitable considerations such as the relative fault of the Company and the Placement Agent and the Selected Dealers in connection with the facts which resulted in such losses, liabilities, claims, damages, and expenses shall also be considered. In no case shall the Placement Agent or a Selected Dealer be responsible for a portion of the contribution obligation in excess of the compensation received by it. No person guilty of a fraudulent misrepresentation shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls the Placement Agent or a Selected Dealer within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer, director, stockholder, employee and agent of the Placement Agent or a Selected Dealer, shall have the same rights to contribution as the Placement Agent or the Selected Dealer, and each person, if any who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer, director, employee and agent of the Company, shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 7. Anything in this Section 7 to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 7 is intended to supersede any right to contribution under the 1933 Act, the 1934 Act, or otherwise. 8. Miscellaneous. (a) Survival. Any termination of the Offering without consummation thereof shall be without obligation on the part of any party except that the indemnification provided in Section 6 hereof and the contribution provided in Section 7 hereof shall survive any termination and shall survive the Final Closing for a period of two years. (b) Representations, Warranties and Covenants to Survive Delivery. The respective representations, warranties, indemnities, agreements, covenants and other statements as of the date hereof shall survive execution of this Agreement and delivery of the Shares and the termination of this Agreement for a period of two years after such respective event. (c) No Other Beneficiaries. This Agreement is intended for the sole and exclusive benefit of the parties hereto and their respective successors and controlling persons, and no other person, firm or corporation shall have any third-party beneficiary or other rights hereunder. (d) Governing Law; Resolution of Disputes. This Agreement shall be governed by and construed in accordance with the law of the State of New York without regard to conflict of law provisions. The Placement Agent and the Company will attempt to settle any claim or controversy arising out of this Agreement through consultation and negotiation in good faith and a spirit of mutual cooperation. Should such attempts fail, then the dispute will be mediated by a mutually acceptable mediator to be chosen by the Placement Agent and the Company within 15 days after written notice from either party demanding mediation. Neither party may 17 unreasonably withhold consent to the selection of a mediator, and the parties will share the costs of the mediation equally. Any dispute which the parties cannot resolve through negotiation or mediation within six months of the date of the initial demand for it by one of the parties may then be submitted to the courts for resolution. The use of mediation will not be construed under the doctrine of latches, waiver or estoppel to affect adversely the rights of either party. Nothing in this paragraph will prevent either party from resorting to judicial proceedings if (a) good faith efforts to resolve the dispute under these procedures have been unsuccessful; or (b) interim relief from a court is necessary to prevent serious and irreparable injury. (e) Counterparts. This Agreement may be signed in counterparts with the same effect as if both parties had signed one and the same instrument. (f) Notices. Any communications specifically required hereunder to be in writing, if sent to the Placement Agent, will be sent by overnight courier providing a receipt of delivery or by certified or registered mail to it at Commonwealth Associates, L.P., 830 Third Avenue, New York, New York 10022, Att: Carl Kleidman, with a copy to Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, Att: Fran Stoller and if sent to the Company, will be sent by overnight courier providing a receipt of delivery or by certified or registered mail to it at 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317, Att: Judson E. Schmid, with a copy to Holland & Knight LLP, 701 Brickell Avenue, Suite 3000, Miami, Florida 33131 Att: Rodney Bell. (g) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the matters herein referred and supersedes all prior agreements and understandings, written and oral, between the parties with respect to the subject matter hereof. Neither this Agreement nor any term hereof may be changed, waived or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, waiver or termination is sought. (h) This Agreement is subject to termination by notice given by the Placement Agent to the Company, if (i) after the execution and delivery of this Agreement and prior to the Initial Closing (A) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (B) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (C) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (D) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crises that, in the Placement Agent's judgement, is material and adverse and (ii) in the case of any of the events specified in Sections 8(h)(i)(A) through 8(h)(i)(D), such event, singly or together with any other such event, makes it, in the Placement Agent's judgement, impracticable to offer the Units on the terms and in the manner contemplated herein. If you find the foregoing is in accordance with our understanding, kindly sign and return to us a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between us. 18 Very truly yours, PROXYMED, INC. By: /s/ Judson E. Schmid ---------------------------------------------- Name: Judson E. Schmid Title: EVP, CFO, Treasurer & Acting Secretary Agreed: COMMONWEALTH ASSOCIATES, L.P. By: Commonwealth Associates Management Company, Inc., its general partner By: /s/ Joseph P. Wynne --------------------------------------- Name: Joseph P. Wynne Title: Chief Financial Officer 19 EX-10.3 6 g73653ex10-3.txt PROXYMED - CONVERSION AGREEMENT 12/13/01 EXHIBIT 10.3 PROXYMED, INC. CONVERSION AGREEMENT This Conversion Agreement (this "Agreement") made as of this ___ day of _________, _____ between ProxyMed, Inc., a Florida corporation with offices at 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317 (the "Company"), and the undersigned (the "Holder"). A. In June 2000, the Company completed a private placement to accredited investors (the "Placement") through Commonwealth Associates, L.P. ("Commonwealth") pursuant to which it issued shares of Series C 7% Convertible Preferred Stock (the "Preferred Stock"), convertible into shares of the Company's common stock, par value $.001 per share (the "Common Stock"). B. The Holder is the owner of shares of the Preferred Stock. C. The Company hereby offers, upon the terms and subject to the conditions set forth in the Confidential Term Sheet dated December 13, 2001 (the "Term Sheet"), to allow holders of the Preferred Stock to convert their shares of Preferred Stock (the "Preferred Shares") on terms different than those contained the Certificate of Designation governing the Preferred Stock (the "Designation") in consideration for the holders' agreement to (i) amend certain provisions of the Designation; (ii) amend certain provisions of the Subscription Agreement dated as of June 15, 2000 (the "Subscription Agreement"); and (iii) convert their Preferred Shares. D. The Holder agrees to amend the Designation and the Subscription Agreement in accordance with the provisions set forth in the Term Sheet as evidenced by the Holder's execution of this Agreement and the Designation and Subscription Amendment Agreement (the "Amendment Agreement") enclosed herewith. E. The Holder desires to convert his/her/its ("his") Preferred Shares for shares of Common Stock (the "Shares") on the terms contained in the Term Sheet. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: 1. CONVERSION; REPRESENTATIONS BY AND COVENANTS OF HOLDER. 1.1 Subject to the terms and conditions hereinafter set forth, the Holder hereby agrees to convert all of his Preferred Shares for Shares and the Company agrees to issue Shares to the Holder subject to the condition set forth in the penultimate sentence of this paragraph. The Holder, by signing this Agreement, authorizes Commonwealth to deliver his Preferred Share certificates, for conversion, to the Company. To the extent not held in an account at Commonwealth, the Holder shall deliver the certificates to the Company or Commonwealth at the addresses specified in the Term Sheet promptly after execution of this Agreement. The completion of this offering (the "Offering") is contingent upon Holders of not less than 66 2/3% of the outstanding Preferred Shares (the "Threshold Amount") executing and delivering this Agreement and the Amendment Agreement. The Shares, together with any check in payment of fractional shares, will be delivered to the Holder following the consummation of the Offering as set forth in Article 3 hereof. 1.2 The Holder recognizes that the acquisition of Shares pursuant to the Offering involves a high degree of risk in that (i) the Company has incurred substantial losses from operations in prior years and may incur losses in the future; (ii) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; and (iii) Holders will be foregoing significant rights by converting their Preferred Shares for Common Stock. The Holder acknowledges and understands these and the other risk factors which are more fully set forth in the Term Sheet and in the Company's publicly available filings (the "SEC Filings") with the United States Securities and Exchange Commission (the "SEC") . 1.3 The Holder represents and warrants that he/she/it ("he") is an "accredited investor" as such term in defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act") (which definition is set forth in Appendix A hereto), and that he is able to bear the economic risk of an investment in the Shares. The Holder further represents and warrants that the information furnished herein is accurate and complete in all material respects. 1.4 The Holder acknowledges that he has prior investment experience and that he recognizes the highly speculative nature of this investment. 1.5 The Holder acknowledges receipt and careful review of the Term Sheet and all other documents furnished in connection with the Offering (collectively, the "Offering Documents") and hereby represents that he has been furnished by the Company during the course of this transaction with all information regarding the Company (including, but not limited to, the SEC Filings) which he has requested or desired to know; that he has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the terms and conditions of the Offering, and any additional information which he had requested. 1.6 The Holder acknowledges that the Offering may involve tax consequences and that the contents of the Term Sheet do not contain tax advice or information. The Holder 2 acknowledges that he must retain his own professional advisors to evaluate the tax and other consequences of converting his Preferred Shares. 1.7 The Holder acknowledges that the Offering has not been reviewed by the SEC because of the Company's representations that this is intended to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act. The Holder represents that the Shares are being acquired for his own account, for investment and not for distribution or resale to others. The Holder agrees that he will not sell or otherwise transfer the Shares unless they are registered under the Act or unless an exemption from such registration is available. 1.8 The Holder consents to the placement of a legend on any certificate or other document evidencing the Shares stating that they have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale thereof, and to the issuance of stop transfer instructions with respect thereto. 1.9 If the undersigned Holder is a partnership, corporation, trust or other entity, such partnership, corporation, trust or other entity further represents and warrants that: (i) it is authorized and otherwise duly qualified to acquire and hold the Shares; and (ii) that this Agreement and the Amendment Agreement have been duly and validly authorized, executed and delivered and constitute the legal, binding and enforceable obligations of the undersigned. 1.10 The Holder hereby represents that the address furnished by him at the end of this Agreement is the undersigned's principal residence if he is an individual or its principal business address if it is a corporation or other entity. 1.11 The Holder hereby represents that, except as set forth in the Offering Documents, no representations or warranties have been made to the Holder by the Company or Commonwealth, or any agent, employee or affiliate of the Company or Commonwealth, and in entering into this transaction, the Holder is not relying on any information, other than that contained in the Offering Documents, the SEC Filings and the results of independent investigation by the Holder. 1.12 The Holder represents that his participation in the Offering has not been solicited by means of any general solicitation or general advertisement. 1.13 The Holder represents that he is the sole record and beneficial owner of the Preferred Shares being converted pursuant to this Agreement. 1.14 The Holder agrees that his conversion will not be revocable at any time prior to the Termination Date (as defined in Section 3.1 hereof). 2. REPRESENTATIONS BY THE COMPANY. 2.1 The Company represents and warrants to the Holder that upon consummation of the Offering: 3 2.1.1 The Company is a corporation duly organized, existing and in good standing under the laws of the State of Florida and has the corporate power to conduct the business which it conducts and proposes to conduct. 2.1.2 The execution, delivery and performance of this Agreement and the Amendment Agreement by the Company will have been duly approved by the Board of Directors of the Company and all other actions required to authorize and effect the Offering will have been duly taken and approved. 2.1.3 The Shares have been duly and validly authorized and when issued and paid for in accordance with the terms hereof, will be duly and validly issued and fully paid and non-assessable. 2.1.4 The Company has, to the best of its knowledge, obtained, or is in the process of obtaining, all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and the Company is in all material respects complying therewith; except where such failure to obtain such licenses, permits and other governmental authorizations necessary to the conduct of its business would not have a material adverse effect on the Company's business or financial condition. 2.1.5 The Company knows of no pending or threatened legal or governmental proceedings to which the Company is a party which could materially adversely affect the business, property, financial condition or operations of the Company not otherwise disclosed in the SEC Filings. 2.1.6 Other than as set forth in the Term Sheet, the Company is not in violation of or default under, nor will the execution and delivery of this Agreement or the Amendment Agreement, the issuance of the Shares, and the incurrence of the obligations herein and therein set forth and the consummation of the transactions herein or therein contemplated, result in a violation of, or constitute a default under, the Company's articles of incorporation (as such will be amended in accordance with the Term Sheet) or by-laws, any material obligations, agreement, covenant or condition contained in any bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint venture or other agreement or instrument to which the Company is a party or by which it or any of its properties may be bound or any material order, rule, regulation, writ, injunction, or decree of any government, governmental instrumentality or court, domestic or foreign; except where such violation or default would not have a material adverse effect on the Company's business or financial condition. 2.1.7 The financial information contained in the SEC Filings presents fairly in all material respects the financial condition of the Company as of the dates and for the periods indicated. 4 3. TERMS OF AGREEMENT. 3.1 This offering will terminate at 5:00 p.m. EST on February 11, 2002 (the "Termination Date"). 3.2 Pending the issuance of the Shares, the Preferred Shares shall be held by the Company or Commonwealth. If the Company does not achieve the Threshold Amount on or before the Termination Date, then this Agreement shall be void and the Holder's Preferred Shares will be promptly returned to him, subject to paragraph 3.4 hereof. If the Threshold Amount is achieved, the Designation and the Subscription Agreement will be deemed amended, all of the Holder's Preferred Shares will be deemed converted and the Shares, together with any check in payment of fractional shares, will be delivered to the Holder in accordance with the terms of this Agreement. 3.3 The Holder hereby authorizes and directs the Company to deliver certificates representing the Shares to be issued to such Holder pursuant to this Agreement either (a) to the residential or business address indicated on the signature page or (b) directly to the Holder's account maintained with Commonwealth, if any. 3.4 The Holder hereby authorizes and directs the Company to return any Preferred Shares for unaccepted subscriptions to the same account from which such securities were drawn, including any customer account maintained with Commonwealth. 3.5 If the Holder is not a United States person, such Holder hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the acquisition of the Shares, (ii) any foreign exchange restrictions applicable to such acquisition, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the acquisition, holding, redemption, sale or transfer of the Shares. Such Holder's subscription and payment for, and his continued beneficial ownership of, the Shares will not violate any applicable securities or other laws of the Holder's jurisdiction. 4. MISCELLANEOUS. 4.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, addressed to the Company, at its registered office, 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317, Attention: In-House Counsel, and to the Holder at his address indicated on the last page of this Agreement. Notices shall be deemed to have been given on the date of mailing, except notices of change of address and notices sent from outside the continental United States, which shall be deemed to have been given when received. 4.2 This Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. 5 4.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. 4.4 Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of New York without regard to such states laws regarding conflicts of laws. The parties hereby agree that any dispute which may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in New York City and they hereby submit to the exclusive jurisdiction of the courts of the State of New York located in New York, New York and of the federal courts in the Southern District of New York with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth below or such other address as the undersigned shall furnish in writing to the other. 4.5 This Agreement may be executed in counterparts. Upon the execution and delivery of this Agreement and the Amendment Agreement by the Holder, this Agreement shall become a binding obligation of the Holder with respect to the (i) amendments of the Designation; (ii) amendments to the Subscription Agreement; and (iii) conversion of the Preferred Shares as herein provided; subject, however, to the right hereby reserved to the Company to enter into the same agreements with other Holders. By executing this Agreement, the Holder understands that he shall be deemed designated a member of the committee referenced in the modification provisions of the Designation and the Subscription Agreement. 4.6 The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. 4.7 It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party. 4.8 The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement. 5. BLUE SKY LEGENDS FLORIDA RESIDENTS: A HOLDER WHO IS A FLORIDA RESIDENT IS ENTITLED TO RESCIND HIS PURCHASE WITHIN THREE (3) BUSINESS DAYS AFTER THE DATE OF PURCHASE (WHICH IS THE 6 DATE OF TENDER OF CONSIDERATION OR THE DATE THE AVAILABILITY OF THIS PRIVILEGE IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER) WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH SUCH RESCISSION, SUCH HOLDER MUST SEND A CERTIFIED LETTER OR TELEGRAM TO PROXYMED, INC., 2555 DAVIE ROAD, SUITE 110, FORT LAUDERDALE, FLORIDA 33317, INDICATING HIS INTENTION TO RESCIND. SUCH LETTER OR TELEGRAM SHOULD BE SENT OR POSTMARKED PRIOR TO 5:00 P.M. ON THE THIRD (3RD) DAY FOLLOWING PURCHASE. IF A LETTER IS SENT, IT SHOULD BE SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME WHEN IT WAS MAILED. NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE DIRECTOR OF THE OFFICE OF SECURITIES REGULATION THAT ANY DOCUMENT FILED UNDER RSA 421-b IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE DIRECTOR OF THE OFFICE OR SECURITIES REGULATION HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. PENNSYLVANIA RESIDENTS: UNDER PROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF 1972, EACH INDIVIDUAL WHO IS A PENNSYLVANIA RESIDENT HAS THE RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS OR HER WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OR PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE OR SHE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. TO ACCOMPLISH THIS WITHDRAWAL A SUBSCRIBER NEED ONLY SEND A LETTER TO THE ISSUER AT THE ADDRESS SET FORTH IN THE TEXT OF THE CONVERSION AGREEMENT, INDICATING HIS OR HER INTENTION TO WITHDRAW. SUCH LETTER SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND TO EVIDENCE THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY IN PERSON OR BY TELEPHONE TO THE ISSUER AT THE NUMBER LISTED IN THE TEXT OF THE CONVERSION AGREEMENT A WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED. 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. - ------------------------------------------ ------------------------------------------ Signature of Holder Signature of Co-Holder - ------------------------------------------ ------------------------------------------ Name of Holder Name of Co-Holder [please print] [please print] - ------------------------------------------ ------------------------------------------ Address of Holder Address of Co-Holder - ------------------------------------------ ------------------------------------------ Social Security or Taxpayer Social Security or Taxpayer Identification Identification Number of Holder Number of Co-Holder - ------------------------------------------ Holder's Account Number at Commonwealth Associates (if applicable) - ------------------------------------------ Number of Preferred Shares Surrendered For Conversion Subscription Accepted: PROXYMED, INC. By: --------------------------------------- Name: Title:
8 APPENDIX A DEFINITION OF ACCREDITED INVESTOR The Shares will only be issued to investors who represent in writing in the Conversion/Exercise Agreement that they are accredited investors, as defined in Regulation D, Rule 501 under the Act which definition is set forth below: 1. A natural person whose net worth, or joint net worth with spouse, at the time of purchase exceeds $1 million (including home, home furnishings, and automobiles); or 2. A natural person whose individual gross income exceeded $200,000 or whose joint income with that person's spouse exceeded $300,000 in each of the last two years, and who reasonably expects to exceed such income level in the current year; or 3. A trust with total assets in excess of $5 million, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person described in Regulation D; or 4. A director or executive officer of the Company; or 5. The investor is an entity, all of the owners of which are accredited investors; or 6. (a) bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, (b) any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (c) an insurance Company as defined in Section 2(13) of the Act, (d) an investment Company registered under the Investment Company Act of 1940 or a business development Company as defined in Section 2(a)(48) of such Act, (e) a Small Business Investment Company licensed by the United States Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, (f) an employee benefit plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, if such plan has total assets in excess of $5 million, (g) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Securities Act of 1974, and the employee benefit plan has assets in excess of $5 million, or the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, that is either a bank, savings and loan institution, insurance Company, or registered investment advisor, or, if a self-directed plan, with an investment decisions made solely by persons that are accredited investors, (h) a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of the Internal Revenue code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with assets in excess of $5 million. A prospective investor will be required to provide such evidence as may be deemed necessary to substantiate the accuracy of representations. The above suitability standards are minimum requirements for prospective investors, and the satisfaction of these standards does not mean that the Shares are a suitable investment for a prospective investor 9 EX-10.4 7 g73653ex10-4.txt PROXYMED - DESIGNATION AGREEMENT 12/13/01 EXHIBIT 10.4 PROXYMED, INC. DESIGNATION AND SUBSCRIPTION AMENDMENT AGREEMENT This Designation and Subscription Amendment Agreement (this "Amendment Agreement") is made and entered into as of ______________, ______, by and between ProxyMed, Inc., a Florida corporation (the "Company"), and the undersigned holder of securities of the Company (the "Holder"). A. In June 2000, the Company completed a private placement to accredited investors (the "Placement") through Commonwealth Associates, L.P. ("Commonwealth") pursuant to which it issued shares of Series C 7% Convertible Preferred Stock (the "Preferred Stock") convertible into shares of the Company's common stock (the "Common Stock"). B. The Holder is the owner of shares of the Preferred Stock. C. The Company is offering, upon the terms and subject to the conditions set forth in the Confidential Term Sheet dated December 13, 2001 (the "Term Sheet") to allow holders of the Preferred Stock to convert their shares of Preferred Stock (the "Preferred Shares") on special, temporary terms (the "Offering") in consideration for which the holder must agree to (i) amend certain provisions of the certificate of designation governing the Preferred Stock (the "Designation"); (ii) amend certain provisions of the Subscription Agreement dated as of June 15, 2000 (the "Subscription Agreement"); and (iii) convert their Preferred Shares. NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree to amend the Designation and the Subscription Agreement as set forth herein. 1. Certificate of Designation. The undersigned holder of Preferred Stock hereby agrees that, subject to the requirements set forth in Section 3 hereof, the Designation shall be amended as follows: (a) Conversion Price. The "Conversion Price" set forth in Section 4(c) of the Designation shall be reduced to $13.05 until February 11, 2002. (b) Anti-dilution. Section 6(D) shall be deleted in its entirety. (c) Voting. Section 7(B) shall be deleted in its entirety. (d) Covenants. Section 8 shall be deleted in its entirety. 2. Subscription Agreement. The undersigned holder of Preferred Stock hereby agrees that, subject to the requirements set forth in Section 3 hereof, the Subscription Agreement shall be amended as follows: (a) Affirmative Covenants. Section 8 shall be deleted in its entirety. (b) Negative Covenants. Section 9 shall be deleted in its entirety. 3. Condition Precedent. Notwithstanding anything to the contrary set forth herein, neither the Designation nor the Subscription Agreement shall be amended as set forth herein unless on or prior to February 11, 2002, holders of at least 66 2/3% of the outstanding shares of Preferred Stock (the "Threshold Amount") execute and deliver this Amendment Agreement and the Conversion Agreement described in the Term Sheet to the Company or Commonwealth. 4. Committee Membership. By executing this Amendment Agreement, the undersigned understands that he shall be deemed designated a member of the committee referenced in the modification provisions of Section 11 of the Designation and Sections 3.9 and 14 of the Subscription Agreement and shall be deemed to have consented in writing to the amendments set forth in Sections 1 and 2 above. 5. Miscellaneous. (a) Governing Law; Jurisdiction. Notwithstanding the place where this Amendment Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of New York without regard to such states laws regarding conflicts of laws. The parties hereby agree that any dispute which may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in New York City and they hereby submit to the exclusive jurisdiction of the courts of the State of New York located in New York, New York and of the federal courts in the Southern District of New York with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Amendment Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth below or such other address as the undersigned shall furnish in writing to the other. (b) Binding Effect. This Amendment Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. (c) Entire Agreement. This Amendment Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. Except as set forth in this Amendment Agreement, provisions of the original Designation and/or the Subscription Agreement which are not inconsistent with this Amendment Agreement shall remain in full force and effect. This Amendment Agreement may be executed in counterparts. (d) Separability. If any provision of this Amendment 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 Amendment Agreement in that jurisdiction or the validity or enforceability of any provision of this Amendment Agreement in any other jurisdiction. 2 (e) No Implied Waiver. It is agreed that a waiver by either party of a breach of any provision of this Amendment Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party. (f) Written Consent. This Amendment Agreement shall constitute a written consent of the Holder in lieu of a meeting of the holders of the Preferred Shares to taking all actions necessary to effect the amendments described herein, including the filing of Articles of Amendment to the Company's Articles of Incorporation to effect such amendments. IN WITNESS WHEREOF, the parties hereto have executed this Amendment Agreement as of the date first written above. PROXYMED, INC. By: ------------------------------------------ Name: Title: HOLDER --------------------------------------------- Signature --------------------------------------------- Print Name: 3 EX-99.1 8 g73653ex99-1.txt PROXYMED - PRESS RELEASE 12/28/01 EXHIBIT 99.1 [PROXYMED LOGO] COMPANY NEWS RELEASE FOR IMMEDIATE RELEASE CONTACT: JUDSON E. SCHMID CHIEF FINANCIAL OFFICER (954) 473-1001, EXT. 300 INVESTORRELATIONS@PROXYMED.COM PROXYMED COMPLETES PRIVATE PLACEMENT AND ANNOUNCES CONVERSION OF PREFERRED STOCK FT. LAUDERDALE, FL. (BusinessWire) December 28, 2001 - ProxyMed, Inc. (Nasdaq: PILL), a leading provider of physician healthcare transaction processing services, announced today that it has completed a private placement of 483,414 shares of its common stock to a group of nine U.S. and Canadian institutional and accredited investors at a purchase price of $16.50 per share for total gross proceeds of approximately $8 million. Proceeds from the offering will be used for general corporate purposes. The Company also announced today the continuation of its year-long effort to clean-up its capital structure by reporting that the holders of over 76% of its outstanding Series C Preferred shares have agreed to convert their preferred shares into common stock at a reduced conversion price. The remaining Series C holders may exercise their conversion rights at the reduced conversion price until February 11, 2002. In connection with the 76% conversion, a total of approximately 1,174,200 shares of common stock will be issued to the former Series C holders, representing a premium of approximately 15% in additional shares attributable to the reduced conversion price. The common stock issued in the private placement and the additional shares issued upon the conversion have not been registered under United States or state securities laws and may not be offered or sold in the United States absent a registration or an applicable exemption from the registration requirements of the Securities Act of 1933. The Company has agreed to file a registration statement covering the resale of the private placement shares of the investors and the resale of the additional shares received by the former Series C holders. This press release shall not constitute an offer to sell or the solicitation of an offer to buy common stock and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act. ABOUT PROXYMED, INC. ProxyMed is an electronic healthcare transaction processing services company providing connectivity services and related value-added products to physicians, payers, pharmacies, medical laboratories, and other healthcare providers and suppliers. ProxyMed's electronic transaction processing services support a broad range of both financial and clinical transactions. To facilitate these services, ProxyMed operates ProxyNet(R), its secure, proprietary national electronic information network, which provides physicians and other primary care providers with direct connectivity to one of the industry's largest list of payers, the largest list of chain and independent pharmacies and the largest list of clinical laboratories. -----END PRIVACY-ENHANCED MESSAGE-----