10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)

          x      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
or

          o      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 000-22052

PROXYMED, INC.

(Exact name of registrant as specified in its charter)

Florida	65-0202059
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1854 Shackleford Court, Suite 200, Atlanta, Georgia	30093
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (770)-806-9918

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 Par Value

(Title of class)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x  Yes o No

     Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). [X] Yes [ ] No

     The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed using $12.91 per share, the closing price of the registrant’s common stock on the Nasdaq National Market as of the last business day of the registrant’s most recently completed second fiscal quarter, was $54,511,031.

     As of March 26, 2004, 12,624,626 shares of the registrant’s common stock were issued and outstanding.

     Documents Incorporated by Reference: Portions of the registrant’s definitive Proxy Statement for its Annual Meeting of Shareholders to be held on or about June 2, 2004, are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Amendment to Articles of Incorporation

Amendment to Articles of Incorporation

Employment Letter-J. Markle

Employment Agreement - G. Eisenhauer

Employment Agreement - T. Wohlford

Amendment to Employment Agreement - T. Tolan

Amendment to Employment Agreement - M. Hoover

Amendment to Employment Agreement - N. Ham

2002 Stock Option Plan, as amended

Loan and Security Agreement

Revolver Note

Patent and Trademark Security Agreement

Subsidiaries of the Registrant

Consent of PriceWaterhouseCoopers LLP

Section 302 Certification of CEO

Section 302 Certification of CFO

Section 906 Certification of CEO

Section 906 Certification of CFO

PART I

ITEM 1. OUR BUSINESS

     ProxyMed, Inc., incorporated in Florida in 1989, is an electronic healthcare transaction processing services company providing connectivity services and related value-added products to physician offices, payers, medical laboratories, pharmacies and other healthcare institutions. We maintain an open electronic network for electronic transactions with no equity ownership in businesses engaged in the front-end (i.e., physician practice management software system vendors and other physician desk top vendors) or in the back-end (i.e., payers, laboratories and pharmacies). Our business strategy is to leverage our leadership position in connectivity services in order to establish ProxyMed as the premier provider of automated financial, clinical and administrative transaction services primarily between small physician offices (offices with one to nine physicians) and payers, clinical laboratories and pharmacies. With our neutral position, we believe that we can better attract both front-end and back-end partners who may be more comfortable doing business with a non-competitive partner.

     Our electronic transaction processing services support a broad range of financial, clinical, and administrative transactions. To facilitate these services, we operate Phoenix™, our secure, proprietary national electronic information network, which provides physicians and other healthcare providers with direct connectivity to one of the industry’s largest list of payers, the industry’s largest list of chain and independent pharmacies and the largest list of clinical laboratories. Our corporate headquarters is located in Atlanta, Georgia, and our products and services are provided from various operational facilities located throughout the United States. We also operate our clinical computer network and portions of our financial and real-time production computer networks from a secure, third-party co-location site also located in Atlanta, Georgia. All of our revenues are generated domestically.

     According to the Centers for Medicare and Medicaid Services, the healthcare industry has grown from $1.4 trillion in 2001 to $1.6 trillion in 2002, with physician services comprising 21% of this amount. Healthcare accounts for 14.9% of the U.S. Gross National Product. As one of the most transaction-oriented industries in the country, analysts report that healthcare generates over 35 billion financial and clinical transactions each year, including new prescription orders, refill authorizations, laboratory orders and results, medical insurance claims, insurance eligibility inquiries, encounter notifications, and referral requests and authorizations. Current healthcare information technology spending has been projected at $41.6 billion for 2004, and is predicted to continue growing steadily at 7% annually through 2006. Even with healthcare information technology spending at these levels, we believe that the healthcare industry’s use of technology lags behind many other transaction-intensive industries, with the vast majority of these healthcare transactions being performed manually and on paper.

     For physician offices, payers, laboratories and pharmacies to meet the financial, clinical and administrative demands of an evolving managed care system, we believe that participants in the healthcare system will need to process many of these types of transactions electronically. In fact, under legislation named the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (see Healthcare and Privacy Related Legislation below), eight major transaction types, including claims, eligibility inquiries and claims status inquiries are generally required to be conducted electronically. Because of the number of participants, the challenges of meeting HIPAA requirements and the complexity of establishing reliable and secure communication networks, the healthcare industry needs companies such as ProxyMed with its secure, proprietary systems to facilitate the processing of these transactions, its extensive connectivity to back-end healthcare institutions, and its ability to market to the underserved niche of small physician office practices.

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Acquisition of PlanVista

     On December 5, 2003, we entered into a definitive agreement to acquire all of the outstanding capital stock of PlanVista Corporation (“PlanVista”), a publicly-held company with locations in Tampa, Florida and Middletown, New York for 3,600,000 shares of our common stock. PlanVista provides medical cost containment and business process outsourcing solutions, including claims repricing services, for the medical insurance and managed care industries, as well as services for healthcare providers, including individual providers, preferred provider organizations and other provider groups. We raised $24.1 million by selling 1,691,229 shares of our common stock at $14.25 per share in a private equity transaction with various entities affiliated with General Atlantic Partners and Commonwealth Associates to pay off certain debts of PlanVista and other obligations as a result of the acquisition. The acquisition enables us to enter into a new line of business, provide new end-to-end services, increase sales opportunities with payers, strengthen business ties with certain customers, expand technological capabilities, reduce operating costs and enhance our public profile. During the second quarter of 2003, we entered into a joint marketing and distribution agreement with PlanVista, pursuant to which PlanVista had access to our significant payer customers for purposes of marketing PlanVista’s services.

     On March 1, 2004, shareholders of both companies approved the merger, and on March 2, 2004, we acquired all of the outstanding stock of PlanVista. As a result, each outstanding share of PlanVista common stock, par value $.01 per share, was converted into the right to receive 0.08271 shares of our common stock. Additionally, each outstanding share of PlanVista series C preferred stock, par value $.01 per share, was converted into the right to receive 51.5292 shares of our common stock. Following consummation of the transaction, PlanVista’s common stock was delisted from the Over the Counter Bulletin Board. We also provided the funds necessary to satisfy $27.4 million of PlanVista’s debt and other obligations outstanding as of the effective time of the merger through the use of available cash, a draw on our line of credit and cash raised through the private placement.

     In connection with the merger, our shareholders approved (1) an amendment to our articles of incorporation to increase the total number of authorized shares of our common stock from 13,333,333 1/3 shares to 30,000,000 shares; (2) the issuance of 1,691,229 shares of our common stock at $14.25 per share in a private equity offering valued at $24.1 million; (3) the issuance of 3,600,000 shares of our common stock to PlanVista stockholders in connection with the merger; and (4) an amendment to our 2002 Stock Option Plan to increase the total number of shares available for issuance under such plan from 600,000 to 1,350,000. Additionally, one director of PlanVista was appointed to our board of directors.

     As noted above, upon completion of the merger, each share of PlanVista’s outstanding common stock was cancelled and converted into the right to receive 0.08271 of a share of our common stock and each holder of PlanVista series C preferred stock received 51.5292 shares of our common stock in exchange for each share of PlanVista series C preferred stock, collectively representing approximately 23% of our common stock on a fully converted basis, and the holders of our outstanding stock, options and warrants retained approximately 77% of the Company.

     PlanVista will be operated as our wholly-owned subsidiary and its operations will be included in our Transaction Services segment. All officers and employees of PlanVista, with the exception of the PlanVista’s Chief Financial Officer, were offered continued employment with us.

     Additionally, certain officers, directors and employees of PlanVista were granted options to purchase an aggregate of 200,000 shares of our common stock at $17.74 per share. Of these options, 173,120 will vest two-thirds on the first anniversary date of the grant and one-third on the third anniversary date of the grant. The balance of 26,880 options were granted to PlanVista’s former chief financial officer in connection with a consulting arrangement with him. Fifty percent of these options vested immediately upon the change of control and 25% will each vest after three and six months.

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Acquisition of MedUnite

     On December 31, 2002, we acquired all of the outstanding stock of MedUnite, Inc. (“MedUnite”) for $10.0 million in cash, $13.4 million in 4% convertible promissory notes, and $6.7 million in transaction and exit related costs (originally estimated at $8.3 million). Interest on the convertible notes is payable in cash on a quarterly basis. The convertible promissory notes (now currently payable at a maturity value of $13.1 million after a claim setoff against the escrow in December 2003) are payable in full on December 31, 2008 and are convertible into an aggregate of 716,968 shares (originally 731,322 shares before the claim setoff) of our common stock if the founders of MedUnite achieve certain revenue-based triggers over the next three and one-half year period. The shares of our common stock issuable upon conversion of the convertible notes will be registered by us promptly after a conversion trigger event. The first conversion trigger event was met during the fourth quarter of 2003.

     MedUnite was founded in June 2000 by seven of the nation’s leading health insurers —Aetna, Anthem, CIGNA, Health Net, Inc., Oxford Health Plans, PacifiCare Health Systems, and Wellpoint Health Network — and its technology includes one of the industry’s largest Internet-based real time transaction networks, in addition to electronic data interchange (“EDI”) based processes. At the time of our acquisition exiting 2002, MedUnite’s legacy claims platform, which was acquired from NDCHealth Corporation (“NDCHealth”) in 2001, was annually processing over 85 million transactions with approximately 4.7 million real-time transactions processed by MedUnite’s new state-of-the-art platform. The acquisition of MedUnite added an additional 30,000 physicians to our network and provided unique opportunities for cross-selling products and services to our existing and new customer base. During 2003, we began the integration of MedUnite’s operations into ours and, by the end of the 2003 year, were successful in creating one Transaction Services business.

     Our acquisition of MedUnite resulted in an organization serving 140,000 physicians and other healthcare providers and processing over 200 million healthcare transactions processed annually, making us the nation’s second largest physician-based transaction processing company, second only to WebMD Corporation. In addition, in conjunction with the acquisition of MedUnite, we formed a strategic relationship with NDCHealth, MedUnite’s 8th shareholder, for processing claims and real-time transactions and now as a result we have potential access to over 100,000 physicians that utilize NDCHealth’s various practice management systems.

* * *

     Our corporate offices are now located at 1854 Shackleford Court, Suite 200, Atlanta, Georgia, and our telephone number is 770-806-9918.

     As used in this report, unless the context requires otherwise, “we”, “us”, “our”, “ProxyMed” or the “Company”, means ProxyMed, Inc. and its consolidated subsidiaries. Italicized terms in this document indicate trademarks or other protected intellectual property that we own or license.

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Overview of ProxyMed. Where Healthcare Connects™

     Our mission statement is as follows: “ProxyMed solves the business problems of healthcare providers every day by automating their financial, administrative and clinical transactions with their healthcare institution partners. We exceed customer expectations through our expertise, proven methodologies and dedication to service excellence.”

     Our focus is connecting small physician offices with their contracted financial and clinical partners so that they can conduct transactions electronically. We are organized into two business segments: Transaction Services (formerly known as Electronic Healthcare Transaction Processing) and Laboratory Communication Solutions. Transaction Services includes transaction and value-added services principally between physician offices and insurance companies (Payer Services), physician offices and pharmacies/pharmacy benefit managers (Prescription Services), and cost containment and business process outsourcing solutions for insurance companies offered through our recently completed acquisition of PlanVista on March 2, 2004 (Medical Cost Containment Services); and Laboratory Communication Solutions includes the sale, lease and service of communication devices principally to laboratories and the contract manufacturing of printed circuit boards and other value-added services (Laboratory Services).

     Since the beginning of 2001, our focus has been to double the number of physicians and other healthcare providers we serve as well as to increase the utilization of our transaction-based services among them over the following five years. Our success is largely dependent upon our ability to cross-sell our services across our provider base; to offer new transactions and services as they become available; and to achieve economies of scale in our operations resulting from the consolidation of our operation centers, including production and financial systems, from our various acquisitions.

     We believe that we are well positioned today in each of our business units. With our completed acquisition of MedUnite on December 31, 2002, we believe that we are the second largest medical claims clearinghouse for physician offices, the largest provider of intelligent laboratory results reporting devices, and the largest provider of retail pharmacy-to-physician connectivity. In 2003, we processed approximately 226.6 million electronic transactions among physician offices, payers, laboratories and pharmacies compared to 114.2 million electronic transactions in 2002. We leverage the connectivity of our back-end transaction network, Phoenix™, and continue to add partners by developing new value-added products and services, by adding additional payer transaction types such as improved eligibility and claim status reports, and by expanding our Internet-based transaction offerings such as claims, lab results reporting and prescription refills through our Internet portal, ProxyMed.net. We are an attractive, neutral partner to front-end electronic healthcare companies who are focused on physician office services, as we remain the only national and independent transaction center that does not compete with them for the physician’s desktop and that can connect their physician offices on the back-end to carry on electronic transactions between them and their payers, laboratories and pharmacies. Financial information relating to the Company’s segments, including revenue, segment operating margin and assets attributable to each segment for each of the fiscal years ending 2001, 2002 and 2003 is presented in Note 4 of the Notes to Consolidated Financial Statements in Item 8 — Financial Statements and Supplementary Data.

Our business is driven by the healthcare community’s need to process information more efficiently

     With more than 35 billion financial and clinical transactions being generated each year, the major driver of our business is the increasing number of physicians who wish to adopt secure electronic solutions that improve the quality of their patient care while reducing costs and administration time. We believe that it is just a matter of time before the majority of physicians, payers, laboratories and pharmacies embrace the electronic transmission and processing of virtually all of a patient’s clinical and financial transactions. Our efforts concentrate on the innovative design of our products and services that make these electronic transactions easy to use, fast, reliable and secure. Phoenix™, our secure, proprietary national healthcare information network, is the key enabler that makes this possible. We are a leader in providing these back-end connections and offer a host of transaction

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services to smaller physician offices which we believe reduce costs by increasing efficiency, reducing payment cycle time, and enabling physicians to make more informed decisions at the point of care.

Connectivity and physician relationships are key strengths

     Our advantage lies in two critical areas. First, we offer the industry’s broadest range of financial, clinical and administrative connectivity available from a single company. Our existing connectivity to payers positions us as the second largest medical claims clearinghouse in the industry with 94% of our annual transaction volume sent directly to the designated payer rather than being routed through other transaction centers. In addition, we are the largest provider of intelligent laboratory results reporting devices and the largest provider of retail pharmacy connectivity. Our electronic transaction processing services support a broad range of financial transactions (such as claims, patient statements, claims status reports, eligibility verification, explanations of benefits (EOB) and electronic remittance advices); clinical transactions (such as laboratory results, new prescription orders and prescription refills); and administrative transactions (such as referrals and pre-certifications). These connections allow information to reliably move back and forth from the physician’s office to the appropriate healthcare institution (payer, laboratory and pharmacy) facilitating diagnosis, treatment and payment.

     Our second advantage is our extensive physician relationships. Following our acquisition of MedUnite, we have almost 140,000 physicians directly or indirectly using at least one of our existing solutions. To reach these direct and partnered physicians, we have licensing and connectivity agreements with many national and regional companies, such as practice management system vendors, billing services, and electronic healthcare companies, and with physician offices directly. These relationships offer us an opportunity to cross-sell our products and services to our existing physician office customer base.

We have built a comprehensive back-end model which would be difficult and time-consuming to replicate

     We were an early entrant into the healthcare electronic transaction industry, having developed, as a result of our own efforts and through acquisitions, our back-end connectivity for both financial and clinical transactions. We believe that the development and maintenance of our connections from both a technical and relationship perspective were costly, complex and time-consuming, and represent a barrier to entry for would-be competitors. Having accomplished much of this task, there is an opportunity for us to leverage our existing connectivity and existing relationships, especially since we believe we are the only connectivity company that is, in fact, processing new prescriptions, refill prescriptions, laboratory test results reports and financial transactions over a single network.

Current Products and Services

     We offer a variety of financial and clinical electronic processing services through our suite of Windows®-based¹ products, through our Internet portal, ProxyMed.net and through various direct network connection programs. Each of these entry points connects physician offices to our network and then routes transactions to their contracted payer, laboratory and pharmacy partners.

     Claims submission and reporting, insurance eligibility verification, claims status inquiries, referral management, laboratory test results reporting and prescription refills are all available today through ProxyMed.net. We continue to expand our offerings through ProxyMed.net to include new financial and clinical transactions such as claims response management, electronic remittance advices, encounters and new prescriptions. All of our existing web-based applications can be private-labeled and are being marketed through our channel partners to increase distribution opportunities. Our recently completed acquisition of PlanVista also adds a suite of cost containment and business process outsourcing solutions to our payer customers.

¹ Windows is a registered trademark of Microsoft Corporation.

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     Payer Services

     Over the course of 2003 ProxyMed completed the integration of MedUnite’s products and services into ProxyMed’s existing suite of products. This combination has resulted in a broad suite of products that fit the transaction processing and connectivity needs of all physician offices, regardless of the technology that they use. This suite of products covers platforms as old as DOS but also includes solutions for those that have the latest in Internet platforms.

     We offer several Windows and Unix based desktop products, including claims submission through ProxyClaim and claims tracking through our ProxyTracker product. We also offer Statlink, that can be used to submit claims, eligibility and claims status. We also offer a non-computer based solution in our point-of-service terminal that allows for a low cost, stand-alone solution for electronic eligibility verification, patient statement processing, paper claims printing and Explanation of Benefits (EOB) scanning.

     For physicians who prefer to use Internet based services ProxyMed had developed and had been operating our provider transaction services web portal, ProxyMed.com, for over three years. With our acquisition of MedUnite and its MedUnite.net web portal, we started the 2003 year operating two provider web portals. However, in July 2003, we launched a consolidated new portal, ProxyMed.net, that integrated the MedUnite.net individual application services with the ProxyMed.com menu system, user access management, enrollment and other infrastructure components. By the end of 2003, the majority of transactions and customers had been migrated from ProxyMed.com and MedUnite.net to the new portal. ProxyMed.net’s available web-based financial and administrative transactions now include claims submission and reporting, eligibility verification, claims status inquiries, referral management and pre-certifications.

     In addition to working directly with physician offices, ProxyMed offers software developers, large customers and partners an Application Programming Interface (API) to connect to the ProxyMed real-time transaction platform and directly submit XML or X12 based transactions. This service is sold as ProxyMed’s business-to-business (“B2B”) offering. The platform which supported the B2B offering was based on MedUnite’s proprietary XML transaction format. The platform and the API as implemented were not HIPAA-compliant and MedUnite had an ongoing project to bring the platform and API to HIPAA-compliance. We completed this project in mid 2003 and all transaction types are HIPAA compliant.

     In addition to remediating the physician side of our connectivity services to be HIPAA compliant. ProxyMed also updated all payer side connectivity platforms to be HIPAA compliant. This project was completed in 2003. The parallel effort to work with each connected payer to remediate its connection for HIPAA-compliance is continuing in 2004. We anticipate completion of this project by mid-year.

     Prescription Services

     In our Prescription Services business unit, we offer both new prescription ordering and refill management through our PreScribe® family of products. There are currently over 1,200 physician clients using PreScribe®. PreScribe® and Phoenix™ support the largest and oldest electronic and fax gateway infrastructure with connectivity to over 30,000 pharmacies nationwide. We also offer a private-label version of our web-based refill prescription application.

     Laboratory Services

     Our Laboratory Services business unit offers lab order entry and results reporting through our recently announced QuickReq product. We believe the QuickReq advantage is its enterprise scope with a modular approach, giving even the smallest labs the ability to deploy an order entry and results reporting solution. In addition to QuickReq, we offer a family of intelligent remote reporting devices for communicating lab results to

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physician clients. Our devices are installed in more than 100,000 physician offices throughout the United States. Our FleetWatchSM monitors and reports the status of individual remote reporting devices within a fleet. This service is valuable to laboratories in its ability to detect and proactively resolve problems, many times before clients ever notice a disruption in service.

     Medical Cost Containment Services

     Through our recently completed acquisition of PlanVista on March 2, 2004, we now provide medical cost containment and business process outsourcing solutions for the medical insurance and managed care industries through our operating subsidiary, PlanVista. PlanVista’s customers include healthcare payers such as self-insured employers, medical insurance carriers, third party administrators, health maintenance organizations, sometimes referred to as HMOs, and other entities that pay claims on behalf of health plans. PlanVista also provides network and data management business process outsourcing services for health care providers, including individual providers, preferred provider organizations, sometimes referred to as PPOs, and other provider groups.

     PlanVista provides healthcare payers with access to its preferred provider network, known as the National Preferred Provider Network, which offers payers discounts on participating provider medical services. The National Preferred Provider Network is a “network of networks,” comprised of more than 30 local PPO networks and independent physician associations with which PlanVista contracts, as well as directly contracted independent physicians in some cases. PlanVista’s National Preferred Provider Network includes approximately 400,000 physicians, 4,000 acute care hospitals, and 55,000 ancillary care providers. In addition to offering payers in-network discounts, PlanVista has added medical bill review and negotiation through key strategic alliances. PlanVista’s cost containment customers also benefit from its advanced claims repricing and network and data management services.

     PlanVista has leveraged its leading edge technology and management expertise to offer its clients network and data management outsourcing services that are independent of the National Preferred Provider Network access business. In late 2001, PlanVista launched its PayerServ business, which helps payers manage all of their network relationships, whether or not the payers also access the National Preferred Provider Network. PlanServ, the other business initiative PlanVista implemented in late 2001, provides claims repricing and network and data management services that help PPOs support all of their payer relationships, not simply payer relationships that they maintain through the National Preferred Provider Network.

     Business Strategy - We plan to grow operating revenue and profits by increasing the market share of PlanVista’s medical cost containment business, building its existing network and data management business process outsourcing businesses, introducing new medical cost management solutions for its customers and accessing our significant payer customers. PlanVista’s strategy to date has been to market its established National Preferred Provider Network brand as a leading national preferred provider network and to provide a broad array of technology-based business process outsourcing services to existing and new customers. This strategy is designed to help customers maximize their total savings on medical claims and administration through PlanVista’s advanced network and administrative capabilities.

     Focused Penetration of Payer Market — We believe that we can increase PlanVista’s market share by marketing its claims repricing technology, its ability to capture discounts on a large percentage of claims due to the size of its National Preferred Provider Network, and the attractiveness to payer customers of its percentage of savings revenue model. PlanVista also cross-sells its PayerServ products to its existing National Preferred Provider Network access customers. Additionally, because PlanVista’s National Preferred Provider Network is a network comprised in part of a number of regional PPOs, we believe that PlanVista’s ability to market its products to PPOs is enhanced because, in operating the National Preferred Provider Network, PlanVista has gained experience in managing the back office, automation, and technology challenges that most PPOs face.

     Emphasis on Superior Technology - We intend to continue differentiating PlanVista as a technology leader by using its electronic claims repricing technology to increase its customer base. In June 2003, PlanVista completed the migration of all its clients to its “MedEngine” repricing system on the Oracle Database, thereby

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updating its technology-enabled services to further improve speed and accuracy and achieve greater operational efficiencies and enhanced claim data integrity. This technology update took place over the course of two years and represented a significant achievement for PlanVista, allowing it to handle the most demanding claim repricing tasks.

     The latest version of PlanVista’s Internet claims repricing system, ClaimPassXL® v3.5, allows PlanVista to shift claims repricing submissions from paper or fax to the Internet, which reduces its claims processing costs from between $0.75 and $0.80 per claim to $0.15 per claim, and reduces turnaround times from three business days to real-time for most claims. We believe that faster turnaround of claims repricing will become more important to payers as state insurance regulators increase their scrutiny of claims payment turnaround times. Since the March 2001 release of ClaimPassXL® v3.0, the predecessor to ClaimPassXL® v3.5, PlanVista’s volume of Internet repriced claims has increased steadily.

     National Preferred Provider Network - The National Preferred Provider Network is comprised of PPOs, independent physician associations, and individually contracted providers that offer discounts on medical services. These providers and provider groups participate in the National Preferred Provider Network to increase patient flow and benefit from the National Preferred Provider Network’s prompt, efficient claims repricing services. Healthcare payers access the National Preferred Provider Network to benefit from the discounts offered by participating providers. The size of the National Preferred Provider Network and the level of National Preferred Provider Network discounts provide PlanVista’s payer customers with significant reductions in medical claims costs.

     The National Preferred Provider Network access agreements generally require PlanVista’s customers to pay PlanVista a percentage of the cost savings generated by the National Preferred Provider Network discounts. In the medical cost containment industry, this payment arrangement is called a “percentage of savings” revenue model. A typical percentage of savings customer maintains arrangements with more than one PPO network. Most of these payer customers utilize the National Preferred Provider Network as an additional network to contain costs when a covered person obtains medical services from a provider outside of the payer’s primary PPO network. When PlanVista receives a provider bill for medical services that are covered by the National Preferred Provider Network discount arrangements, PlanVista electronically reviews the bill and reprices it to conform to the negotiated discounted rate, which is typically lower than the invoiced amount. PlanVista charges payers an average of 18.0% of the savings that the payer realizes from the discount. PlanVista derives the balance of its National Preferred Provider Network operating revenue from payer customers that pay a flat fee per month based on the number of enrolled members. These customers generally access the National Preferred Provider Network as their primary PPO network.

     PlanVista’s contracts with PPO participants and other participating providers generally have renewable terms ranging from one to two years, but in most cases are terminable by either party without cause on 90 days’ notice. The termination of any PPO contracts would render PlanVista unable to provide customers with access to the PPO’s provider discounts, and therefore would eliminate PlanVista’s ability to reprice claims and derive operating revenue accordingly. More than 80.0% of PlanVista’s participating providers have been part of the National Preferred Provider Network for more than three years, with some relationships spanning more than nine years since the beginning of the National Preferred Provider Network’s inception in 1994. Since the majority of the provider arrangements are through other networks, PlanVista depends on its contracted networks to maintain provider relationships and ensure provider compliance with the terms of the network arrangements.

     Electronic Claims Repricing - In connection with its National Preferred Provider Network access business, PlanVista provides electronic claims repricing services that benefit both its payer clients and its participating providers. A participating provider submits a claim at the full, undiscounted provider rate. The provider sends the claim directly to PlanVista or to the payer, which then forwards the bill to PlanVista. Because there are a wide variety of provider systems for submitting claims, PlanVista accepts claims by traditional methods such as mail and fax, as well as through the Internet and by electronic data interchange. PlanVista converts paper and faxed claims to an electronic format, and then electronically reprices the claims by calculating

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the reduced price based on its National Preferred Provider Network’s negotiated discount. PlanVista returns the repriced claims file to the payer electronically, in most cases within three business days.

     PlanVista’s ClaimPassXL® Internet and electronic data interchange services speed the claims repricing process for its customers. By logging onto PlanVista’s ClaimPassXL® Internet site, a payer can input claims information directly into PlanVista’s claims system. PlanVista electronically reprices the claim and delivers the repriced claim information to the payer customer through the Internet. PlanVista’s electronic data interchange (sometimes referred to as “EDI”), system provides an alternative way for customers to simplify the claims repricing process. EDI customers do not have to key claims information into PlanVista’s Internet site. Instead, PlanVista’s EDI system interfaces directly with the payer’s claims file configuration, which allows the payer to send PlanVista its claims file in its existing electronic format. After PlanVista electronically reprices the claims, PlanVista sends the customer an electronic file of claims information that the payer can incorporate into its claims database automatically.

     Although PlanVista does not charge its network access customers a separate fee for claims repricing, PlanVista believes that its advanced repricing system provides significant benefits that make PlanVista’s network access services more attractive to payers. It is time consuming and expensive for a payer to load PPO rates and demographic information into its claims system and to create a system that accepts the various forms in which claims information is submitted. PlanVista offers a turnkey solution that requires only a limited number of payer personnel. PlanVista can reduce claims turnaround times and provide efficient claims transmission options. PlanVista’s system also can reduce lost claims, reduce the number of undiscounted claims, support high claim volume customers, and improve accuracy over manually processed claims. PlanVista’s customers are also relieved of some of the burden of complying with the Health Insurance Portability and Accountability Act, sometimes referred to as HIPAA, which imposes privacy and data configuration requirements that apply to claims repricing. PlanVista believes that its claims processing procedures are in material compliance with current HIPAA requirements and will be compliant with future requirements. Providers also benefit from PlanVista’s streamlined claims system, which helps increase the speed with which they get paid and the accuracy of the claims payments.

     Network and Data Management — PlanVista uses its information system capabilities to provide network and data management services for the payers that access the National Preferred Provider Network. For some network access payers, PlanVista acts as the payer’s mailroom for receipt of all provider claims, converting payer and fax claims to an electronic format, identifying the correct network fee schedule applicable to each claim, and electronically repricing the claim accordingly. PlanVista prepares detailed reports regarding repricing turnaround times and the savings that each payer realizes, itemized by the total number of claims incurred, the number of claims discounted, and the average discount. Payers can use this information to help design health plans that effectively control costs, enhance member benefits, and yield a more favorable loss ratio, which is the ratio of paid medical claims compared to collected premiums. As a provider of data management services, PlanVista maintains provider demographics and fee schedules and updates provider directories. PlanVista integrates several components of certain licensed reporting software to provide both payer clients and participating PPOs with quick access to claims data, allowing them to produce a variety of analytical reports. PlanVista generally does not charge its National Preferred Provider Network access customers any additional fee for its standard network and data management services.

     Bill Review and Negotiation - In April 2002, PlanVista began offering optional medical bill review and negotiation services to its payer clients. Many of PlanVista’s percentage of savings clients send PlanVista all claims that fall outside their primary PPO network arrangements. Traditionally, PlanVista identified and repriced the claims that were subject to the National Preferred Provider Network discount arrangements and returned the non-National Preferred Provider Network claims to the payer without applying any discount. PlanVista now offers payer customers the opportunity to realize cost savings on these out-of-network claims through PlanVista’s affiliations with bill review and negotiation companies. PlanVista can electronically transmit non-National Preferred Provider Network claims to experienced professionals at the contracted bill review and negotiation companies. These professionals use proprietary medical software to analyze each claim to detect any incorrect charges or billing irregularities. Once that phase of the analysis is completed, the detailed charges are compared to a proprietary database to determine the competitiveness of the charges in the provider’s geographic area. The

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bill negotiator then contacts the provider to discuss PlanVista’s findings, and in many cases is able to reduce the claim amount. The reviewer obtains signed agreements from each provider to prevent the provider from later contesting the reduction or billing the patient for the balance. The bill review and negotiation vendor then returns the electronic file to PlanVista, and PlanVista forwards it to the payer along with the payer’s other repriced claims. Payers pay PlanVista a percentage of the savings that are generated by the bill review and negotiation service.

     Advance Funding - In 2002, PlanVista launched a program to provide advance funding services for payers and providers. Through an arrangement with established advance funding companies, PlanVista offers participating providers the opportunity to receive claim payments in advance of the due date. In exchange, the providers agree to accept a discount of the original billed amount. This service provides both a reduction in claim costs for payers and rapid payment for providers.

     Business Process Outsourcing - PlanVista traditionally provided claims repricing and network management services only with respect to claims that its National Preferred Provider Network participating providers submitted to one of PlanVista’s network access payer customers. Through its network and data management business process outsourcing business, PlanVista has expanded its scope to offer payers and providers services that are independent of PlanVista’s network access business.

     PayerServ - Healthcare payers typically contract with more than one PPO network. While historically most payers’ claim systems and applications could handle simple percentage discount repricing calculations for a single network, PlanVista believes that most are not well suited for current PPO contract terms requiring detailed, often complex, repricing calculations. Each of the networks with which a payer contracts may have different discount methodologies and rates, greatly adding to a payer’s administrative burden and increasing the complexities of processing and repricing claims.

     Through PayerServ, PlanVista uses its existing technology and management expertise to help payers manage all of their network relationships, whether or not they also access the National Preferred Provider Network. A payer can outsource its network and data management obligations to PlanVista, and PlanVista will assume the responsibility for moving, tracking, and repricing healthcare claims among all of the PPO networks with which it has contracts. By maintaining provider fee schedule and demographic information for all of the providers in a payer’s provider configuration, PlanVista eliminates bottlenecks in the payer’s claim work flow, expedites claims repricing, and improves accuracy.

     The PayerServ services may include acting as the payer’s mailroom for receipt of all provider claims, converting paper and fax claims to an electronic format, identifying the correct network fee schedule applicable to each claim, and electronically repricing the claim accordingly. PlanVista also can provide reporting and other network management services with respect to all of the payer’s networks. PlanVista can prepare customized reports for payers that capture information regarding repricing turnaround time, cost management, demographics, case management, provider services, diagnoses and procedures. PlanVista believes that its PayerServ customers benefit from reduced operating expenses, streamlined network management, HIPAA-compliant procedures, and electronic repricing with rapid turnaround times. PlanVista does not require customers to pay upfront network loading fees and monthly maintenance fees, which are features of many of its competitors’ systems.

     PayerServ customers typically pay PlanVista for claims repricing and claims and network and data management services on a per-claim basis. For each PayerServ customer, PlanVista analyzes the customer’s service requirements, including claims work flow, claims volume and types, and PPO network configurations. Then, based on its proprietary pricing model, PlanVista determines the pricing for each claim transaction.

     PlanServ - PlanServ uses the same technology and management expertise that supports PlanVista’s PayerServ business to offer claims repricing and network data management services to PPOs. PlanVista’s PPO participants generally maintain relationships with payers that are independent from the PPOs’ affiliation with PlanVista’s National Preferred Provider Network. Many of these PPOs are seeking cost-efficient ways to develop their own automated claims handling and repricing systems and to manage the provider data necessary to update

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their provider directories efficiently and otherwise support network access. By outsourcing repricing functions to PlanServ, a PPO can achieve advanced electronic capabilities for its payer clients without incurring the high cost of systems development. PlanVista can serve as a mailroom for PlanServ clients, receiving paper and fax claims and converting them to an electronic form for repricing, so that the PPO never touches the claims. PPOs that take advantage of the PlanServ offerings do not have to distribute their rates to their payers, manually reprice claims, or be concerned with HIPAA requirements related to claims repricing. The PPO’s payer clients benefit from reduced turnaround times on repriced claims and escape the burden of loading the PPO’s rates. PlanServ products also include web hosting capabilities, featuring customized, private label web access that enables a participating PPO’s customers to reprice claims electronically through the Internet. Each PPO’s website includes the PPO’s logo and other material chosen by the PPO.

     PlanServ also offers PlanVista’s PPO customers management reporting products that capture important claims data, including repricing turnaround times, claim volume, and savings amounts. PPO customers can use this information to negotiate better physician and facility discounts. PlanVista believes that obtaining and analyzing information is increasingly important to PPOs because this information is necessary for them to properly establish their discount levels. PlanVista also provides PlanServ customers with database administration, including provider directory updates and maintenance of provider demographics and fee schedules.

     Like PayerServ, PlanServ generally charges customers a per-claim fee, which is calculated based on the extent of the customer’s service requirements, including claims work flow and number of payers.

Product and Services Development

     In Payer Services, several initiatives are underway to convert all current transactions to their respective HIPAA-compliant formats (see “Healthcare and Privacy Related Legislation” below). To date, our institutional, professional and dental claims (837); electronic remittance advice (835); eligibility (270/271); claims status (276/277) and referral (278) transactions have been certified as HIPAA-compliant by Claredi, one of the nation’s leading commercial providers of HIPAA EDI compliance testing and certification services. We are actively engaged in migrating all of our existing payer and provider connections to a HIPAA-compliant format, in conjunction with our contingency plan for HIPAA compliance. HIPAA also affords us many opportunities to increase both the number and type of transactions we offer to both physicians and payers.

     In addition to processing the basic HIPAA-defined transactions, we seek to expand our product and service offerings to include other value-added services for its providers and payers. In furtherance of this strategy, we formed a strategic relationship in July 2003 with First Data Corporation (“First Data”). By leveraging our deep payer and provider connectivity with First Data’s financial transaction expertise, the two companies are jointly marketing FirstProxy, a new suite of innovative solutions that streamline and expedite healthcare claim, payment and settlement processes. The first offering, FirstProxy ERA/ EFT, will transform the remittance advice and payment process from paper-based to electronic.

     Together, ProxyMed and First Data will allow healthcare providers and insurance companies to rapidly convert existing paper-based checks and explanation of benefits into secure, HIPAA-compliant electronic ERAs with electronic funds transfer. The processing and settlement of the financial transactions and payments will start and end within the First Data processing system. FirstProxy ERA/ EFT will also ensure that insurers and providers are compliant with upcoming HIPAA regulation deadlines that require standards for health information security and privacy as well as the implementation of electronic data interchange for ERAs. In addition, we announced in June 2003 that we entered into a joint marketing program to offer our electronic healthcare transaction processing services and PlanVista’s network access product as an integrated package to existing and prospective payer customers. We will integrate PlanVista’s network, repricing services and network management services with our physician and hospital claims processing services. The resulting leading-edge medical cost management solutions will include medical claim repricing, flexible EDI connectivity and national PPO access through PlanVista’s preferred provider network, NPPN. Combining these solutions will allow us to offer a one-

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stop shop for all our customers’ claims needs, which will include a guaranteed 24-hour turn-around time and bill negotiation. These services are available immediately for our payer customers

     In Laboratory Services, we were pursuing opportunities to convert our business from the traditional sale, lease and service of intelligent laboratory reporting devices to recurring transaction-based revenue streams. Although this is a factor in our long-term growth strategy, to date, the marketplace has been slow to adopt this economic model and we have had limited success with this service. As a result, we have postponed any significant further development or deployment at this time.

     The total amount capitalized for purchased technology, capitalized software and other intangible assets as of December 31, 2003, was approximately $15.9 million, net of amortization.

     Our research and development expense was approximately $4.4 million in 2003, $3.2 million in 2002 and $2.0 million in 2001.

Marketing

     We have a direct sales force and customer support staff that serves physician offices, payers, laboratories and pharmacies. In addition, since we do not compete for the physician desktop and allow for private branding of our value-added products and services, we are able to leverage the marketing and sales efforts of our partners by giving them even greater added value to drive our revenues and transactions.

     Our marketing efforts are focused on providing connectivity solutions for the 326,000 small physician offices (one-to-nine physicians) in the United States, a niche that is underserved by our competitors.

     We utilize a unique sales and marketing methodology called “FOCUS” (an acronym for Find, Obtain, Capture, Utilize and Service) for targeting, acquiring, retaining and maximizing the utilization of our services at the small physician office. Working with our payer and pharmacy partners to identify high volume paper claim submitters and prescription writing physicians as qualified sales leads, the results of our FOCUS program indicate quick contract-to-implementation time frames, low attrition rates and high post-implementation satisfaction levels.

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     We utilize the following distribution channels for our products and services to maximize connectivity between physician offices, payers, laboratories, pharmacies and other healthcare providers:

Channel	Focus
Direct	We have a direct sales force of account executives, inside telemarketers, account managers and customer care representatives who serve our physician offices, payers, laboratories and pharmacies. We license access to our proprietary network, Phoenix™, and provide intelligent laboratory results reporting devices for communications between physicians and laboratories.
Partners	We work with the vendors of physician and pharmacy office management systems so that they may enable their existing applications to process transactions through Phoenix™ between physicians and payers, laboratories and pharmacies. We also license these customers to offer our products and services under their own private label. We also connect other electronic transaction processing networks to Phoenix™ so that the participants on both networks can communicate with each other in National Council of Pharmacy Drug Program (NCPDP) standard, HIPAA approved formats, and the HL-7 standard format for laboratories.
Internet	We are a provider of financial, clinical and administrative electronic transaction processing services through our portal, ProxyMed.net, which may be easily accessed by any physician office with an Internet connection.

Competition

     Transaction Services — We face competition from many healthcare information systems companies and other technology companies. Many of our competitors are significantly larger and have greater financial resources than we do and have established reputations for success in implementing healthcare electronic transaction processing systems. Other companies, including WebMD Corporation, NDCHealth Corporation, Per-Se Technologies, and other healthcare related entities such as RxHub LLC, have targeted this industry for growth, including the development of new technologies utilizing Internet-based systems. While our ability to compete has been enhanced by our acquisition of MedUnite and its Internet-based platform for real-time transactions, we cannot assure that we will be able to compete successfully with these companies or that these or other competitors will not commercialize products, services or technologies that render our products, services or technologies obsolete or less marketable.

     Preferred Provider Network Access - The PPO industry is highly fragmented. According to the American Association of Preferred Provider Organizations, as of March 2003 there were more than 1,000 PPOs in the United States. A few companies, such as First Health Group Corporation, BCE Emergis/eHealth Solutions, Concentra, Inc., Beech Street Corporation, Coalition America, Inc., and Multiplan, Inc., offer provider networks and claim volumes of meaningful size. The remainder of the competitive landscape is diverse, with major insurance companies and managed care organizations such as Blue Cross Blue Shield, Aetna, WellPoint Health Networks, Inc., UnitedHealth Group, Humana Health Care Plans, Private Healthcare Systems, and CIGNA Healthcare also offering proprietary preferred provider networks and services. In addition, the number of independent PPOs has decreased as managed care organizations and large hospital chains have acquired PPOs to administer their managed care business and increase enrollment. We expect consolidation to continue as the participants in the industry seek to acquire additional volume and access to PPO contracts in key geographic markets. This consolidation may give customers greater bargaining power and lead to more intense price competition.

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     Electronic Claims Repricing - The claims repricing service market is also fragmented. PlanVista’s repricing competitors provide some or all of the services PlanVista currently provides. PlanVista’s competitors can be categorized as follows:

• Large managed care organizations and third party administrators with in-house claims processing and repricing systems, such as Blue Cross and Blue Shield, UnitedHealth Group, and Wellpoint Health Networks;

• Healthcare information technology companies providing enterprise-wide systems to the payer market, such as McKesson HBOC, Eclipsys Corporation, and Perot Systems Corporation; and

• Healthcare information software vendors selling claim processing products to the provider market, such as The TriZetto Group, Healthaxis, AVIDYN/ppoONE, and several private companies.

     The market for claims repricing services is competitive, rapidly evolving, and subject to rapid technological change. We believe that competitive conditions in the healthcare information industry in general will lead to continued consolidation as larger, more diversified organizations are able to reduce costs and offer an integrated package of services to payers and providers.

     PlanVista competes on the basis of the strength of its electronic claims repricing technology, the size of its network and the level of its network discounts, its percentage of savings pricing model, and the diversity of services PlanVista offers through its business processing outsourcing products and other new initiatives. Many of our current and potential competitors have greater financial and marketing resources than we have. Furthermore, we believe that the increasing acceptance of managed care in the marketplace, the adoption of more sophisticated technology, legislative reform, and the consolidation of the industry will result in increased competition. There can be no assurance that we will continue to maintain our existing customer base, or that we will be successful with any new products that we have introduced or will introduce.

Healthcare and Privacy Related Legislation

     ProxyMed and our customers are subject to extensive and frequently changing federal and state healthcare laws and regulations. Political, economic and regulatory influences are subjecting the healthcare industry in the United States to fundamental change. Potential reform legislation may include:

• mandated basic healthcare benefits;

• controls on healthcare spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid reimbursement;

• the creation of large insurance purchasing groups;

• fundamental changes to the healthcare delivery system;

• FTC enforcement actions of existing privacy laws relating to the Internet;

• Medicare or Medicaid prescription benefit plans;

• State licensing requirements; or

• Patient protection initiatives.

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     HIPAA

     Several state and federal laws govern the collection, dissemination, use and confidentiality of patient healthcare information. The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) was signed into law on August 21, 1996. HIPAA was designed to improve the efficiency and effectiveness of the healthcare system by standardizing the interchange of electronic data for certain administrative and financial transactions and to protect the confidentiality of patient information. Multiple regulations have, and will continue to be promulgated from this revolutionary legislation.

     Privacy Compliance

     HIPAA’s Privacy Rule imposes extensive requirements on healthcare providers, healthcare clearinghouses, and health plans. These “Covered Entities” must implement standards to protect and guard against the misuse of individually identifiable health information. Certain functions of ProxyMed have been or may be deemed to constitute a clearinghouse as defined by the Privacy Rule. However, in many instances, ProxyMed also functions as a “Business Associate” of its health plan and provider customers. Among other things, the Privacy Rule requires us to adopt written privacy procedures, adopt sufficient and reasonable safeguards, and provide employee training with respect to compliance. The deadline for compliance with the privacy aspects of HIPAA was April 14, 2003. Although we have undertaken several measures to ensure compliance with the privacy regulation by the deadline and believe that we are in compliance, the privacy regulations are less definitive than other HIPAA regulations, are broad in scope, and will require constant vigilance for ongoing compliance.

     We also may be subject to state privacy laws, which may be more stringent than HIPAA in some cases.

     Transaction and Code Sets Compliance

     HIPAA also mandates the use of standard transactions for electronic claims and other certain healthcare transactions. HIPAA specifically designates clearinghouses (including the Company and other financial network operators) as the compliance facilitators for healthcare providers and payers. On August 17, 2000, the U.S. Department of Health and Human Services published final regulations to govern eight of the most common electronic transactions involving health information. Under a revised bill passed by the U.S. Congress, the deadline for the transaction and code sets aspects of HIPAA was extended to October 16, 2003, provided that a formal request for extension and plan for compliance was submitted by October 16, 2002. However, covered entities, including ProxyMed and our physician and payer customers, are permitted to continue to process non-compliant transactions after October 16, 2003 so long as that covered entity is compliant with the “contingency planning” guidelines provided by the Center for Medicare and Medicaid Services. A substantial number of our transactions, including those related to its acquisition of MedUnite, on behalf of our physician and payer customers are currently being processed in a non-HIPAA compliant manner in accordance with our contingency plan.

     Security Compliance

     HIPAA’s Security Rule imposes standards for the security of electronic protected health information and was finalized on February 20, 2003. The effective date for the Security Rule is April 20, 2005. We have long-standing implemented physical, technical and administrative safeguards for the protection of electronic protected health information. However, additional assessments and product and systems remediation is expected to occur before the compliance date. The Security Rule has also introduced the concept of an addressable implementation standard which will require ongoing vigilance to ensure that employed safeguards are sufficient given current technology capabilities and threats and reasonable industry expectations.

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     Identifiers and Future HIPAA Regulations

     Because some HIPAA regulations, including some various national identifiers, have yet to be issued or implemented, and because even final HIPAA regulations may be subject to additional modification or amendment, the Company’s products may require modification in the future. If we fail to offer solutions that permit compliance with applicable laws and regulations, our business could suffer.

Internet Privacy and Regulation

     Another area in which regulatory developments may impact the way we do business is privacy and other federal, state and local regulations regarding the use of the Internet. We offer a number of Internet-related products. Internet user privacy and the extent to which consumer protection and privacy laws apply to the Internet is an area of uncertainty in which future regulatory, judicial and legislative developments may have a significant impact on the way we do business, including our ability to collect, store, use and transmit personal information. Internet activity has come under heightened scrutiny in recent years, including several investigations in the healthcare industry by various state and federal agencies, including the Federal Trade Commission.

Patient/Consumer Protection Initiatives

     State and federal legislators and regulators have proposed initiatives to protect consumers covered by managed care plans and other health coverage. These initiatives may result in the adoption of laws related to timely claims payment and review of claims determinations. These laws may impact the manner in which we perform services for our clients.

Regulations Specific to PlanVista

     Regulation in the healthcare industry is constantly evolving. Federal, state and local governments continue their efforts to reduce the rate of increases in healthcare expenditures and to regulate the adjudication of healthcare claims for the protection of patients as well as providers. Many of these policy initiatives have contributed to the complex and time-consuming nature of obtaining healthcare reimbursement for medical services. The impact of regulatory developments in the healthcare industry is complex and difficult to predict, and PlanVista’s business could be adversely affected by new healthcare regulatory requirements or new interpretations of existing requirements. PlanVista believes, however, that the increasing complexity of healthcare transactions and the resulting additional information management requirements placed on providers and payers should increase the demand for its services. At the same time, these requirements may dramatically increase the cost of providing services.

     Gramm-Leach-Bliley

     Many of PlanVista’s customers may also be subject to state laws implementing the federal Gramm-Leach-Bliley Act, relating to certain disclosures of nonpublic personal health information and nonpublic personal financial information by insurers and health plans. PlanVista also may be subject to state privacy laws, which may be more stringent in some cases.

     Provider Contracting and Claims Regulation

     Some state legislatures have enacted statutes that govern the terms of provider network discount arrangements and/or restrict unauthorized disclosure of such arrangements. Legislatures in other states are considering adoption of similar laws. Although we believe that we operate in a manner consistent with applicable provider contracting laws, there can be no assurance that we will be in compliance with laws or regulations to be promulgated in the future, or with new interpretations of existing laws.

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     PlanVista’s customers perform services that are governed by numerous other federal and state civil and criminal laws, and in recent years have been subject to heightened scrutiny of claims practices, including fraudulent billing and payment practices. Many states also have enacted regulations requiring prompt claims payment. To the extent that PlanVista’s customers’ reliance on any of the services PlanVista provides contribute to any alleged violation of these laws or regulations, then PlanVista could be subject to indemnification claims from its customers or be included as part of an investigation of its customers’ practices. Federal and state consumer laws and regulations may apply to PlanVista when it provides claims services and a violation of any of these laws could subject PlanVista to fines or penalties.

     Licensing Regulation

     PlanVista is subject to, and in compliance with, the licensing requirements of the State of Illinois for the services we provide. While PlanVista is currently not subject to any other licensing requirements for the services it provides, some states require PlanVista, as a non-risk-bearing PPO, to formally register and file an annual or one-time accounting of networks and providers with which PlanVista contracts. Given the rapid evolution of healthcare regulation, it is possible that PlanVista’s business will be subject to future licensing requirements in any of the states where PlanVista currently performs services, or that one or more states may deem PlanVista’s activities to be analogous to those engaged in by other participants in the healthcare industry that are now subject to licensing and other requirements, such as third party administrator or insurance regulations. Moreover, laws governing participants in the healthcare industry are not uniform among states. As a result, we may have to undertake the expense and difficulty of obtaining any required licenses, and there is a risk that we would not be able to meet the licensing requirements imposed by a particular state. It also means that we may have to tailor PlanVista’s products on a state-by-state basis in order for our customers to be in compliance with applicable state and local laws and regulations.

Summary

     We anticipate that Congress and state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods, as well as Internet and healthcare privacy legislation, and that public debate of these issues will likely continue in the future. Because of uncertainties as to these reform initiatives and their enactment and implementation, we cannot predict which, if any, of such reform proposals will be adopted, when they may be adopted or what impact they may have on us.

     While we believe our operations are in material compliance with applicable laws as currently interpreted, the regulatory environment in which we operate may change significantly in the future, which could restrict our existing operations, expansion, financial condition, or opportunities for success.

     Additional current HIPAA and privacy compliance information can be found on our websites at www.proxymed.com and at www.planvista.com.

Intellectual Property and Technology

     In large part, our success is dependent on our proprietary information and technology. We rely on a combination of contracts, copyright, trademark and trade secret laws and other measures to protect our proprietary information and technology. Although we do not currently hold any patents, as a result of the MedUnite acquisition, we acquired rights under four patent applications filed by MedUnite for its healthcare transaction processing platform and method for facilitating the exchange of healthcare transactional information, in addition to rights under various trademarks and trademark applications. We have twelve (12) copyright registrations covering our various software and proprietary products. As part of our confidentiality procedures, we generally enter into nondisclosure agreements with our employees, distributors and customers, and limit access to and distribution of our software, databases, documentation and other proprietary information. We cannot assure that the steps taken by us will be adequate to deter misappropriation of our proprietary rights or that third parties will not independently develop substantially similar products, services and technology. Although we believe our

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products, services and technology do not infringe on any proprietary rights of others, as the number of software products available in the market increases and the functions of those products further overlap, we and other software and Internet developers may become increasingly subject to infringement claims. These claims, with or without merit, could result in costly litigation or might require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us.

     PlanVista — PlanVista’s proprietary technology offers customers the benefits of an open architecture, which means that it is compatible with other operating systems and applications. Using a combination of electronic data interchange and Internet systems, customers can interface with our claims repricing system without incurring significant incremental capital expenditures for hardware or software or having to adopt a specific claims format. The open architecture of PlanVista’s system also improves reliability and facilitates the cross-selling of other technology-based services to PlanVista’s customers.

Employees

     As of March 8, 2004, we employed 541 full-time employees, and 18 part-time employees. We are not and never have been a party to a collective bargaining agreement. We consider our relationship with our employees to be good.

Available Information

     The Company’s Internet address is www.proxymed.com. The Company makes available free of charge on or through its Internet website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material was electronically filed with, or furnished to, the Securities and Exchange Commission.

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ITEM 2. PROPERTIES

     Our significant offices are located as followed:

Business			Approximate
Segment	Location	Description	Square Footage
Prescription Services	Fort Lauderdale, Florida	Operations office		20,500
Payer Services	Santa Ana, California	Operations office/data center		19,600
	San Diego, California	Development office		4,700
	Atlanta, Georgia	Corporate headquarters/operations office/data center		31,200
	Sioux Falls, South Dakota	Operations office		3,700
	Richmond, Virginia	Operations office/data center		3,000
Medical Cost Containment Services	Tampa, Florida	PlanVista headquarters		8,200
	Middletown, New York	PlanVista operations center		26,900
Laboratory Services	New Albany, Indiana	Operations office/manufacturing facility		42,000
	Moorestown, New Jersey	Operations office/depot service facility		4,000

     We also maintain portions of our Phoenix™ network at a secure, third-party co-location center in Atlanta, Georgia. In addition, we also lease several remote sales offices and mini-warehouses. Our leases and subleases generally contain renewal options and require us to pay base rent, plus property taxes, maintenance and insurance. We consider our present facilities adequate for our operations.

ITEM 3. LEGAL PROCEEDINGS

     From time to time, the Company is a party to legal proceedings in the course of its business. The Company, however, does not expect such other legal proceedings to have a material adverse effect on its business or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2003.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY
AND RELATED STOCK MATTERS

     Our common stock trades on the National Market tier of The Nasdaq Stock Market under the symbol “PILL”. The following table sets forth the high and low sale prices of the common stock for the periods indicated.

		High		Low
2004:
	First Quarter (through March 26, 2004)	$	19.80	$	16.65
2003:
	First Quarter	$	11.45	$	7.25
	Second Quarter		13.21		7.08
	Third Quarter		16.40		12.01
	Fourth Quarter		17.64		14.55
2002:
	First Quarter	$	22.35	$	15.00
	Second Quarter		21.99		17.21
	Third Quarter		20.44		10.50
	Fourth Quarter		15.95		9.48

     On March 26, 2004, the last reported sale price of the common stock was $16.70 per share. As of March 26, 2004, we estimate that there were approximately 684 registered holders of record of the common stock. We believe that many of ProxyMed’s holders of record are in “street name” and that the number of individual shareholders is greater than 684.

     We have never paid any dividends on our common stock; however, in prior years, we have paid dividends on our Series B and Series C Preferred Stock in cash and/or in shares of our common stock pursuant to the terms of the Articles of Incorporation, as amended. We intend to retain any earnings for use in our operations and the expansion of our business, and do not anticipate paying any dividends on the common stock in the foreseeable future. The payment of dividends on our common stock is within the discretion of our Board of Directors, subject to our Articles of Incorporation, as amended. Any future decision with respect to dividends on common stock will depend on future earnings, future capital needs and our operating and financial condition, among other factors.

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ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected consolidated financial information for ProxyMed as of and for each of the five years leading up to the period ended December 31, 2003, and has been derived from our audited consolidated financial statements.

		Year Ended December 31,
		2003			2002		2001			2000			1999
STATEMENT OF OPERATIONS DATA:
	Revenues	$	76,142		$	50,182	$	43,230		$	33,441		$	29,023
	Operating income (loss)	$	(3,642	)	$	1,340	$	(6,712	)	$	(23,460	)	$	(20,019	)
	Income (loss) from continuing operations	$	(5,000	)	$	1,950	$	(6,798	)	$	(26,927	)	$	(20,120	)
	Income (loss) from discontinued operations	$	—		$	—	$	—		$	241		$	(1,714	)
	Net income (loss) applicable to common shareholders	$	(5,000	)	$	1,338	$	(19,060	)	$	(48,052	)	$	(21,856	)
PER SHARE DATA:
Basic and diluted net loss per share of common stock:
	Income (loss) from continuing operations	$	(0.74	)	$	0.21	$	(8.81	)	$	(37.03	)	$	(16.75	)
	Income (loss) from discontinued operations	$	—		$	—	$	—		$	0.19		$	(1.43	)
	Net income (loss)	$	(0.74	)	$	0.21	$	(8.81	)	$	(36.84	)	$	(18.18	)
Diluted weighted average common shares outstanding			6,783,742			6,396,893		2,162,352			1,304,342			1,202,136
DIVIDEND DATA:
	Dividends on common stock	$	—		$	—	$	—		$	—		$	—
	Dividends on cumulative preferred stock	$	—		$	—	$	1,665		$	1,275		$	22

		December 31,
		2003		2002		2001		2000		1999
BALANCE SHEET DATA:
	Working capital	$	10,512	$	8,749	$	9,393	$	12,156	$	12,580
	Convertible notes	$	13,137	$	13,400	$	—	$	—	$	—
	Other long-term obligations	$	3,518	$	2,581	$	442	$	729	$	583
	Total assets	$	73,130	$	88,704	$	35,882	$	27,666	$	44,773
	Net assets of discontinued operations	$	—	$	—	$	—	$	—	$	3,022
	Stockholders’ equity	$	45,778	$	50,735	$	22,873	$	22,377	$	37,756

     The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes.

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FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS,
FINANCIAL CONDITION OR BUSINESS

     As discussed under the caption, “Cautionary Statements Pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” in Item 7, certain statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report that are not related to historical results are forward looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They frequently are accompanied by words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, and other words and terms of similar meaning. Actual results may differ materially from those projected or implied in the forward-looking statements. Subsequent written and oral forward looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth below and elsewhere in this report and in other reports filed by the Company with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report.

Risks Related to Acquisitions

Our business will suffer if we fail to successfully integrate into our business, the customers, products, and technology of the companies we acquire.

     We have undertaken several acquisitions in the past few years as part of a business strategy to expand our business, and we may continue in the future to acquire businesses, assets, services, products, and technologies from other persons or entities. The anticipated efficiencies and other benefits to be derived from these acquisitions and future acquisitions may not be realized if we are unable to successfully integrate the acquired businesses into our operations, including customers, personnel, product lines, and technology. We are in the process of integrating into our operations, the customers, products, personnel and technology of PlanVista. There is no guarantee that we will be able to successfully integrate PlanVista, MedUnite or any future acquired businesses into our operations. Integration of acquired businesses can be expensive, time consuming, and may strain our resources. Integration may divert management’s focus and attention from other business concerns and expose us to unforeseen liabilities and risks. We may also lose key employees, strategic partners, and customers as a result of our inability to successfully integrate in a timely matter or as a result of relationships the acquired businesses may have with our competitors or the competitors of our customers and strategic partners. Some challenges that we face in successfully integrating PlanVista, MedUnite and other acquired businesses into our operations include:

• conflicts or potential conflicts with customers, suppliers, and strategic partners;

• integration of platforms, product lines, networks, and other technology;

• the migration of new customers and products to our existing network;

• the ability to cross-sell products and services to our new and existing customer base;

• retention of key personnel;

• consolidation of accounting, operational and administrative functions;

• coordinating new product and process development;

• increasing the scope, geographic diversity and complexity of operations;

• difficulties in consolidating facilities and transferring processes and know-how; and

• other difficulties in the assimilation of acquired operations, technologies or products.

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Businesses we acquire may have undisclosed liabilities that may have a negative impact on our results of operations and require unanticipated expense.

     In pursuing our acquisition strategy, our investigations of the acquisition candidates may fail to discover certain undisclosed liabilities of the acquisition candidates. If we acquire a company having undisclosed liabilities, as a successor owner we may be responsible for such undisclosed liabilities. We try to minimize our exposure to such liabilities by conducting appropriate due diligence, by requiring audited financial statements, by obtaining indemnification from each seller of the acquired companies, by deferring payment of a portion of the purchase price as security for the indemnification or by acquiring only specified assets. However, we cannot insure that we will be able to obtain indemnifications or that they will be enforceable, collectible or sufficient in amount, scope or duration to fully offset any undisclosed liabilities arising from our acquisitions. PlanVista will not be indemnifying us in connection with the merger that occurred on March 2, 2004. In connection with the MedUnite acquisition, we have only limited indemnification rights that may not be sufficient in amount or scope to offset losses resulting from unknown and undisclosed liabilities. Furthermore, the introduction of new products and services from acquired companies such as MedUnite may have a greater risk of undetected or unknown errors, “bugs”, or liabilities than our historic products.

We may lose customers as a result of acquisitions.

     Acquisitions, including the merger with PlanVista, may cause disruptions, including potential loss of customers and other business partners, in the business of ProxyMed or the acquired company, which could have material or adverse effects on our business and operations.

     In addition, our customers, licensors and other business partners, in response to an acquisition or merger, may adversely change or terminate their relationships with us, which could have a material adverse effect on us. Certain of our current or potential customers may cancel or defer requests for our services. In addition, our customers may expect preferential pricing as a result of an acquisition or merger. An acquisition or merger may also adversely affect our ability to attract new customers.

Risks Related to Our Industry

Government regulation and new legislation may have a negative impact on our business and results of operations.

     As discussed in Item 1 under the caption, “Healthcare and Privacy Related Legislation,” the healthcare industry is highly regulated and is subject to extensive and frequently changing federal and state healthcare laws. Several state and federal laws govern the collection, dissemination, use and confidentiality of patient health care information. Final HIPAA rules on standards governing privacy of patient health care information were published in 2000. The implementation deadline for HIPAA’s privacy related regulations was April 14, 2003. Although we have undertaken several measures, including the adoption of policies and procedures for the handling of patient healthcare information, to ensure compliance with the privacy measures by the deadline and believe that we are in compliance, the privacy regulations are broad in scope, and will require constant vigilance for ongoing compliance. We cannot guarantee that we, our business partners or customers are or will be in compliance in the future.

     HIPAA also mandates the use of standard transactions, standard identifiers, security and other provisions for electronic claims transactions. The deadline for compliance with the transaction code set aspects of HIPAA was October 16, 2003. However, covered entities, including ProxyMed and its physician and payer customers, may continue to process non-compliant transactions after October 16, 2003 so long as that covered entity is compliant with the “contingency planning” guidelines provided by the Center for Medicare and Medicaid Services. A substantial number of our transactions, including those related to its acquisition of MedUnite, on behalf of its physician and payer customers are currently being processed in a non-HIPAA compliant manner in accordance with our contingency plan.

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     We expect, but cannot guarantee, that we will be able to complete the migration of these transactions into a HIPAA-compliant format on our Phoenix^TM platform in an accurate and timely manner, and in close coordination with its physician and payer customers. We may be subject to complaints by its customers with regard to the accuracy and timeliness of this migration, which complaints may lead to demands for credits from, or termination of contracts with, us.

     Our contracts with our customers, strategic partners, providers, payers and other healthcare entities mandate or will mandate that the our products and services be HIPAA compliant. If our products and services are not in compliance with HIPAA or any other alternative guidelines issued by the Center for Medicare and Medicaid Services on or before the deadline and on an ongoing basis thereafter, our customers, strategic partners, and other healthcare providers with whom we contract may terminate their contracts with us or sue us for breach of contract. Additionally, our revenues may be reduced as some of our non-compliant payer partners may be forced to accept paper-based transactions for which we may not be the recipient for processing. We may be also subject to penalties for non-compliance by federal and state governments, and patients who believe that their confidential health information has been misused or improperly disclosed may have certain causes of actions under applicable state privacy or HIPAA-like laws against us, our partners or customers.

If electronic transaction processing penetrates the healthcare industry more extensively, we may face pressure to reduce our prices which potentially may cause us to no longer be competitive.

     If electronic transaction processing extensively penetrates the healthcare market or becomes highly standardized, it is possible that competition among electronic transaction processors will focus increasingly on pricing. This competition may put intense pressure on us to reduce our pricing in order to retain market share. If we are unable to reduce our costs sufficiently to offset declines in our prices, or if we are unable to introduce new, innovative service offerings with higher prices, we may not be competitive.

We are dependent on the growth of the Internet and electronic healthcare information markets.

     Many of our products and services are geared toward the Internet and electronic healthcare information markets. The perceived difficulty of securely transmitting confidential information over the Internet has been a significant barrier to conducting e-commerce and engaging in sensitive communications over the Internet. Our strategy relies in part on the use of the Internet to transmit confidential information. We believe that any well-publicized compromise of Internet security may deter people from using the Internet to conduct transactions that involve transmitting confidential healthcare information.

Risks Related to Our Business

Consolidation in the healthcare industry may give our customers greater bargaining power and lead us to reduce our prices.

     Many healthcare industry participants are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks and managed care organizations consolidate, competition to provide products and services such as those we provide will become more intense, and the importance of establishing and maintaining relationships with key industry participants will become greater. These industry participants may try to use their market power to negotiate price reductions for our products and services. If we are forced to reduce its prices, our margins will decrease, unless we are able to achieve corresponding reductions in expenses.

Our business and future success may depend on our ability to cross-sell our products and services.

     Our ability to generate revenue and growth partly depends on our ability to cross-sell our products and services to our existing customers and new customers resulting from acquisitions. Our ability to successfully cross-sell our products and services is one of the most significant factors influencing our growth. There is no

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guarantee that we will be successful in cross-selling our products and services, and our failure in this area would likely have an adverse effect on our business.

We depend on connections to insurance companies and other payers, and if we lose these connections, our service offerings would be limited and less desirable to healthcare participants.

     Our business is enhanced by the substantial number of payers, such as insurance companies, Medicare and Medicaid agencies, to which we have electronic connections. These connections may either be made directly or through a clearinghouse. We have attempted to enter into suitable contractual relationships to ensure long-term payer connectivity; however, we cannot assure that we will be able to maintain our links with all these payers. In addition, we cannot assure that we will be able to develop new connections, either directly or through clearinghouses, on satisfactory terms. Lastly, some third-party payers provide systems directly to healthcare providers, bypassing us and other third-party processors. Our failure to maintain existing connections with payers and clearinghouses or to develop new connections as circumstances warrant, or an increase in the utilization of direct links between providers and payers, could cause our electronic transaction processing system to be less desirable to healthcare participants, which would slow down or reduce the number of transactions that we process and for which we are paid.

We have important business relationships with other companies to market and sell some of our clinical and financial products and services. If these companies terminate their relationships with us, or are less successful in the future, we will need to add this emphasis internally, which may divert our efforts and resources from others projects.

     For the marketing and sale of some of our products and services, we entered into important business relationships with physician office management information system vendors, with electronic medical record vendors, and with other distribution partners. These business relationships, which have required and may continue to require significant commitments of effort and resources, are an important part of our distribution strategy and generate substantial recurring revenue. Most of these relationships are on a non-exclusive basis, and we cannot assure that our electronic commerce partners and other strategic partners, most of whom have significantly greater financial and marketing resources than we do, will not develop and market products and services in competition with us in the future or will not otherwise discontinue their relationship with us. Also, our arrangements with some of our partners involve negotiated payments to the partners based on percentages of revenues generated by the partners. If the payments prove to be too high, we may be unable to realize acceptable margins, but if the payments prove to be too low, the partners may not be motivated to produce a sufficient volume of revenues. The success of our important business relationships will depend in part upon our partners’ own competitive, marketing and strategic considerations, including the relative advantages of alternative products being developed and marketed by such partners. If any such partners are unsuccessful in marketing our products, we will need to place added emphasis on these aspects of our business internally, which may divert our planned efforts and resources from other projects.

The acceptance of electronic processing of clinical transactions in the healthcare industry is still in its early stages; thus, the future of our business is uncertain.

     Our strategy anticipates that electronic processing of clinical healthcare transactions, including transactions involving prescriptions and laboratory results, will become more widespread and that providers and third-party institutions increasingly will use electronic transaction processing networks for the processing and transmission of data. Electronic transmission of clinical healthcare transactions (and, in particular, the use of the Internet to transmit them) is still developing, and complexities in the nature and types of transactions which must be processed have hindered, to some degree, the development and acceptance of electronic processing of clinical transactions in this industry. While discussions of government legislation might be a catalyst for the use of the electronic processing of clinical healthcare transactions, we cannot assure that continued conversion from paper-based transaction processing to electronic transaction processing in the healthcare industry, using proprietary healthcare management systems or the Internet, will occur.

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An error by any party in the process of providing clinical connectivity, such as prescribing drugs, filling prescriptions, and transmitting laboratory orders and results, could result in substantial injury to a patient, and our liability insurance may not be adequate in a catastrophic situation.

     Our business exposes us to potential liability risks that are unavoidably part of being in the healthcare electronic transaction processing industry. Since many of our products and services relate to the prescribing and refilling of drugs and the transmission of medical laboratory orders and results, an error by any party in the process could result in substantial injury to a patient. As a result, our liability risks are significant.

     We cannot assure that our insurance will be sufficient to cover potential claims arising out of our current or proposed operations, or that our present level of coverage will be available in the future at a reasonable cost. A partially or completely uninsured claim against us, if successful and of sufficient magnitude, would have significant adverse financial consequences. Our inability to obtain insurance of the type and in the amounts we require could generally impair our ability to market our products and services.

Our laboratory communication devices may be replaced with web-based technology for lab results delivery, and we may not be successful in converting our customers to Phoenix™ and to our own Internet site at ProxyMed.net, which would adversely impact our revenues.

     A key element of our longer-term Laboratory Services business strategy is to market our intelligent laboratory results reporting devices and related services, and our web-based solutions directly to independent and hospital-based medical laboratories. As the Internet becomes a more acceptable method of transmitting laboratory orders and reporting results because of the efficiencies and savings believed to be available, we hope to leverage more than 25 years of goodwill (through our Key Communications Service subsidiary) and reputation for quality of products and superior service to migrate our customers over to Phoenix™, more specifically to our Internet site at ProxyMed.net. We expect others to develop similar web-based solutions and compete aggressively in an attempt to capture our large customer base. In addition, many of our device customers may choose to offer Internet services themselves, rather than utilizing a third party. We have no assurances that we will be able to retain or continue to grow our customer base. Further, even as to the continuing sales of our laboratory communication devices, we are unable to control many of the factors that influence our customers’ buying decisions, including our customers’ budgets and procedures for approving expenditures, and the changing political, economic and regulatory influences which affect the purchasing practices and operation of healthcare organizations.

We may not be able to retain key personnel or replace them if they leave.

     Our success is largely dependent on the personal efforts of Michael K. Hoover, our Chairman of the Board and Chief Executive Officer and Nancy J. Ham, our President and Chief Operating Officer, and PlanVista is highly dependent on its senior management, particularly PlanVista’s President and Chief Operating Officer Jeffrey L. Markle. Although we have entered into employment agreements with Mr. Hoover, Ms. Ham, Mr. Markle and other senior executives, the loss of any of their services could cause our business to suffer. Our success is also dependent upon our ability to hire and retain qualified operations, development and other personnel. Competition for qualified personnel in the healthcare information services industry is intense, and we cannot assure that we will be able to hire or retain the personnel necessary for our planned operations.

Our businesses have many competitors.

     We face competition from many healthcare information systems companies and other technology companies. Many of our competitors are significantly larger and have greater financial resources than we do and have established reputations for success in implementing healthcare electronic transaction processing systems. Other companies, including WebMD Corporation, NDCHealth Corporation, Per-Se Technologies, and other healthcare related entities such as RxHub LLC, have targeted this industry for growth, including the development of new technologies utilizing Internet-based systems. PlanVista faces competition from HMOs, PPOs, third party administrators, and other managed healthcare companies, such as Blue Cross and Blue Shield, McKesson HBOC,

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The TriZetto Group, Inc., HealthAxis, Avidyn/ppoOne, Inc., Concentra, Inc., Beech Street Corporation, MultiPlan, Inc., Private Healthcare Systems (PHCS), and Coalition America, Inc. While our ability to compete has been enhanced by our acquisition of PlanVista and MedUnite, we cannot assure you that we will be able to compete successfully with these companies or that these or other competitors will not commercialize products, services or technologies that render our products, services or technologies obsolete or less marketable.

Our PPO and provider arrangements provide no guarantee of long-term relationships.

     The majority of our contracts with PPOs and providers can be terminated without cause, generally on 90 days’ notice. For ProxyMed’s Transaction Services business, the loss of any one provider would not be material, but if large numbers of providers chose to terminate their contracts, our revenues and net income could be materially adversely affected. For PlanVista, the termination of any PPO contract would render PlanVista unable to provide its customers with network access to that PPO, and therefore would adversely affect PlanVista’s ability to reprice claims and derive revenues. Furthermore, as a “network of networks,” PlanVista relies on its participating PPOs and provider groups to ensure participation by such providers. PlanVista’s PPO contracts generally do not provide PlanVista with a direct recourse against a participating provider that chooses not to honor its obligation to provide a discount, or chooses to discontinue its participation in PlanVista’s National Preferred Provider Network. Although in most cases we are able to replace lost contracts with new contracts, termination of provider contracts or other changes in the manner in which these parties conduct their business are outside of our control and could negatively affect our ability to provide services to PlanVista customers.

Some providers have historically been reluctant to participate in secondary networks.

     PlanVista’s percentage of savings business model sometimes allows a payer to utilize PlanVista network discounts in circumstances where PlanVista’s National Preferred Provider Network is not the payer’s primary network. In these circumstances, PlanVista’s National Preferred Provider Network participating providers are not traditionally given the same assurances of patient flow that they receive when they are part of a primary network. Historically, some providers have been reluctant to participate in network arrangements that do not guarantee a high degree of patient steerage. Although PlanVista thinks that the steerage provided by its payers as a whole and the speed and efficiency with which PlanVista provides claims repricing services make National Preferred Provider Network affiliation an attractive option for providers, there can be no assurance that PlanVista’s business model will not discourage providers from commencing or maintaining an affiliation with the National Preferred Provider Network.

PlanVista’s accounts receivable are subject to adjustment.

     PlanVista generally records revenue for its services when the services are performed, less amounts reserved for claim reversals and bad debts. The estimates for claim reversals and bad debts are based on judgment and historical experience. To the extent that actual claim reversals and bad debts associated with the PlanVista business exceed the amounts reserved, such difference could have a material adverse impact on our results of operations and cash flows.

PlanVista may not prevail in ongoing litigation and may be required to pay substantial damages.

     PlanVista is party to various legal actions as either plaintiff or defendant in the ordinary course of business. While PlanVista believes that the final outcome of these proceedings will not have a material adverse effect on PlanVista’s financial position, cash flows or results of operations, PlanVista cannot assure the ultimate outcome of these actions and the estimates of the potential future impact on PlanVista’s financial position, cash flows or results of operations for these proceedings could change in the future. In addition, we will continue to incur additional legal costs in connection with pursuing and defending such actions.

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Risks Related to Our Technology

Evolving industry standards and rapid technological changes could result in our products becoming obsolete or no longer in demand.

     Rapidly changing technology, evolving industry standards and the frequent introduction of new and enhanced Internet-based services characterize the market for our products and services. Our success will depend upon our ability to enhance our existing services, introduce new products and services on a timely and cost-effective basis to meet evolving customer requirements, achieve market acceptance for new products or services and respond to emerging industry standards and other technological changes. We cannot assure that we will be able to respond effectively to technological changes or new industry standards. Moreover, we cannot assure that other companies will not develop competitive products or services, or that any such competitive products or services will not cause our products and services to become obsolete or no longer in demand.

We depend on uninterrupted computer access for our customers; any prolonged interruptions in our operations could cause our customers to seek alternative providers of our services.

     Our success is dependent on our ability to deliver high-quality, uninterrupted computer networking and hosting, requiring us to protect our computer equipment and the information stored in servers against damage by fire, natural disaster, power loss, telecommunications failures, unauthorized intrusion and other catastrophic events. To mitigate this risk, we have moved the majority of our production computer networks to a secure, third-party co-location site located in Atlanta, Georgia. This site has back-up site capability and a program to manage technology to reduce risks in the event of a disaster, including periodic “back-ups” of our computer programs and data.

     While we still continue to operate production networks in our Norcross, Middletown, Sioux Falls, and Richmond facilities, any damage or failure resulting in prolonged interruptions in our operations could cause our customers to seek alternative providers of our services. In particular, a system failure, if prolonged, could result in reduced revenues, loss of customers and damage to our reputation, any of which could cause our business to suffer. While we carry property and business interruption insurance to cover operations, the coverage may not be adequate to compensate us for losses that may occur.

Computer network systems like ours could suffer security and privacy breaches that could harm our customers and us.

     We currently operate servers and maintain connectivity from multiple facilities. Despite our implementation of standard network security measures, our infrastructure may be vulnerable to computer viruses, break-ins and similar disruptive problems caused by customers or other users. Computer viruses, break-ins or other security problems could lead to interruption, delays or cessation in service to our customers. These problems could also potentially jeopardize the security of confidential information stored in the computer systems of our customers, which may deter potential customers from doing business with us and give rise to possible liability to users whose security or privacy has been infringed. The security and privacy concerns of existing and potential customers may inhibit the growth of the healthcare information services industry in general, and our customer base and business in particular. A significant security breach could result in loss of customers, loss of revenues, damage to our reputation, direct damages, costs of repair and detection and other unplanned expenses. While we carry professional liability insurance to cover such breaches, the coverage may not be adequate to compensate us for losses that may occur.

The protection of our intellectual property requires substantial resources.

     We rely largely on our own security systems and confidentiality procedures, and employee nondisclosure agreements for certain employees, to maintain the confidentiality and security of our proprietary information, including our trade secrets and internally developed computer applications. If third parties gain unauthorized access to our information systems, or if anyone misappropriates our proprietary information, this may have a

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material adverse effect on our business and results of operations. In addition, our technology has not been patented nor have we registered any copyrights with respect to such technology. Trade secrets laws offer limited protection against third party development of competitive products or services. Because we lack the protection of patents or registered copyrights for our internally-developed software and software applications, we are more vulnerable to misappropriation of our proprietary technology by third parties or competitors. The failure to adequately protect our technology could adversely affect our business.

We may be subject to trademark and service mark infringement claims in the future.

     As our competitors’ healthcare information systems increase in complexity and overall capabilities, and the functionality of these systems further overlap, we could be subject to claims that our technology infringes on the proprietary rights of third parties. These claims, even if without merit, could subject us to costly litigation and could require the resources, time, and attention of our technical, legal, and management personnel to defend. The failure to develop non-infringing technology or trade names, or to obtain a license on commercially reasonable terms, could adversely affect our operations and revenues.

If our ability to expand our network infrastructure is constrained, we could lose customers and that loss could adversely affect its operating results.

     We must continue to expand and adapt our network and technology infrastructure to accommodate additional users, increased transaction volumes, and changing customer requirements. We may not be able to accurately project the rate or timing of increases, if any, in the volume of transactions we process, reprice or otherwise service or be able to expand and upgrade our systems and infrastructure to accommodate such increases. We may be unable to expand or adapt our network infrastructure to meet additional demand or our customers’ changing needs on a timely basis, at a commercially reasonable cost or at all. Our current information systems, procedures, and controls may not continue to support our operations while maintaining acceptable overall performance and may hinder our ability to exploit the market for healthcare applications and services. Service lapses could cause our users to switch to the services of our competitors.

Risks Related to Our Stock

While we generated positive earnings in 2002, we incurred losses in 2003. There is no assurance that we will generate positive earnings in the future and this could have a detrimental effect on the market price of our stock.

     While 2002 was our first full year of positive earnings, we have incurred substantial losses, including losses of $5.0 million in the fiscal year ended December 31, 2003, and $19.1 million for the fiscal year ended December 31, 2001. As of December 31, 2003 and December 31, 2002, we had an accumulated deficit of $100.3 million and $95.3 million, respectively. While we believe that our business model supports earnings growth in the future, various factors that may affect loss of customers and related revenues or increased and unforeseen expenses could cause us to fall short of our financial goals. Such shortfall could have a detrimental effect on the market price of our stock and our liquidity and operations.

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We may issue additional shares that could adversely affect the market price of our common stock.

     Certain events over which you have no control could result in the issuance of additional shares of our common stock or series C preferred stock, which would dilute your ownership percentage in ProxyMed and could adversely affect the market price of our common stock. We may issue additional shares of common stock or preferred stock for many reasons including:

• to raise additional capital or finance acquisitions;

• upon the exercise or conversion or an exchange of outstanding options, warrants and shares of convertible preferred stock; or

• in lieu of cash payment of dividends.

     In addition, the number of shares of common stock that we are required to issue in connection with our outstanding warrants may increase if certain anti-dilution events occur (such as, certain issuances of common stock, options and convertible securities).

The trading price of our common stock may be volatile.

     The stock market, including the Nasdaq National Market, on which the shares of our common stock are listed, has from time to time experienced significant price and volume fluctuations that may be unrelated to the operating performance of particular companies. In addition, the market price of our common stock, like the stock prices of many publicly traded companies in the healthcare industry, has been and may continue to be highly volatile.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Overview

     Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to our consolidated financial statements and notes thereto included in Part IV of this Form 10-K and to provide an understanding of our results of operations, financial condition, and changes in financial condition. Our MD&A is organized as follows:

• Introduction - This section provides a general description of our business, summarizes the significant acquisitions we completed in the last two years, and provides a brief overview of our operating segments.

• Results of Operations - This section provides our analysis and outlook for the line items on our consolidated statement of operations on both a company-wide and segment basis.

• Liquidity and Capital Resources - This section provides an analysis of our liquidity and cash flows, as well as our discussion of our debts and other commitments.

• Critical Accounting Policies and Estimates - This section discusses those accounting policies that are considered to be both important to our financial condition and results of operations, and require us to exercise subjective of complex judgments in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 1 to our consolidated financial statements.

• New Accounting Pronouncements - This section includes a discussion of recently published accounting authoritative literature that may have an impact on our historical or prospective results of operations or financial condition.

Introduction

     We are the nation’s second largest provider-based electronic healthcare transaction services company. We provide connectivity services and related value-added products to physicians, payers, pharmacies, medical laboratories, and other healthcare providers and suppliers. Our services support a broad range of financial, clinical and administrative transactions, and are HIPAA-certified through Claredi, an independent certification and testing services company specializing in HIPAA compliance. To facilitate these services, we operate PhoenixTM, our secure national electronic information platform, which provides physicians and other healthcare providers with direct connectivity to one of the industry’s largest list of payers, the industry’s largest list of chain and independent pharmacies and the largest list of clinical laboratories. Our corporate headquarters is located in Atlanta, Georgia, and our products and services are provided from various operational facilities located throughout the United States. We also operate our clinical computer network and portions of our financial and real-time production computer networks from a secure, third-party co-location site also located in Atlanta, Georgia. All of our revenues are generated domestically.

     Our primary strategy is focused on leveraging our leading position as an independent back-end connectivity provider to small physician offices. Through strategic relationships and partnerships with front-end solution providers, our goal is to drive more healthcare transactions through PhoenixTM while remaining neutral in the battle for the physician’s desktop. Additionally, we expect that there will be opportunities to increase revenues by cross-selling our existing products and services to our current customer base of physicians and other healthcare providers, as well as revenue opportunities from the development of new services from our development efforts, including Internet-based transaction services. We remain committed to developing

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additional capabilities and value-added products and services, and to expanding our back-end connectivity network. In conjunction with this philosophy, we have recently introduced ProxyMed.net, our new web portal for providers, and “PhoenixTM”, our new transaction processing platform which has been HIPAA-certified through Claredi. We have also added new services offerings for our payer customers through agreements with PlanVista Corporation (“PlanVista”) for claims re-pricing services and First Data Corporation for a jointly marketed suite of services being offered under the brand name “FirstProxy.”

Acquisitions

     On December 31, 2002, we acquired all of the outstanding stock of MedUnite, Inc. (“MedUnite”) for $10 million in cash and an aggregate of $13.4 million principal amount of 4% convertible promissory notes. In addition, we paid approximately $6.7 million in transaction and exit related costs (which were originally estimated at $8.3 million). Interest on the convertible notes is payable in cash on a quarterly basis. The convertible promissory notes (now currently payable at a maturity value of $13.1 million after a claim setoff against the escrow in December 2003) are payable in full on December 31, 2008, and are convertible into an aggregate of 716,968 shares (originally 731,322 shares before the claim setoff) of our common stock if the former shareholders of MedUnite achieve certain revenue-based triggers over the next three and one-half year period. The shares of our common stock issuable upon conversion of the convertible notes will be registered by us promptly after a conversion trigger event is met. The first threshold trigger was reached during the fourth quarter of 2003 and the convertible notes were reduced to $13.1 million at December 31, 2003 as a result of a claim against the escrow. The operations of MedUnite are reflected with our operations for the twelve months ended December 31, 2003. Additionally, we spent much of the 2003 year integrating the operations of MedUnite into our existing operations and currently the organizations are run and managed as one operating unit. As a result, meaningful separate results and statistics for MedUnite are no longer available.

     On March 2, 2004, a merger was consummated by and among ProxyMed, Planet Acquisition Corporation (a wholly-owned subsidiary of ProxyMed that was formed solely to effect the merger) and PlanVista (a company that provides medical cost containment and business process outsourcing solutions for the medical insurance and managed care industries, as well as services for health care providers, including individual providers, preferred provider organizations and other provider groups). In connection with this merger, our shareholders approved (1) an amendment to our articles of incorporation to increase the total number of authorized shares of the Company’s common stock from 13,333,333 1/3 shares to 30,000,000 shares, (2) the issuance of 1,691,229 shares of our common stock at $14.25 per share in a private equity offering valued at $24.1 million (to retire debt of PlanVista and pay certain expenses associated with the merger), (3) the issuance of 3,600,000 shares of our common stock in connection with the merger, and (4) an amendment to our 2002 Stock Option Plan to increase the total number of shares available for issuance from 600,000 to 1,350,000.

     Upon completion of the merger, each share of PlanVista’s outstanding common stock was cancelled and converted into the right to receive 0.08271 of a share of our common stock and each holder of PlanVista series C preferred stock received 51.5292 shares of our common stock in exchange for each share of PlanVista series C preferred stock, representing approximately 23% of our common stock on a fully converted basis, and the holders of our outstanding stock, options and warrants retained approximately 77% of ProxyMed. PlanVista will be operated as a wholly-owned subsidiary of ours and its operations will be included in our Transaction Services segment commencing March 2004.

     As described above, to acquire PlanVista we issued 3,600,000 shares of our common stock to PlanVista shareholders valued at $68.4 million (based on the closing price of our common stock on March 2, 2004), we assumed debt and other liabilities of PlanVista, and we estimated approximately $1.3 million in acquisition-related costs. Additionally, we raised $24.1 in a private placement sale of our common stock to partially fund repayment of PlanVista’s debts and other obligations outstanding at the time of the acquisition. The merger enables us to enter into a new line of business, provide new end-to-end services, increase sales opportunities with payers, strengthen business ties with certain customers, expand technological capabilities, reduce operating costs and enhance our public profile.

Operating Segments

     We operate in two reportable segments that are separately managed: Transaction Services (formerly known as Electronic healthcare transaction processing) and Laboratory Communication Solutions. Transaction

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Services includes transaction and value-added services principally between physicians and insurance companies (Payer Services) and physicians and pharmacies (Prescription Services); and Laboratory Communication Solutions includes the sale, lease and service of communication devices principally to laboratories and the contract manufacturing of printed circuit boards (Laboratory Services). The results for the Transaction Services and Laboratory Communication Solutions segments do not include an allocation of Corporate overhead in assessing the operating performance of the respective segments. Commencing in March 2004, the operations of PlanVista will be included in our Transaction Services segment (Medical Cost Containment Services).

Results of Operations

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

     Net Revenues. Consolidated net revenues for 2003 increased by $21.4 million, or 43%, to $71.6 million from consolidated net revenues of $50.2 million for 2002. Net revenues classified by our reportable segments are as follows:

In thousands	2003		2002
Transaction Services	$	46,673	$	22,439
Laboratory Communication Solutions		24,883		27,743
	$	71,556	$	50,182

     Net revenues in our Transaction Services segment (formerly known as “Electronic healthcare transaction processing”) increased by 108% over the 2002 period. This increase was driven by strong internal growth and more significantly by transactions generated by MedUnite.

     Total healthcare transactions grew from 114.2 million transactions in the 2002 period to 197.6 million transactions in 2003. Core transaction growth is up 73% from the 2002 period. The increase in transaction volume was primarily attributable to the MedUnite acquisition and internal growth in both claims and statements processed. While our encounter volume remained flat between the periods, the net increases were generally the result of transactions acquired from MedUnite and new sales, including transactions generated by new vendor partners that resulted in greater claim and patient statement processing transactions. A summary of the number of transactions we processed for the periods presented is as follows:

In thousands		2003		2002
Core transactions			201,120		89,123
Encounters			25,529		25,045
	Total transactions		226,649		114,168

     “Core” transactions represent all transactions except for encounters. “Encounters” are an administrative reporting transaction for payers but do not generate revenue for the provider who must submit them. Accordingly, rather than submitting on a routine basis, most providers choose to periodically “catch up” on their submissions, creating monthly and quarterly swings in both the number of encounters we process and what percentage of our transaction mix they represent. Since encounters are at a significantly lower price point than claims, these swings make it difficult to easily analyze our quarter-over-quarter growth in our core business. In addition, we do not expect our encounter volume to grow on an annual basis, as payers are not expanding the capitated service model that is the foundation of encounters. Therefore, we believe that breaking out encounters shows more clearly our growth in core transactions, which are the growth engine for our Transaction Services segment. For the 2003 period, approximately 65% of our revenues came from our Transaction Services processing segment, compared to 45% from this segment for 2002.

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     Laboratory Communication Solutions segment’s net revenues decreased by 10% from the 2002 period. As the sluggish economy continued throughout 2003, we have seen a slowdown in contract manufacturing sales and sales of communication devices at our smaller labs and hospital labs. Additionally, beginning in 2004, we lost a customer in our contract manufacturing business that represented approximately 13% of this segments’ 2003 revenues. Our future goals for this business include creating new opportunities with existing customers with our Report Tracker product and capitalizing on our relationships for transaction-based solutions.

     Cost of Sales. Consolidated cost of sales decreased from 52% of net revenues in 2002 to 45% in 2003. Cost of sales classified by our reportable segments is as follows:

In thousands	2003		2002
Transaction Services	$	15,893	$	8,793
Laboratory Communication Solutions		16,528		17,223
	$	32,421	$	26,016

     Cost of sales in our Transaction Services segment consists of transaction fees, services and license fees, third-party electronic transaction processing costs, certain telecommunication and co-location center costs, revenue sharing arrangements with our business partners, third-party database licenses, and certain labor and certain travel expenses. Cost of sales as a percentage of revenues in this segment was 34% in the 2003 period compared to 39% in the same period last year primarily due to a change in the mix of transaction types from higher cost patient statements to lower cost sales of data and claims and real-time transactions (such as eligibility verification) through additional transactions acquired from MedUnite.

     In 2003, we reclassified direct labor and manufacturing overhead from selling, general and administrative expenses to cost of tangible products sold to better reflect the production of tangible products. All prior periods have a similar reclassification. As a result, cost of sales in the Laboratory Communication Solutions segment includes hardware, third-party software, consumable materials, direct manufacturing labor and indirect manufacturing overhead. Cost of sales as a percentage of revenues in this segment increased to 66% for 2003 compared to 62% for 2002 primarily due to a change in the mix from lower cost leases to higher cost contract manufacturing.

     Selling, General and Administrative Expenses. Consolidated SG&A increased for 2003 by $15.7 million, or 78%, to $35.8 million from consolidated SG&A of $20.2 for 2002. Consolidated SG&A expenses as a percentage of consolidated revenues increased to 50% for 2003 compared to 40% in 2002. SG&A expenses classified by our reportable segments are as follows:

In thousands	2003		2002
Transaction Services	$	26,645	$	11,430
Laboratory Communication Solutions		5,526		6,128
Corporate		3,638		2,594
	$	35,809	$	20,152

     SG&A expenses in the Transaction Services segment increased 133% during 2003 over the same period last year, primarily due to the incremental expenses incurred in the operations of MedUnite, costs related to our HIPAA compliance efforts, implementation staffing and sales/marketing programs implemented since last year. Segment SG&A expenses as a percentage of segment net revenues increased to 57% for 2003 compared to 51% in 2002 due to the higher expense run rate in the MedUnite operations earlier in the 2003 period compared to our existing business. While we incurred significant SG&A costs related to the MedUnite operations in the first quarter of 2003, we were successful at significantly reducing the monthly operating expenses in the second and third quarters of 2003 and thus achieving much improved results in the second half of the year. We were successful in eliminating or renegotiating substantial telecommunication expenses and duplicative contact management, human resources and customer relationship management systems. However, this improvement was somewhat offset as the development projects related to the integration of MedUnite were moved into production

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resulting in a decrease in the amount of capitalized development related to our real-time and PhoenixTM platforms. By the end of the 2003 period based on our unaudited fourth quarter results, SG&A expenses in this segment were 51% of segment revenues and indicative of the run rate we expected for a combined operation.

     SG&A expenses in our Laboratory Communications Solutions segment decreased by 10% in the 2003 period from the same period last year primarily due to cost cutting measures implemented in the third quarter of 2002. Segment SG&A expenses as a percentage of segment net revenues remained the same at 22% for both periods.

     Corporate SG&A expenses increased 40% for the 2003 period compared to same period of last year due to increased insurance premiums, professional fees and personnel costs. We expect our Corporate SG&A expenses to increase in 2004 as a result of our compliance efforts related to the Sarbanes-Oxley Act of 2002 and financial systems consolidation plans for 2004.

     Depreciation and Amortization. Consolidated depreciation and amortization increased by $3.7 million to $6.3 million for 2003 from $2.6 million for 2002. This increase was primarily due to $1.5 million for the amortization of intangible assets acquired in the MedUnite acquisition, which includes amortization of ProxyMed.net, our real-time network based on the technology platform acquired from MedUnite, and the amortization of the customer relationships acquired from MedUnite. Amortization of intangible assets related to additional capitalized software development increased in late 2003 as we placed the PhoenixTM platform into production and commenced the amortization of this asset. Depreciation and amortization classified by our reportable segments is as follows:

In thousands	2003		2002
Transaction Services	$	4,754	$	1,581
Laboratory Communication Solutions		1,369		857
Corporate		193		198
	$	6,316	$	2,636

     Loss on Disposal of Assets. As a result of the consolidation of the ProxyMed and MedUnite offices in Atlanta during 2003, we recorded $0.1 million in net losses primarily related to the disposition of certain assets owned and leased that were acquired in the acquisition of MDP Corporation in 2001. (Gain) loss on disposal of assets classified by our reportable segments is as follows:

In thousands	2003			2002
Transaction Services	$	107		$	—
Laboratory Communication Solutions		(6	)		—
Corporate		10			—
	$	111		$	—

     Write-off of Impaired and Obsolete Assets. As a result of our periodic review for impairment, we wrote off $0.5 million in customer relationships related to our 2002 acquisitions of KenCom and MDIP and $0.1 million in capitalized software during the 2003 period. During 2002, we wrote off $38,000 in capitalized programming costs in connection with the development of our real-time transaction processing applications as a result of acquiring the same functionality in the software platforms acquired from MedUnite. These write-offs are expected to lower amortization expense by $0.1 million in 2004. Impairment charges classified by our reportable segments are as follows:

In thousands	2003		2002
Transaction Services	$	193	$	38
Laboratory Communication Solutions		348		—
	$	541	$	38

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     Operating Income (Loss). As a result of the foregoing, consolidated operating loss for 2003 was $3.6 million compared to operating income of $1.3 million for 2002. Operating income (loss) classified by our reportable segments is as follows:

In thousands	2003			2002
Transaction Services	$	(920	)	$	597
Laboratory Communication Solutions		1,119			3,535
Corporate		(3,841	)		(2,792	)
	$	(3,642	)	$	1,340

     Interest income (expense), net. Consolidated net interest expense was $0.9 million compared to net interest income of $0.3 million for 2002. This increase in expense is primarily due to interest related to ProxyMed’s convertible debt issued to the former owners of MedUnite and the financing of certain liabilities of MedUnite during the 2003 period, and lower interest income earned on a smaller investment base at lower interest rates.

     Other Income (Expense), net. In conjunction with our distribution and marketing agreement with PlanVista for claims re-pricing services signed in June 2003, we received a warrant to purchase up to 15% of PlanVista common stock that expired in December 2003. The warrant was initially valued at $0.5 million and recorded as an asset. During the term the warrant was outstanding, the value of the warrant was evaluated at the end of each calendar quarter. On September 30, 2003, the value of the warrant increased to approximately $5.3 million primarily as a result of an increase in the market value of PlanVista common stock and this increase was reflected as other income in the statement of operations during the third quarter of 2003. Upon expiration of the warrant in December 2003, we recorded an impairment loss in the amount of $5.3 million resulting in a net impairment loss in the amount of $0.5 million (representing the original value of the warrant) for the 2003 year.

     Net Income (Loss). As a result of the foregoing, consolidated net loss for 2003 was $5.0 million compared to net income of $2.0 million for 2002.

     Deemed Dividends and Other Charges. We did not incur deemed dividends and other charges during 2003. During 2002, we incurred deemed dividends and other charges of $0.6 million as a result of non-cash accounting charges for the conversion of 31,650 preferred shares into 242,510 shares of common stock by our Series C preferred shareholders in 2002 pursuant to our offer to convert their shares commencing in December 2001.

     Net Income (Loss) Applicable to Common Shareholders. As a result of the foregoing, we reported net loss applicable to common shareholders of $5.0 million for 2003 compared to a net loss applicable to common shareholders of $1.3 million for 2002.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

     Net Revenues. Consolidated net revenues for 2002 increased by $7.0 million or 16%, to $50.2 million from consolidated net revenues of $43.2 million for 2001. Net revenues classified by our reportable segments are as follows:

In thousands	2002		2001
Transaction Services	$	22,439	$	16,938
Laboratory Communication Solutions		27,743		26,292
	$	50,182	$	43,230

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     Net revenues in our Transaction Services segment increased by 32% primarily due to a 30% increase in the number of electronic clinical and financial healthcare transactions processed through Phoenix (previously called "ProxyNet”). Total transactions grew from 87.9 million transactions in the 2001 period to 114.2 million transactions in 2002. Core transaction growth is up 47% from the 2001 period. The increase in transaction volume was primarily attributable to internal growth in both claims and statements processed. Additionally, we continued to make progress in our cross-selling efforts to our existing customers resulting in an increase of transaction services utilized per directly contracted provider from a 1.3 (estimated) in 2001 to 2.5 in 2002. A summary of the number of transactions we processed for the periods presented is as follows:

In thousands		2002		2001
Core transactions			89,123		60,523
Encounters			25,045		27,419
	Total transactions		114,168		87,942

     “Core” transactions represent all transactions except for encounters. “Encounters” are an administrative reporting transaction for payers but do not generate revenue for the provider who must submit them. Accordingly, rather than submitting on a routine basis, most providers choose to periodically “catch up” on their submissions, creating monthly and quarterly swings in both the number of encounters we process and what percentage of our transaction mix they represent. Since encounters are at a significantly lower price point than claims, these swings make it difficult to easily analyze our quarter-over-quarter growth in our core business. In addition, we do not expect our encounter volume to grow on an annual basis, as payers are not expanding the capitated service model that is the foundation of encounters. Therefore, we believe that breaking out encounters shows more clearly our growth in core transactions, which are the growth engine for our Transaction Services segment.

     We exited the year on an annualized run rate of over 120 million total transactions for ProxyMed on a stand-alone basis. The acquisition of MedUnite added another 90 million transactions; therefore, we exited 2002 with a combined annualized run rate of almost 210 million total transactions.

     For 2002, approximately 45% of our revenues came from our Transaction Services segment, compared to 39% from this segment for 2001.

     Laboratory Communication Solutions’ net revenues increased by 6% primarily due to the acquisition of KenCom and an increase in contract manufacturing revenues, offset by decreases in sales and leases of communication devices, and field service revenues.

     Cost of Sales. Consolidated cost of sales decreased from 54% in 2001 to 52% in 2002. Cost of sales classified by our reportable segments is as follows:

In thousands	2002		2001
Transaction Services	$	8,793	$	6,531
Laboratory Communication Solutions		17,223		16,895
	$	26,016	$	23,426

     Cost of sales in the Transaction Services segment consists of transaction fees, services and license fees, third-party electronic transaction processing costs, certain telecommunication and co-location center costs, revenue sharing arrangements with our business partners, third-party database licenses, and certain labor and travel expenses. Cost of sales as a percentage of revenues remained constant at 39% for 2002 and 2001.

     Cost of sales in the Laboratory Communication Solutions segment includes hardware, third-party software, consumable materials, direct manufacturing labor and indirect manufacturing overhead (as a result of reclassifications that were done in 2003 between SG&A and cost of sales). Cost of sales as a percentage of

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revenues decreased to 62% for 2002 compared to 64% for 2001 primarily as a result of a change in the mix of revenues from higher margin leases of communication devices (as our lease base shrinks) to lower margin device sales and contract manufacturing.

     Selling, General and Administrative Expenses. Consolidated SG&A increased for 2002 by $1.9 million, or 10%, to $20.2 million from consolidated SG&A of $18.2 million for 2001. Consolidated SG&A expenses as a percentage of consolidated revenues decreased to 40% for 2002 compared to 42% in 2001. SG&A expenses classified by our reportable segments are as follows:

In thousands	2002		2001
Transaction Services	$	11,430	$	9,906
Laboratory Communication Solutions		6,128		5,150
Corporate		2,594		3,193
	$	20,152	$	18,249

     Transaction Services’ SG&A expenses for 2002 increased 15% over 2001 primarily due to adding associates in our Payer Services transaction business sales and marketing teams to drive our core revenue growth and in our technical and development areas as it relates to our HIPAA compliance efforts, and incremental expenses incurred at our South Dakota operations as a result of our acquisition of MDIP. These increases were offset by the capitalization of payroll and other costs for HIPAA and private label internal-use software projects for 2002. Segment SG&A expenses as a percentage of segment net revenues decreased to 51% for 2002 compared to 58% for 2001 due to the operational leverage inherent in the business. As we increase the number of transactions we process, we do not experience a direct correlation in our costs due to the semi-fixed nature of operating expenses in this segment.

     Laboratory Communication Solutions’ SG&A expenses for 2002 increased by 19% primarily due to incremental expenses incurred for the May 2002 acquisition and operations of KenCom plus increases in contract manufacturing personnel. As a result, segment SG&A expenses as a percentage of segment net revenues increased to 22% for 2002 compared to 20% for 2001. However, in the fourth quarter of 2002, we enacted several cost containment programs in an effort to curtail spending.

     Corporate SG&A expenses decreased 19% for 2002 compared to 2001 primarily due to the non-cash compensatory warrants and the additional accrual recorded for our software licensing contingency for 2001.

     Depreciation and Amortization. Consolidated depreciation and amortization decreased by $5.5 million to $2.6 million for 2002 from $8.2 million for 2001. This decrease was primarily from a reduction in amortization expense due to the conclusion of amortization of certain intangible assets in 2001 related to prior acquisitions in our Transaction Services segment and the adoption of SFAS No. 142 on January 1, 2002, offset by amortization of identifiable intangible assets (other than goodwill) related to the acquisitions of KenCom, MDIP, and the customer relationships of Claimsnet.com in September 2002 for $0.7 million. Amortization expense related to these acquisitions is expected to be approximately $0.1 million per quarter through the first quarter of 2005. Depreciation and amortization classified by our reportable segments is as follows:

In thousands	2002		2001
Transaction Services	$	1,581	$	7,285
Laboratory Communication Solutions		857		561
Corporate		198		330
	$	2,636	$	8,176

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     Operating Income (Loss). As a result of the foregoing, consolidated operating income for 2002 was $1.3 million compared to a loss of $6.7 million for 2001. Operating income (loss) classified by our reportable segments is as follows:

In thousands	2002			2001
Transaction Services	$	597		$	(6,859	)
Laboratory Communication Solutions		3,535			3,686
Corporate		(2,792	)		(3,539	)
	$	1,340		$	(6,712	)

     Write-off of Impaired and Obsolete Assets. For the 2002 period, we wrote off $38,000 in capitalized programming costs in connection with the development of our real-time transaction processing applications as a result of acquiring the same functionality in the software platforms acquired from MedUnite in December 2002. As a result of our periodic review of fixed assets and co-location of our clinical production network, in December 2001 we wrote off $0.1 million in obsolete fixed assets, which consisted of primarily computer hardware and software.

     Interest Income (Expense), net. Consolidated net interest income for 2002 was $0.3 million compared to net interest expense of $0.1 million for 2001. This net increase is primarily due to higher cash balances as a result of our investment from GAP in April 2002, even though effective interest rates are lower for 2002 compared to 2001 on the cash invested.

     Net Income (Loss). As a result of the foregoing, consolidated net income for 2002 was $2.0 million compared to a net loss of $6.8 million for 2001.

     Deemed Dividends and Other Charges. We incurred deemed dividends and other charges of $0.6 million for 2002 as a result of non-cash accounting charges for the conversion of 31,650 preferred shares into 242,510 shares of common stock by our Series C preferred shareholders in 2002 pursuant to our offer to convert their shares commencing in December 2001. For the 2001 period, we incurred total deemed dividend and other charges of $12.3 million primarily as a result of non-cash accounting charges from the anti-dilution reset in number and price of certain warrants issued to our Series B preferred shareholders in February 2001, non-cash accounting charges from the exchange of 271,700 warrants into 218,828 shares of common stock by our Series B preferred shareholders in April 2001, non-cash accounting charges from the exchange of 1,412,033 warrants into 1,050,691 shares of common stock by our Series C preferred shareholders in August 2001, non-cash accounting charges related to the conversion of our Series C preferred into 1,296,126 shares of common stock pursuant to our Conversion Offer through December 31, 2001, non-cash charges from the anti-dilution reset in number and price of certain warrants issued to our remaining Series B preferred warrant holder in December 2001 as a result of the reduced conversion price pursuant to our Conversion Offer to Series C preferred stockholders and dividends paid to the holder of our Series B Preferred stock (which was fully converted in October 2001) and dividends paid to our Series C preferred shareholders through the issuance of shares of common stock.

     Net Income (Loss) Applicable to Common Shareholders. As a result of the foregoing, we reported net income applicable to common shareholders of $1.3 million for 2002 compared to a net loss applicable to common shareholders of $19.1 million for 2001.

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Liquidity and Capital Resources

     In 2003, cash provided by operating activities totaled $1.5 million. Cash used for investing activities totaled $9.6 million and consisted primarily of payments of costs related to the acquisition of MedUnite, capital expenditures and capitalized software. Cash used in financing activities totaled $3.0 million mainly due to repayments of notes payable, other long-term debt, and payments related to capital leases.

     In 2002, cash provided by operating activities was $2.8 million. During this period, we paid $9.1 million ($10.0 million cash less $0.9 million cash acquired, in addition to $13.4 million (now $13.1 million after a claim against the portion held in escrow) in 4% convertible notes due December 2008) for our acquisition of MedUnite; we paid $2.9 million ($3.2 million adjusted cash purchase price less $0.3 million cash acquired, in addition to 30,034 shares of our common stock valued at $0.6 million) for our acquisition of KenCom; we paid $2.4 million for our acquisition of MDIP; paid $0.7 million for our acquisition of customer relationships from Claimsnet.com; paid in full our $7.0 million promissory note for our acquisition of MDP; and paid $2.0 million for fixed assets and capitalized software. These activities were principally financed through a private placement of our common stock valued at $25.0 million (resulting in net proceeds to us of $24.9 million) in April 2002, proceeds of $0.5 million from the exercise of 34,500 Series B warrants, and available cash resources.

     We had cash and cash equivalents totaling $5.3 million as of December 31, 2003 compared to $16.4 million at December 31, 2002. These available funds will be used for operations, strategic acquisitions, the further development of our products and services, and other general corporate purposes. We continue to evaluate other acquisition opportunities and strategic alternatives that may add synergies to our product offerings and business strategy.

     On March 2, 2004, we acquired PlanVista through the issuance of 3.6 million shares of our common stock (valued at $69.3 million). In addition, we raised an additional $24.1 million in a private placement sale of our common stock and drew down $4.4 million on our asset-based line of credit. These funds, along with available cash resources, were used to satisfy $27.4 million of PlanVista’s debt and other obligations outstanding as of the effective time of the acquisition.

     At the current time, we do not have any material commitments for capital expenditures except for the final installment related to the licensing of software for use in our internal systems in the amount of $0.2 million due in the first quarter of 2004

     We expect to incur $1.0 million for various development projects scheduled to be undertaken by us in 2004 (including $0.3 million related to projects at PlanVista). Additionally, we anticipate spending approximately $5.8 million (including the $0.2 licensing commitment above and $1.1 million at PlanVista) primarily for hardware and software costs related to enhancements to our technical infrastructure and administrative systems.

     At the time we acquired MedUnite at the end of 2002, MedUnite had incurred significant losses since its inception and was utilizing cash significantly in excess of amounts it was generating primarily due to technical and research and development activities related to their various processing platforms. As a result, there were substantial liabilities and obligations as well as future commitments (both known and unknown at December 31, 2002) associated with the business in addition to the transaction and exit costs associated with the acquisition. In an effort to immediately curtail and reduce the expenditure levels, MedUnite’s senior management team was terminated along with approximately 20% of the general workforce, and in February 2003, and we moved our Atlanta facility into MedUnite’s Norcross facility. While we did not achieve the expected reductions in MedUnite’s cost early in the first quarter, we did exit the first quarter on an expense run rate in line with our expectations. Furthermore, during the second and third quarters of 2003, we continued expense reductions by successfully eliminating or renegotiating substantial telecommunication expenses and eliminating duplicative contact management, human resources and customer relationship management systems. Additionally, in April

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2003, we terminated the San Diego facility lease effective July 1, 2003 in return for a $0.8 million letter of credit held by the current landlord and furniture at the facility.

     By December 31, 2003, we had paid all but $0.2 million of the transaction and exit costs associated with the MedUnite acquisition. As a result of our negotiations, the original $8.3 million in transaction and exit costs were ultimately settled for approximately $6.7 million, representing a savings of $1.6 million.

     Additionally, other MedUnite contractual obligations have been canceled or renegotiated with the respective vendors. We have entered into financing agreements with certain major vendors as a means of settling liabilities that existed at December 31, 2002, and to date have financed $3.4 million of liabilities to one vendor; $2.0 million in net liabilities to a former owner of MedUnite; and $0.4 million for a required insurance policy as part of the acquisition. Between these financing agreements, existing capital leases, and the convertible notes issued in the acquisition, we incurred significant interest expense charges in 2003.

     In December 2003, we closed on a $12.5 million asset-based line of credit with our commercial bank. Borrowing under such facility is subject to eligible cash, accounts receivable, and inventory and other conditions. Borrowings bear interest at the prime rate plus 0.5% or at LIBOR plus 2.25% (or LIBOR plus 0.75% in the case of borrowings against eligible cash only). As of December 31, 2003, there were no borrowings against this line of credit. However, as a result of our acquisition of PlanVista, we drew down $4.4 million against this line at the end of February 2004. At this time, the assets of PlanVista are not eligible collateral for this line of credit due to covenants of the senior debt in place at PlanVista.

     As noted above, with our acquisition of PlanVista on March 2, 2004, we utilized the $24.1 million in proceeds raised from our private placement, drew $4.4 million on our line of credit and used available cash to satisfy $27.4 million of PlanVista’s debt and other obligations outstanding as of the effective time of the acquisition. As a result of the acquisition, we acquired a cash flow positive company with $20.4 million in senior debt due in May 2005 (at an interest rate of 6% until December 2004 when the interest rate increases to 10%). While it is our intent to satisfy this debt either through refinancing, obtaining a senior line of credit, or possible equity raise, we will incur substantial additional cash interest charges until we do so. We may be unable to raise additional funds.

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     The following table represents our contractual cash obligations due over the next several years (including a separate table for PlanVista commencing after the acquisition). At the present time, none of our contractual cash obligations extend beyond 2006 except for the maturity of our $13.1 million in convertible notes on December 31, 2008 (assuming no prior conversion). Operating leases are shown net of any sublease agreements.

In thousands	2004		2005		2006		2007		2008
Interest on convertible notes (1)	$	525	$	525	$	525	$	525	$	525
Convertible notes (1)		—		—		—		—		13,137
Notes payable		1,890		1,758		354		—		—
Capital lease obligations		218		96		6		—		—
Operating leases		1,275		451		9		—		—
Acquisition related costs		865		—		—		—		—
Other obligations		164		—		—		—		—
Subtotal ProxyMed		4,937		2,830		894		525		13,662
Interest on senior and other debt		1,195		744		—		—		—
Senior debt		2,000		18,395		—		—		—
Notes payable		1,084		—		—		—		—
Operating leases		389		101		56		53		11
Subtotal PlanVista		4,668		19,240		56		53		11
Grand total	$	9,605	$	22,070	$	950	$	578	$	13,673

(1)     Assumes no conversion of convertible notes.

     We believe that we have sufficient cash and cash equivalents on hand to fund our future operational capital requirements and expenditures, and a sufficient level of capital in order to fund specific research and development projects or to pursue smaller additional strategic acquisitions. Even with the positive cash flow expected to be generated from our operations, we anticipate that we will need to refinance the PlanVista debt, obtain a senior line of credit, or raise capital in order to satisfy this debt on or before maturity. However, if we require additional funding in the future to satisfy any of our outstanding, future obligations, or further our strategic plans, there can be no assurance that any additional funding will be available to us, or if available, that it will be available on acceptable terms. If we are successful in obtaining additional financing, the terms of the financing may have the effect of significantly diluting or adversely affecting the holdings or the rights of the holders of our common stock. We believe that if we are not successful in obtaining additional financing for further product development or strategic acquisitions, such inability may adversely impact our ability to successfully execute our business plan and may put us at a competitive disadvantage.

Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions but we believe that any variation in results would not have a material effect on our financial condition. We evaluate our estimates on an ongoing basis.

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     We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to Consolidated Financial Statements beginning on Page F-7.

     Revenue Recognition — Transaction Services fee revenue is recorded in the period the service is rendered. Certain transaction fee revenue may be subject to revenue sharing per agreements with resellers, vendors or gateway partners and are recorded as gross revenues. Revenue from sales of inventory and manufactured goods is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectibility is probable. Revenue from certain up-front fees is amortized ratably over the expected life of the customer or contract. Revenue from hardware leases, network access and maintenance fees is recognized ratably over the applicable period.

     Goodwill — We adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002. Under SFAS No. 142, goodwill is reviewed at least annually for impairment. This adoption resulted in the reduction of approximately $0.8 million of amortization relating to its existing goodwill each quarter, which would have otherwise been recorded through the first quarter of 2004. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level at adoption and at least annually thereafter, utilizing a “fair value” methodology versus an undiscounted cash flow method required under previous accounting rules. In accordance with our adoption of SFAS No. 142, we completed our annual tests at December 31, 2003 and 2002 utilizing various valuation techniques including a market value analysis. No impairment charges were recorded as a result of these tests.

     Capitalized Software Development and Research and Development — Costs incurred internally and fees paid to outside contractors and consultants during the application development stage of our internally used software products are capitalized. Costs of upgrades and major enhancements that result in additional functionality are also capitalized. Costs incurred for maintenance and minor upgrades are expensed as incurred. All other costs are expensed as incurred as research and development expenses (which are included in “Selling, general and administrative expenses”). Application development stage costs generally include software configuration, coding, installation to hardware and testing. Once the project is completed, capitalized costs are amortized over their remaining estimated economic life. Our judgment is used in determining whether costs meet the criteria for immediate expense or capitalization. We periodically review projected cash flows and other criteria in assessing the impairment of any internal-use capitalized software and take impairment charges as needed.

     Equity Transactions — Over the past three years, we have engaged in various equity transactions. These transactions were first aimed at providing capital to continue to operate and grow our business and then became a critical step aimed at simplifying our capital structure. These transactions are complex and require the application of various accounting rules and standards that have resulted in significant cash and non-cash charges reflected primarily as deemed dividend charges included our net loss applicable to common shareholders. Additionally, the valuation of the PlanVista warrant was based on a series of assumptions that are used in a complex financial model. This warrant’s value of $0.5 million was written off upon its expiration in December 2003.

     Bad Debt Estimates — We rely on estimates to determine the bad debt expense and the adequacy of the reserve for doubtful accounts receivable. These estimates are based on our historical experience and the industry in which we operate. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

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New Accounting Pronouncements

     In January 2003, the FASB issued Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest Entities”. FIN No. 46 expands upon and strengthens existing accounting guidance that addresses when a company should include in its financial statements the assets, liabilities and activities of another entity. A variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights; or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN No. 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Disclosure requirements apply to any financial statements issued after January 31, 2003. Currently we do not have variable interest entities, therefore we do not believe that the implementation of FIN No. 46 will have a material effect on our consolidated financial statements and related disclosures.

     In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, except for certain provision that relate to SFAS No. 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003 and for hedging relationships designated after June 30, 2003. We do not believe that the implementation SFAS No. 149 will have a material effect on its consolidated financial statements and related disclosures.

     In May 2003, the Financial Accounting Standards Board issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”. SFAS No. 150 specifies that instruments within its scope embody obligations of the issuer and that, therefore, the issuer must classify them as liabilities. SFAS No. 150 requires issuers to classify as liabilities the following three types of freestanding financial instruments: (1) mandatory redeemable financial instruments; (2) obligations to repurchase the issuer’s equity shares by transferring assets; and (3) certain obligations to issue a variable number of shares. SFAS No. 150 defines a freestanding financial instrument as a financial instrument that (1) is entered into separately and apart from any of the entity’s other financial instruments or equity transactions; or (2) is entered into in conjunction with some other transaction and can be legally detached and exercised on a separate basis. For all financial instruments entered into or modified after May 31, 2003, SFAS No. 150 is effective immediately. For all other instruments of public companies, SFAS No. 150 goes into effect at the beginning of the first interim period beginning after June 15, 2003. For contracts that were created or modified before May 31, 2003 and still exist at the beginning of the first interim period beginning after June 15, 2003, entities should record the transition to SFAS No. 150 by reporting the cumulative effect of a change in an accounting principle. SFAS No. 150 prohibits entities from restating financial statements for earlier years presented. We do not expect the adoption of SFAS No. 150 to have a material impact on our financial statements.

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Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

     Statements contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report may contain information that includes or is based upon forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements present our expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They frequently are accompanied by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. In particular, these include statements relating to: our ability to identify suitable acquisition candidates; our successful integration of PlanVista, MedUnite and any other future acquisitions; our ability to successfully develop, market, sell, cross-sell, install and upgrade our clinical and financial transaction services and applications to new and current physicians, payers, medical laboratories and pharmacies; our ability to compete effectively on price and support services; our ability to increase revenues and revenue opportunities; and our ability to meet expectations regarding future capital needs and the availability of credit and other financing sources.

     All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues, synergies, accretion, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings, approvals and closings relating to the merger or other planned acquisitions; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

     Actual results may differ significantly from projected results due to a number of factors, including, but not limited to, the soundness of our business strategies relative to perceived market opportunities; our assessment of the healthcare industry’s need, desire and ability to become technology efficient; market acceptance of our products and services; and our ability and that of our business associates to comply with various government rules regarding healthcare information and patient privacy. These and other risk factors are more fully discussed starting on page 23 and elsewhere in this Form 10-K, which we strongly urge you to read.

     Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in the forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Shareholders are cautioned not to put undue reliance on any forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any intent or obligation to update any forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We own no derivative financial instruments or derivative commodity instruments. We derive no revenues from international operations and do not believe that we are exposed to material risks related to foreign currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and schedule are included beginning at Page F-1.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     We have not had any change in or disagreement with our accountants on accounting and financial disclosures during our two most recent fiscal years or any later interim period.

ITEM 9A. CONTROLS AND PROCEDURES

     As of the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)), under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer. Based upon such evaluation, management has concluded that the Company’s disclosure controls and procedures are effective to ensure that the information the Company is required to disclose in reports that it files or submits under the Exchange Act is communicated to management, including, the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the Commission rules and forms.

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PART III

     The information required in Item 10 (Directors and Officers of the Registrant), with the exception of the information required by Item 401 of Regulation of S-K, Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Managers and Equity Compensation Plan Information), Item 13 (Certain Relationships and Related Transactions), and Item 14 (Principal Accountant Fees and Services) is incorporated by reference to the Company’s definitive proxy statement for the 2004 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Our Company’s directors and executive officers are as follows:

Name	Age		Position
William L. Bennett		54	Director
Edwin M. Cooperman (1)		60	Director
Phillip S. Dingle		42	Executive Vice President and Chief Executive Officer - PlanVista
Gregory J. Eisenhauer, CFA		45	Executive Vice President and Chief Financial Officer
Michael S. Falk (2)		42	Director
John Paul Guinan		43	Executive Vice President and Chief Technology Officer
Nancy J. Ham		42	President and Chief Operating Officer
Lonnie W. Hardin		49	Senior Vice President — Payer Services
A. Thomas Hardy		50	Senior Vice President — Laboratory Services and President — Key Communications Service, Inc.
Thomas E. Hodapp (2)		45	Director
Michael K. Hoover		48	Chairman of the Board and Chief Executive Officer
Braden R. Kelly (2)		33	Director
Jeffrey L. Markle		55	Senior Vice President and President /Chief Operating Officer — PlanVista
Kevin M. McNamara (1)		48	Director
Judson E. Schmid		42	Executive Vice President, Chief Accounting Officer and Treasurer
Eugene R. Terry (1)		65	Director
Timothy J. Tolan		45	Executive Vice President — Sales and Account Management
Thomas C. Wohlford		50	Senior Vice President — Submitter Services

(1)	Member of the Audit Committee, the Chairman of which is Mr. McNamara.
(2)	Member of the Compensation Committee, the Chairman of which is Mr. Falk.

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     William L. Bennett was appointed as a director of ProxyMed in March 2004 in connection with ProxyMed’s acquisition of PlanVista. From January 1998 to March 2004, Mr. Bennett was the Vice Chairman of the Board of PlanVista. Mr. Bennett served as the Chairman of the Board from December 1994 to December 1997 and had been a director since August 1994. Since February 2000, Mr. Bennett has been a partner and is Director of Global Recruiting and Managing Director of Monitor Company Group, L.P., a strategy consulting firm and merchant bank. From May 1991 to May 2001, he was a director of Allegheny Energy, Inc., an electric utility holding company. Until March 1995, Mr. Bennett served as Chairman and Chief Executive officer of Noel Group, Inc., a publicly traded company that held controlling interests in small to medium-sized operating companies. Previously, Mr. Bennett was Co-Chairman and Chief Executive officer of Noel Group, Inc. from November 1991 to July 1994. Mr. Bennett is a director of Sylvan, Inc., a publicly traded company that produces mushroom spawn and fresh mushrooms.

     Edwin M. Cooperman has served as a director of ProxyMed since July 2000. He is a principal of T.C. Solutions, a privately-held investment and financial services consulting firm. Previously, Mr. Cooperman was Chairman of the Travelers Bank Group and Executive Vice President, Travelers Group, where he was responsible for strategic marketing, the integration of Travelers brands and products, joint and cross marketing efforts and corporate identity strategies, as well as expanding the Travelers Bank Group’s credit card portfolios. After joining Travelers in 1991, Mr. Cooperman became Chairman and CEO of Primerica Financial Services Group, which comprises Primerica Financial Services, Benefit Life Insurance Company and Primerica Financial Services Canada. Previous to this, Mr. Cooperman served at American Express where he became Chairman and Co-Chief Executive of Travel Related Services, North America. Mr. Cooperman is also a director of Comdial Corporation and Grannum Value Mutual Fund.

     Phillip S. Dingle joined ProxyMed in March 2004 and currently serves as Executive Vice President of ProxyMed and Chief Executive Officer of PlanVista. Prior to joining ProxyMed, Mr. Dingle served as Chairman of the Board, and Chief Executive Officer of PlanVista since May 2001, and was President and Chief Executive Officer from October 2000 to May 2001. Mr. Dingle served as President and Chief Operating officer of PlanVista from June 2000 to September 2000, as Executive Vice President and Chief Financial Officer from January 1999 to May 2000, and as Senior Vice President and Chief Counsel from August 1996 to December 1998. Prior to August 1996, Mr. Dingle was a partner with the law firm of Hill, Ward & Henderson, P.A. in Tampa, Florida.

     Gregory J. Eisenhauer, CFA joined ProxyMed in December 2003 and currently serves as Executive Vice President and Chief Financial Officer of ProxyMed. Mr. Eisenhauer has extensive experience in healthcare, mergers and acquisitions, and investor relations. Before joining ProxyMed, he served as Executive Vice President, Chief Financial Officer and Secretary for U.S. Healthworks, a national occupational healthcare services company headquartered in Alpharetta, Georgia. From 1993 to 2002, Mr. Eisenhauer was with RehabCare Group (NYSE: RHB), a company that grew from $40 million in revenue to over $500 million in revenue during his tenure, which culminated in Mr. Eisenhauer’s appointment as Senior Vice President, Chief Financial Officer and Secretary. Among other accomplishments, Mr. Eisenhauer was responsible for acquisitions that contributed significantly to the growth. In 2000, RehabCare was the number one percentage gaining company on the New York Stock Exchange. Prior to RehabCare, he was with Sverdrup Corporation and APEX Oil. Mr. Eisenhauer is a Chartered Financial Analyst and has an MBA in finance from the University of St. Louis and an undergraduate finance degree from the University of Missouri.

     Michael S. Falk has served as a director of ProxyMed since July 2000. Mr. Falk is the co-founder of Commonwealth Associates L.P., a New York-based merchant bank founded in 1988, and served as Chairman and Chief Executive Officer from 1995 until 2002. Currently, he is Chairman and Chief Executive Officer of Commonwealth Associates Group Holdings, and a managing partner of ComVest Investment Partners and various related investment partnerships. He currently serves as a director of the CARE fund. Mr. Falk is Chairman of Comdial Corporation and was a director of PlanVista Corporation. Mr. Falk holds a B.A. degree in Economics from Queens College and attended the Stanford University Executive Program for Smaller Companies.

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     John Paul Guinan joined ProxyMed in April 1993 and currently serves as Executive Vice President and Chief Technology Officer. Mr. Guinan served as President and a director of ProxyMed between June 1995 and December 1999. He was also its Chief Operating Officer from August 1996 to January 1998. He was an Executive Vice President of ProxyMed from July 1993 until June 1995. From March 1993 to June 1993, Mr. Guinan was the Chief Executive Officer and co-founder of ProxyScript, Inc., which ProxyMed acquired in June 1993. From 1989 until April 1993, Mr. Guinan founded and developed two companies: The Desktop Professionals, Inc., a company which supplied automation systems to South Florida professional offices; and POSitive Thinking, Inc., a software development company which specialized in point-of-sale systems. He received both a B.S. degree in Computer Science and a Juris Doctor degree from the University of Miami.

     Nancy J. Ham joined ProxyMed in October 2000 and currently serves as President and Chief Operating Officer. Prior to joining ProxyMed in October 2000, Ms. Ham served as General Manager, Institutional and Connectivity Services of Healtheon/WebMD Corporation from June 1999 to March 2000. She originally joined Healtheon in May 1998 with its acquisition of ActaMed Corporation, where she had served with Mr. Michael K. Hoover, ProxyMed’s Chairman and CEO, as Chief Financial Officer and Senior Vice President, Business Development. Upon the merger with WebMD Corporation, she became General Manager. Before joining ActaMed in 1993, Ms. Ham was a Director, Corporate Finance at Equifax, Inc. from 1992 to 1993, and prior to that spent five years with GE Capital’s Corporate Finance Group. Ms. Ham has a B.A. from Duke University and a Masters in International Business Studies from the University of South Carolina.

     Lonnie W. Hardin joined ProxyMed in November 1997 in connection with its acquisition of US Healthdata Interchange, Inc. (“USHDI”), and since October 2000 has been serving as Senior Vice President of Payer Services and from November 1997 to October 2000 as the Senior Vice President of Field Claims Operations. Prior to joining ProxyMed, Mr. Hardin was employed by US Health Data Interchange, Inc. from 1991 through 1997, during which time he held the positions of Vice President — Sales/Marketing and General Manager.

     A. Thomas Hardy joined ProxyMed in December 1998 in conjunction with ProxyMed’s acquisition of Key Communications Service, Inc. and since January 2000, has served as President and Chief Operating Officer of Key Communications. From October 2000, Mr. Hardy has also served as Senior Vice President of Laboratory Services of ProxyMed. Mr. Hardy joined Key Communications in 1995 where he served as Key Communications’ Executive Vice President and Chief Financial Officer. Mr. Hardy is a certified public accountant and has a BBA in Business from Georgia College & State University and a MBA degree from the University of Arkansas.

     Thomas E. Hodapp has served as a director of ProxyMed since July 2000. In 1999, Mr. Hodapp founded Access Capital Management, a private banking and management firm dedicated to providing financial and strategic advisory services to select, early stage private healthcare and information technology companies. From 1992 to 1998, Mr. Hodapp was a Managing Director for Robertson Stephens & Company, LLC, a leading international investment banking firm, overseeing the firm’s Healthcare Managed Care Research Group, with a focus on the managed care, practice management and healthcare information services industries. From 1988 to 1992, he was with Montgomery Medical Ventures, a venture firm focused on the biotechnology, medical device and healthcare service fields. MMV I and II actively managed long-term investments in over 40 early stage companies, many of which the firm was involved in co-founding. Prior to that, Mr. Hodapp researched the healthcare industry as an industry analyst with Goldman, Sachs & Company, S.G. Warburg Securities and Volpe & Covington. Additionally, Mr. Hodapp has been published in a number of major financial and healthcare industry journals and publications, was a two-time selection to the Wall Street Journal Research Analyst All-Star Team, and is a frequent speaker at national healthcare investment and strategy forums.

     Michael K. Hoover was appointed Chairman of the Board and Chief Executive Officer of ProxyMed in July 2000. He served as President and director of Healtheon/WebMD Corporation after Healtheon acquired ActaMed Corporation, an eHealth information systems and transaction company similar to ProxyMed in May 1998. Mr. Hoover co-founded ActaMed in May 1992 and served as its President from its inception to May 1998, and as its President and Chief Executive Officer from December 1995 to May 1998. From 1989 to

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1992, Mr. Hoover served as the Executive Director of Financial Services of the MicroBilt Division of First Financial Management Corporation. Prior to that, he founded FormMaker Software Corporation, a producer of electronic forms automation systems, and served as its Chief Executive Officer from 1982 to 1988.

     Braden R. Kelly was appointed director of ProxyMed in April 2002. Mr. Kelly is a Managing Member of General Atlantic Partners, LLC, a private equity investment firm that invests in information, communications and media companies on a global basis, where he has been employed in various capacities since 1995. Prior to joining General Atlantic, Mr. Kelly was a member of the Mergers, Acquisitions, and Restructurings Department at Morgan Stanley & Co. He also serves as a director of Eclipsys Corporation, Tickets.com, HEALTHvision, Inc. and Schaller Anderson, Inc. Mr. Kelly received his B.A. in Finance and Business Economics from the University of Notre Dame.

     Jeffrey L. Markle joined ProxyMed in March 2004 and currently serves as Senior Vice President of the Company and President/Chief Operating Officer of PlanVista. Before joining ProxyMed, Mr. Markle served as the President and Chief Operating Officer of PlanVista since May 2001 and served as a director from July 2001 to April 2002. From July 1999 to May 2001, Mr. Markle was the Executive Vice President — Medical Cost Management and from June 1998 to June 1999, Mr. Markle was the Senior Vice President — Medical Loss Management. From 1996 to 1998, Mr. Markle was Vice President of the US Group Operations for Swiss Re Life & Health, a reinsurance company in Toronto. From 1994 to 1996, he was Vice President and General Manager of the Canadian Operations of Osten Kimberly Quality Care, a home healthcare company. From 1991 to 1993, he was Chief Operating Officer of Medisys Health Group, Inc., a preventive healthcare company in Canada, and from 1989 to 1991 he was President and Chief Executive Officer of Oaurentian Health Services, an executive and occupational health services company.

     Kevin M. McNamara – was appointed as a director of ProxyMed in September 2002. Mr. McNamara currently serves as Chief Financial Officer of HCCA International, Inc., a healthcare management and recruitment company. From November 1999 until February 2001, Mr. McNamara served as Chief Executive Officer and a director of Private Business, Inc., a provider of electronic commerce solutions that help community banks provide accounts receivable financing to their small business customers. From 1996 to 1999, Mr. McNamara served as Senior Vice President and Chief Financial Officer of Envoy. Before joining Envoy, he served as president of NaBanco Merchant Services Corporation, then one of the world’s largest merchant credit card processors. Mr. McNamara currently serves on the Board of Directors of Luminex Corporation, a medical device company and several private companies. He is a Certified Public Accountant and holds a B.S. in Accounting from Virginia Commonwealth University and a Masters in Business Administration from the University of Richmond.

     Judson E. Schmid joined ProxyMed in April 1996 and currently serves as Executive Vice President, Chief Accounting Officer and Treasurer of ProxyMed. From October 2000 to December 2003, he was ProxyMed’s Chief Financial Officer. From April 1996 to October 2000, he was ProxyMed’s Vice President — Corporate Finance and Corporate Controller. From August 1994 to September 1995, Mr. Schmid was the Corporate Controller for CardioLife Corporation, a privately-held medical provider of transtelephonic cardiac monitoring services. From September 1990 to August 1994, he was the Corporate Controller of Sports-Tech International, Inc., a publicly-held developer and supplier of computer-controlled video editing systems for the sports industry. From September 1985 to September 1990, he worked as an Audit Supervisor for two public accounting firms, including KPMG. Mr. Schmid received his undergraduate degree at the University of Florida and his Masters of Accounting at Florida Atlantic University. Mr. Schmid is a certified public accountant in Florida (inactive status elected).

     Eugene R. Terry has been a director of ProxyMed since August 1995. Mr. Terry is a pharmacist and is a principal of T.C. Solutions, a privately-held investment and financial services consulting firm. Since 2004, Mr. Terry has served as a consultant for MSO Medical, a bariatric surgery management company. Until 2001, Mr. Terry was a director on the board of In-Home Health, a home health care company acquired by Manor Care, Inc. In 1971, Mr. Terry founded Home Nutritional Support, Inc. (“HNSI”), one of the first companies established in the home infusion industry. In 1984, HNSI was sold to Healthdyne, Inc. HNSI was later sold to the W.R. Grace Group. From 1975 to 1984, Mr. Terry was also founder and Chief Executive Officer of Paramedical Specialties, Inc., a respiratory and durable medical equipment company, which was also sold to Healthdyne, Inc.

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     Mr. Terry is also a director of Medical Nutrition, a nutritional products company and Intercept, an implantable drug delivery pump company.

     Timothy J. Tolan joined ProxyMed in January 2001 and currently serves as Executive Vice President — Sales and Account Management. Mr. Tolan previously served as ProxyMed’s Executive Vice President of Business Development beginning in June 2003. Before joining ProxyMed, Mr. Tolan was Vice President of Sales for ePhysician, Inc from May 2000 until his appointment at ProxyMed. He was Vice President of Sales — Lab/PBM for Healtheon/WebMD Corporation from August 1998 through May 2000. Prior to Healtheon/WebMD, Mr. Tolan also held the position of Vice President of Sales — Eastern Region for CITATION Computer Systems, a laboratory information system company. Prior to CITATION, Mr. Tolan spent twelve years in the physician practice management market.

     Thomas C. Wohlford joined ProxyMed as Senior Vice President of Submitter Services as part of the MedUnite acquisition. Mr. Wohlford was Vice President of Operations at MedUnite since January 2002. Prior to joining MedUnite, Mr. Wohlford was Vice President of Strategic Partnering with Helus, Inc., a Chicago based e-health company. From 1993 to 1999, Mr. Wohlford held executive positions with CNA Health Partners (formerly CoreSourceBurgett & Dietrich) and CNA. From 1989 to 1993, Mr. Wohlford was responsible for healthcare cost containment for Georgia-Pacific Corporation. Prior to joining G-P, he led all network development for Travelers Health Network as Vice President of Network Development from 1986 to 1989.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K

				Page
(a)	(1	)	The following financial statements are included in Part II, Item 8:
		Consolidated Financial Statements:
			Report of Independent Certified Public Accountants	F-2
			Consolidated Balance Sheets – December 31, 2003 and 2002	F-3
			Consolidated Statements of Operations – Years Ended December 31, 2003, 2002 and 2001	F-4
			Consolidated Statements of Stockholders’ Equity — Years Ended December 31, 2003, 2001 and 2001	F-5
			Consolidated Statements of Cash Flows — Years Ended December 31, 2003, 2002 and 2001	F-6
			Notes to Consolidated Financial Statements	F-7 – F-41
	(2	)	The following schedule for the years 2003, 2002 and 2001 is submitted herewith:
			Schedule II — Valuation and Qualifying Accounts - Years Ended December 31, 2003, 2002 and 2001	F-42
	(3	)	Exhibits required to be filed by Item 601 of Regulation S-K as exhibits to this Report are listed in the Exhibit Index appearing on pages 55 through 60.
(b)			Reports on Form 8-K:
			A Form 8-K was filed on October 31, 2003, announcing the issuance of a press release setting forth the Company’s earnings and condensed balance sheet for the three and nine months ended September 30, 2003.
			A Form 8-K was filed on December 9, 2003, announcing the issuance of a joint press release regarding the Company’s execution of an Agreement and Plan of Merger by and among the Company, PlanVista Corporation, and Planet Acquisition Corp.

53

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 30, 2004	PROXYMED, INC.
	By: /s/ Michael K. Hoover Michael K. Hoover Chief Executive Officer

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael K. Hoover and Gregory J. Eisenhauer and each of them, his true and lawful attorney-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURES	TITLE	DATE
/s/ Michael K. Hoover Michael K. Hoover	Chairman of the Board and Chief Executive Officer (principal executive officer)	March 30, 2004
/s/ Gregory J. Eisenhauer Gregory J. Eisenhauer	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	March 30, 2004
/s/ William L. Bennett William L. Bennett	Director	March 30, 2004
/s/ Edwin M. Cooperman Edwin M. Cooperman	Director	March 30, 2004
/s/ Michael S. Falk Michael S. Falk	Director	March 30, 2004
/s/ Thomas E. Hodapp Thomas E. Hodapp	Director	March 30, 2004
/s/ Braden R. Kelly Braden R. Kelly	Director	March 30, 2004
/s/ Kevin M. McNamara Kevin M. McNamara	Director	March 30, 2004
/s/ Eugene R. Terry Eugene R. Terry	Director	March 30, 2004

54

EXHIBIT INDEX

Exhibit
No.	Description
2.1	Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Registrant, Planet Acquisition Corp. and PlanVista Corporation (incorporated by reference to Annex A of the Registration Statement on Form S-4, File No. 333-111024).
2.2	Agreement and Plan of Merger and Reorganization dated December 31, 2002 between ProxyMed, Inc., Davie Acquisition Corp., and MedUnite Inc. (incorporated by reference to Exhibit 2.1 of Form 8-K File No. 000-22052, reporting an event dated December 31, 2002).
2.3	Asset Purchase Agreement dated July 30, 2002 between ProxyMed, Inc. and MDIP, Inc. (incorporated by reference to Exhibit 2.1 of Form 8-K File No. 000-22052, reporting an event dated July 31, 2002).
2.4	Stock Purchase Agreement dated May 6, 2002 between ProxyMed, Inc. and KenCom Communications & Services, Inc. (incorporated by reference to Exhibit 2.1 of Form 8-K File No. 000-22052, reporting an event dated May 6, 2002).
2.5	Stock and Warrant Purchase Agreement between ProxyMed and General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GAPCO GmbH & Co., KG and GapStar, LLC (incorporated by reference to Exhibit 10.1 of Form 8-K, File No. 000-22052, reporting an event dated March 26, 2002).
3.1	Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-2678).
3.2	Bylaws, as amended (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-2678).
3.3	Articles of Amendment to Restated Articles of Incorporation of the Registrant dated March 1, 2004 (incorporated by reference to Exhibit 3.1 of Form 8-K File No. 000-22052, reporting an event dated March 2, 2004).
3.4	Articles of Amendment to Articles of Incorporation of the Registrant effective August 22, 2002.
3.5	Articles of Amendment to Articles of Incorporation of the Registrant dated December 21, 2001 (incorporated by reference to Exhibit 3.1 of Form 8-K File No. 000-22052, reporting an event dated December 13, 2001).
3.6	Articles of Amendment to Articles of Incorporation dated August 21, 2001 (incorporated by reference to Exhibit 2.2 of Form 8-K, File No. 000-22052, reporting an event dated August 17, 2001).

55

Exhibit
No.	Description
3.7	Articles of Amendment to Articles of Incorporation dated July 25, 2001 (incorporated by reference to Exhibit 2.1 of Form 8-K, File No. 000-22052, reporting an event dated August 17, 2001).
3.8	Articles of Amendment to Articles of Incorporation of the Registrant effective July 14, 2000.
3.9	Articles of Amendment to Articles of Incorporation of the Registrant dated June 15, 2000 (incorporated by reference to Exhibit 3.4 of Form 10-Q/A for the period ended June 30, 2000).
4.1	Common Stock Purchase Warrants issued to First Data Corporation (incorporated by reference to Exhibit 10.1 of Form 8-K, File No. 000-22052, reporting an event dated July 8, 2003).
4.2	Form of 4% Convertible Promissory Notes dated December 31, 2002 issued in connection with the Agreement and Plan of Merger and Reorganization dated December 31, 2002 between ProxyMed, Inc., Davie Acquisition Corp., and MedUnite, Inc. (incorporated by reference to Exhibit 10.1 of Form 8-K File No. 000-22052, reporting an event dated December 31, 2002).
4.3	Form of Common Stock Purchase Warrants issued to General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GAPCO GmbH & Co., KG and GapStar, LLC (incorporated by reference to Exhibit 10.2 of Form 8-K, File No. 000-22052, reporting an event dated March 26, 2002).
4.4	Form of Exchanged Warrant to Purchase Common Stock of the Registrant dated May 4, 2000, issued to certain investors (incorporated by reference to Exhibit 4.1 of Form 8-K, File No. 000-22052, reporting an event dated May 4, 2000).
4.5	Form of New Warrant to Purchase Common Stock of the Registrant dated May 4, 2000, issued to certain investors (incorporated by reference to Exhibit 4.2 of Form 8-K, File No. 000-22052, reporting an event dated May 4, 2000).
4.6	Form of Warrant to Purchase Common Stock of the Registrant dated December 23, 1999, issued to certain investors (incorporated by reference to Exhibit 4.1 of Form 8-K, File No. 000-22052, reporting an event dated December 23, 1999).
10.1	Amended and Restated Registration Rights Agreement among the Registrant, General Atlantic Partners 77, L.P., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GAP Coinvestments III, LLC, GAP Coinvestments IV, LLC, GapStar, LLC, GAPCO GmbH & Co. KG, PVC Funding Partners, LLC, ComVest Venture Partners, L.P., Shea Ventures, LLC, and Robert Priddy, dated March 2, 2004 (incorporated by reference to Exhibit 4.1 of Form 8-K, File No. 000-22052, reporting an event dated March 2, 2004).

56

Exhibit
No.	Description
10.2	Stock Purchase Agreement, dated as of December 5, 2003 among the Registrant, General Atlantic Partners 77, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, GAPCO GmbH & Co. KG, PVC Funding Partners, LLC, ComVest Venture Partners, L.P., Shea Ventures, LLC, and Robert Priddy (incorporated by reference to Exhibit 2.2 of the Registration Statement on Form S-4, File No. 333-111024).
10.3	Registration Rights Agreement among the Registrant General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC and GAPCO GmbH & Co. KG dated April 5, 2002 (incorporated by reference to Exhibit 10.3 of Form 8-K, File No. 000-22052, reporting an event dated March 29, 2003).
10.4	Registration Rights Agreement dated December 31, 2002 among ProxyMed, Inc. and the holders of the 4% Convertible
	Promissory Notes (incorporated by reference to Exhibit 10.2 of Form 8-K File No. 000-22052, reporting an event dated December 31, 2002).
10.5	Form of Indemnification Agreement for all Officers and Directors adopted May 22, 2002 (incorporated by reference to Exhibit 10.55 of Form 10-K for the period ended December 31, 2002).
10.6	Registration Rights Agreement dated May 6, 2002 ProxyMed, Inc. and Deborah M. Kennedy and Colleen Phillips-Norton (incorporated by reference to Exhibit 10.1 of Form 8-K File No. 000-22052, reporting an event dated May 6, 2002).
10.7	Registration Rights Agreement between ProxyMed and General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, and GAPCO GmbH & Co. KG (incorporated by reference to Exhibit 10.3 of Form 8-K, File No. 000-22052, reporting an event dated March 26, 2002).
10.8	Employment Letter between ProxyMed and Jeffrey L. Markle effective March 2, 2004.*
10.9	Employment Agreement between ProxyMed and Gregory J. Eisenhauer dated December 8, 2003.*
10.10	Employment Agreement between ProxyMed and Tom Wohlford dated May 13, 2003.*
10.11	Employment Agreement between ProxyMed and Rafael G. Rodriguez dated January 2, 2003 (incorporated by reference to Exhibit 10.53 of Form 10-K for the period ended December 31, 2002).*
10.12	Employment Agreement between ProxyMed and A. Thomas Hardy dated December 31, 2001 (incorporated by reference to Exhibit 10.40 of Form 10-K for the period ended December 31, 2001).*

57

Exhibit
No.	Description
10.13	Employment Agreement between ProxyMed and Lonnie W. Hardin dated March 29, 2001 (incorporated by reference to Exhibit 10.1 of Form 10-Q for the period ended March 31, 2001).*
10.14	Employment Agreement between ProxyMed and Timothy J. Tolan dated January 23, 2001 (incorporated by reference to Exhibit 10.30 of Form 10-K for the period ended December 31, 2000).*
10.15	Amendment to Employment Agreement between ProxyMed and Timothy J. Tolan effective January 1, 2004.*
10.16	Employment Agreement between ProxyMed and Michael K. Hoover dated July 28, 2000 (incorporated by reference to Exhibit 99.1 of Form 10-Q for the period ended September 30, 2000).*
10.17	Amendment to Employment Agreement between ProxyMed and Michael K. Hoover effective January 1, 2004.*
10.18	Employment Agreement between ProxyMed and Judson E. Schmid dated September 29, 2000 (incorporated by reference to Exhibit 99.2 of Form 10-Q for the period ended September 30, 2000).*
10.19	Employment Agreement between ProxyMed and Nancy J. Ham dated October 2, 2000 (incorporated by reference to Exhibit 99.3 of Form 10-Q for the period ended September 30, 2000).*
10.20	Amendment to Employment Agreement between ProxyMed and Nancy J. Ham effective January 1, 2004.*
10.21	Employment Agreement between ProxyMed and John Paul Guinan (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-2678).*
10.22	Form of bonus letter offered to executive and senior management on February 26, 2002 (incorporated by reference to Exhibit 10.54 of Form 10-K for the period ended December 31, 2002).*
10.23	2002 Stock Option Plan, as amended.*
10.24	2001 Stock Option Plan (incorporated by reference to Exhibit B of the Proxy Statement filed on June 22, 2001).*
10.25	2000 Stock Option Plan (incorporated by reference to Exhibit B of the Proxy Statement filed on July 7, 2000).*
10.26	2000-1/2 Stock Option Plan (incorporated by reference to Exhibit C of the Proxy Statement filed on July 7, 2000).*

58

Exhibit
No.	Description
10.27	1997 Stock Option Plan (incorporated by reference to Exhibit A of the Proxy Statement filed on May 6, 1997).*
10.28	Amended 1993 Stock Option Plan (incorporated by reference to Exhibit A of ProxyMed’s Proxy Statement for its 1994 Annual Meeting of Shareholders).*
10.29	1995 Stock Option Plan (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-2678).*
10.30	Subscription Agreement dated December 21, 2001 for the private placement issuance of up to $8,000,000 of ProxyMed, Inc. common stock (incorporated by reference to Exhibit 10.1 of Form 8-K File No. 000-22052, reporting an event dated December 13, 2001).
10.31	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 (incorporated by reference to Exhibit 10.2 of Form 8-K File No. 000-22052, reporting an event dated December 13, 2001).
10.32	Conversion Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001 (incorporated by reference to Exhibit 10.3 of Form 8-K File No. 000-22052, reporting an event dated December 13, 2001).
10.33	Designation and Subscription Amendment Agreement for Series C 7% Convertible Preferred shareholder pursuant to conversion offer dated December 13, 2001 (incorporated by reference to Exhibit 10.4 of Form 8-K File No. 000-22052, reporting an event dated December 13, 2001).
10.34	Loan and Security Agreement by and between ProxyMed, Key Communications Service, Inc., MedUnite Inc. and Wachovia Bank, National Association dated December 4, 2003.
10.35	Revolver Note dated December 4, 2003, issued in connection with the Loan and Security Agreement by and between ProxyMed, Key Communications Service, Inc., MedUnite Inc. and Wachovia Bank, National Association dated December 4, 2003.
10.36	Patent and Trademark Security Agreement effective as of December 4, 2003 between ProxyMed, Key Communications Service, Inc., MedUnite Inc. and Wachovia Bank, National Association.
21	Subsidiaries of the Registrant.
23	Consent of PricewaterhouseCoopers LLP.
31.1	Certification by Michael K. Hoover, Chief Executive Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14.

59

Exhibit
No.	Description
31.2	Certification Gregory J. Eisenhauer, Chief Financial Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14.
32.1	Certification by Michael K. Hoover, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Gregory J. Eisenhauer, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Denotes management contract or compensating plan or arrangement.

60

PROXYMED, INC. AND SUBSIDIARIES

Index to Consolidated Financial Statements and Schedule

	PAGE
Consolidated Financial Statements
Report of Independent Certified Public Accountants	F-2
Consolidated Balance Sheets — December 31, 2003 and 2002	F-3
Consolidated Statements of Operations - Years Ended December 31, 2003, 2002 and 2001	F-4
Consolidated Statements of Stockholders’ Equity - Years Ended December 31, 2003, 2002 and 2001	F-5
Consolidated Statements of Cash Flows - Years Ended December 31, 2003, 2002 and 2001	F-6
Notes to Consolidated Financial Statements	F-7 – F-41
Schedule II — Valuation and Qualifying Accounts - Years Ended December 31, 2003, 2002, and 2001	F-42

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and the
Shareholders of ProxyMed, Inc.

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) on page 53 present fairly, in all material respects, the financial position of ProxyMed, Inc. and its subsidiaries (the “Company”) at December 31, 2003 and December 31, 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) on page 53 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 8 to the consolidated financial statements, pursuant to the adoption of Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets, the Company changed its method of accounting for goodwill in 2002.

/s/ PricewaterhouseCoopers LLP

Fort Lauderdale, Florida
March 25, 2004

F-2

PROXYMED, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2003 and 2002
(amounts in thousands except for share and per share data)

				2003			2002
ASSETS
Current assets:
	Cash and cash equivalents			$	5,333		$	16,378
	Accounts receivable — trade, net of allowance for doubtful accounts of $882 and $1,096 respectively				10,434			10,060
	Other receivables				187			503
	Inventory				3,347			2,774
	Other current assets				1,908			1,022
		Total current assets			21,209			30,737
Property and equipment, net					4,772			5,719
Goodwill, net					30,775			32,797
Purchased technology, capitalized software and other intangible assets, net					15,884			18,220
Restricted cash					291			825
Other assets					199			406
		Total assets		$	73,130		$	88,704
			LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Notes payable and current portion of long-term debt			$	1,712		$	—
	Accounts payable and accrued expenses and other current liabilities				8,264			21,472
	Deferred revenue				721			516
		Total current liabilities			10,697			21,988
Convertible notes					13,137			13,400
Other long term debt					2,057			—
Long-term deferred revenue and other long-term liabilities					1,461			2,581
		Total liabilities			27,352			37,969
Commitments and contingencies — see Note 18
Stockholders’ equity:
	Series C 7% Convertible preferred stock — $.01 par value Authorized 300,000 shares; issued 253,265 shares; outstanding 2,000; liquidation preference $13,333
	Common stock — $.001 par value. Authorized 13,333,333 shares; issued and outstanding 6,784,118 and 6,782,938 shares, respectively				7			7
	Additional paid-in capital				146,230			146,187
	Accumulated deficit				(100,273	)		(95,273	)
	Note receivable from stockholder				(186	)		(186	)
		Total stockholders’ equity			45,778			50,735
		Total liabilities and stockholders’ equity		$	73,130		$	88,704

The accompanying notes are an integral part of the consolidated financial statements.

F-3

PROXYMED, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Years Ended December 31, 2003, 2002 and 2001
(amounts in thousands except for share and per share data)

			2003			2002		2001
Revenues:
	Transaction fees, services and license fees		$	51,813		$	28,455	$	23,366
	Communication devices, computer systems and other tangible goods			19,743			21,727		19,864
				71,556			50,182		43,230
Costs and expenses:
	Cost of transaction fees, services and license fees			15,917			8,858		6,530
	Cost of tangible goods			16,504			17,158		16,896
	Selling, general and administrative expenses			35,809			20,152		18,249
	Depreciation and amortization			6,316			2,636		8,176
	Loss on disposal of assets			111			—		—
	Write-off of impaired and obsolete assets			541			38		91
				75,198			48,842		49,942
		Operating income (loss)		(3,642	)		1,340		(6,712	)
Other income (expense), net				(496	)		265		40
Interest income (expense), net				(862	)		345		(126	)
		Net income (loss)		(5,000	)		1,950		(6,798	)
Deemed dividends and other charges				—			612		12,262
		Net income (loss) applicable to common shareholders	$	(5,000	)	$	1,338	$	(19,060	)
Basic weighted average shares outstanding				6,783,742			6,322,086		2,162,352
Basic earnings per share			$	(0.74	)	$	0.21	$	(8.81	)
Diluted weighted average shares outstanding				6,783,742			6,396,893		2,162,352
Diluted earnings per share			$	(0.74	)	$	0.21	$	(8.81	)

The accompanying notes are an integral part of the consolidated financial statements.

F-4

PROXYMED, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2003, 2002 and 2001
(amounts in thousands except for share and per share data)

		Series B					Series C
		Preferred Stock					Preferred stock					Common stock										Note
																Additional						receivable
		Number			Par		Number			Par		Number		Par		paid-in			Accumulated			from
		of shares			value		of shares			value		of shares		value		capital			deficit			stockholder			Total
Balances, January 1, 2001			110		$	—		253,265		$	2		1,372,898	$	1	$	113,235		$	(90,425	)	$	(436	)	$	22,377
Sales of common stock, net of expenses of $729,000			—			—		—			—		483,414		1		7,247			—			—			7,248
Conversion of Series B preferred stock			(110	)		—		—			—		8,766		—		—			—			—			—
Conversions of Series C preferred stock			—			—		(49,466	)		—		329,773		1		—			—			—			1
Conversions of Series C preferred stock pursuant to Conversion Offer			—			—		(169,149	)		(2)		1,296,126		1		(32	)		—			—			(33	)
Exchange of Series B warrants into common stock			—			—		—			—		218,828		—		(73	)		—			—			(73	)
Exchange of Series C warrants into common stock			—			—		—			—		1,050,691		1		(54	)		—			—			(53	)
Dividends on preferred stock			—			—		—			—		133,937		—		(7	)		—			—			(7	)
Repayment of note from stockholder			—			—		—			—		—		—		—			—			250			250
Other, net			—			—		—			—		—		—		(39	)		—			—			(39	)
Net loss			—			—		—			—		—		—		—			(6,798	)		—			(6,798	)
	Balances, December 31, 2001		—			—		34,650			—		4,894,433		5		120,277			(97,223	)		(186	)		22,873
Sales of common stock, net of expenses of $139,000			—			—		—			—		1,569,366		2		24,884			—			—			24,886
Common stock issued for acquired business			—			—		—			—		30,034		—		600			—			—			600
Conversions of Series C preferred stock pursuant to Conversion Offer			—			—		(31,650	)		—		242,508		—		—			—			—			—
Conversions of Series C preferred stock			—			—		(1,000	)		—		6,666		—		—			—			—			—
Exchange of Series B warrants into common stock			—			—		—			—		34,500		—		450			—			—			450
Exchange of Series C warrants into common stock			—			—		—			—		1,190		—		—			—			—			—
Dividends on preferred stock			—			—		—			—		4,241		—		—			—			—			—
Other, net			—			—		—			—		—		—		(24	)		—			—			(24	)
Net income			—			—		—			—		—		—		—			1,950			—			1,950
	Balances, December 31, 2002		—			—		2,000			—		6,782,938		7		146,187			(95,273	)		(186	)		50,735
Exercise of stock options			—			—		—			—		555		—		7			—			—			7
Other, net			—			—		—			—		625		—		36			—			—			36
Net income			—			—		—			—		—		—		—			(5,000	)		—			(5,000	)
	Balances, December 31, 2003		—		$	—		2,000		$	—		6,784,118	$	7	$	146,230		$	(100,273	)	$	(186	)	$	45,778

The accompanying notes are an integral part of the consolidated financial statements.

F-5

PROXYMED, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended December 31, 2003, 2002 and 2001
(amounts in thousands except for share and per share data)

					2003			2002			2001
Cash flows from operating activities:
	Net income (loss)				$	(5,000	)	$	1,950		$	(6,798	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
			Depreciation and amortization			6,316			2,636			8,176
			Provision for doubtful accounts			152			38			70
			Provision for obsolete inventory			28			—			(50	)
			Non-cash interest expense			54			—			—
			Write-off of obsolete and impaired assets			541			38			91
			Compensatory stock options and warrants and stock compensation awards issued			—			—			433
			Write-off of investment			496			—			—
			Loss on disposal of fixed assets			111			—			—
			Changes in assets and liabilities, net of effect of acquisitions and dispositions:
				Accounts and other receivables		(498	)		(1,445	)		(614	)
				Inventory		(601	)		747			(612	)
				Other current assets		430			(30	)		20
				Accounts payable and accrued expenses		(1,173	)		(1,150	)		576
				Deferred revenue		222			76			(264	)
				Other, net		440			(12	)		(9	)
		Net cash provided by operating activities				1,518			2,848			1,019
Cash flows from investing activities:
	Acquisition of businesses, net of cash acquired					—			(14,453	)		(3,000	)
	Acquisition of assets					—			(700	)		—
	Short term investments					—			(15,000	)		—
	Redemption of short term investments					—			15,000			—
	Capital expenditures					(2,601	)		(1,561	)		(1,325	)
	Capitalized software					(1,426	)		(445	)		(120	)
	Collection of notes receivable					120			65			298
	Proceeds from sale of fixed assets					395			—			—
	Decrease in restricted cash					534			—			—
	Payments for acquisition-related costs					(6,623	)		(96	)		(42	)
		Net cash used in investing activities				(9,601	)		(17,190	)		(4,189	)
Cash flows from financing activities:
	Net proceeds from sale of common stock					—			24,886			7,248
	Preferred stock conversion offer and warrant exchange costs					—			—			(158	)
	Dividends on preferred stock					—			—			(7	)
	Proceeds from exercise of stock options and warrants					7			450			—
	Payment of note payable related to acquisition of business					—			(7,000	)		—
	Payment of notes payable, long-term debt and capital leases					(2,969	)		(217	)		(153	)
		Net cash provided by (used in) financing activities				(2,962	)		18,119			6,930
Net increase (decrease) in cash and cash equivalents						(11,045	)		3,777			3,760
Cash and cash equivalents at beginning of year						16,378			12,601			8,841
Cash and cash equivalents at end of year					$	5,333		$	16,378		$	12,601

The accompanying notes are an integral part of the consolidated financial statements.

F-6

PROXYMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Business and Summary of Significant Accounting Policies

(a) Business of ProxyMed — ProxyMed, Inc. (“ProxyMed” or “the Company”) is an electronic healthcare transaction processing services company providing connectivity services and related value-added products to physician offices, payers, medical laboratories, pharmacies and other healthcare providers. With its acquisition of PlanVista Corporation (PlanVista”) on March 2, 2004 (see Note 20), the Company now offers claims repricing and cost containment services to its existing and prospective payer customers. ProxyMed’s corporate headquarters are located in Norcross, Georgia and its products and services are provided from various operational facilities located throughout the United States. The Company also operates its clinical computer network and portions of its financial and real-time production computer networks from a secure, third-party co-location site in Atlanta, Georgia.

In May 2002, the Company acquired all of the capital stock of KenCom Communications & Services, Inc., a privately-owned provider of laboratory communication solutions, for $3.2 million in cash and 30,034 shares of unregistered ProxyMed common stock (valued at $0.6 million (see Note 2(b)).

In August 2002, the Company acquired substantially all of the assets of MDIP, Inc., a privately owned company providing institutional claims processing services for $2.4 million in cash (see Note 2(c)).

On December 31, 2002, the Company acquired all of the capital stock of MedUnite, Inc., a privately-held company providing healthcare claims processing services founded by seven of the nation’s largest health insurers, for $10.0 million in cash and $13.4 million in 4% convertible debt. The operations of MedUnite are reflected with those of the Company during 2003 (see Note 2(a)).

(b) Principles of Consolidation — The consolidated financial statements include the accounts of ProxyMed and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

(c) Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-7

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(d) Revenue Recognition –Transaction fee revenue is recorded in the period the service is rendered. Certain transaction fee revenue is subject to revenue sharing pursuant to agreements with resellers, vendors or gateway partners and are recorded as gross revenues. Revenue from sales of inventory and manufactured goods is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectibility is probable. Revenue from certain up-front fees is amortized ratably over the expected life of the customer. Revenue from hardware leases and maintenance fees is recognized ratably over the applicable period.

(e) Fair Value of Financial Instruments – Cash and cash equivalents, notes and other accounts receivable, and restricted cash are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and liabilities, notes payable, and short-term and long-term debt are financial liabilities with carrying values that approximate fair value.

(f) Cash and Cash Equivalents – The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash balances in excess of immediate needs are invested in bank certificates of deposit, money market accounts and commercial paper with high-quality credit institutions. At times, such amounts may be in excess of FDIC insurance limits. The Company has not experienced any loss to date on these investments. Cash and cash equivalents used to support collateral instruments, such as letters of credit, are reclassified as either current or long-term assets depending upon the maturity date of the obligation they collateralize.

(g) Inventory — Inventory, consisting of component parts, materials, supplies and finished goods (including direct labor and overhead) used to manufacture laboratory communication devices, is stated at the lower of cost (first-in, first-out method) or market. Reserves for obsolete, damaged and slow-moving inventory are maintained and are periodically reviewed by management.

(h) Property and Equipment — Property and equipment is stated at cost and includes revenue earning equipment. Depreciation of property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets.

Upon sale or retirement of property and equipment, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gains or losses are reflected in other income for the period; upon sale or retirement of revenue earning equipment, the gross proceeds are included in net revenues and the undepreciated cost of the equipment sold is included in cost of sales. Maintenance and repair of property and equipment are charged to expense as incurred. Renewals and betterments are capitalized and depreciated. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for Impairment or Disposition of Long-lived Assets,” management periodically examines the Company’s fixed assets for obsolescence, damage and impairment.

F-8

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(i) Intangible Assets

Goodwill — Goodwill representing the excess of cost over the estimated fair value of net assets acquired was amortized on the straight-line basis over 3 to 15 years until December 31, 2001, at which time the Company adopted SFAS No. 142 (see Note 8(a) below).

Other Intangibles — Other acquired intangible assets, consisting of customer relationships, are being amortized on a straight-line basis over their estimated useful lives of 4.6 to 10 years.

The Company regularly reviews the recoverability of goodwill, other intangible assets and other long-lived assets for indications that the carrying value may be impaired or that the useful lives assigned may be excessive. In performing such review, goodwill associated with acquisition of the intangible assets is included in the analysis of the impairment of such intangible assets. When indications exist that impairment may have occurred, the carrying values are assessed based upon an analysis of estimated future cash flows on an undiscounted basis and before interest charges, or useful lives are changed prospectively.

Purchased Technology and Capitalized Software – The Company has recorded amounts related to various software and technology that it has purchased or capitalized for its own internal systems use.

Internal and external costs incurred to develop internal-use computer software during the application development stage are capitalized. Application development stage costs generally include software configuration, coding, installation to hardware and testing. Costs of upgrades and major enhancements that result in additional functionality are also capitalized. Costs incurred for maintenance and minor upgrades are expensed as incurred. All other costs are expensed as incurred as research and development expenses (which are included in selling, general and administrative expenses). Capitalized internal-use software development costs are periodically evaluated by ProxyMed for indications that the carrying value may be impaired or that the useful lives assigned may be excessive.

Purchased technology and capitalized software are being amortized on a straight-line basis over their estimated useful lives of 1 to 12 years. Purchased technology and capitalized software and related accumulated amortization are removed from the accounts when fully amortized.

Research and Development — Software development costs incurred prior to the application development stage are charged to research and development expense when incurred. Research and development expense of approximately $4.4 million in 2003, $3.2 million in 2002 and $2.0 million in 2001 was recorded in selling, general and administrative expenses.

F-9

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(j) Income Taxes — Deferred income taxes are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are also established for the future tax benefits of loss and credit carryovers. Valuation allowances are established for deferred tax assets when, based on the weight of available evidence, it is deemed more likely than not that such amounts will not be realized.

(k) Net Income (Loss) Per Share — Basic net income (loss) per share is computed by dividing net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share reflects the potential dilution from the exercise or conversion of securities into common stock; however, 2,887,664 stock options and warrants as well as 13,333 shares issuable upon conversion of Series C preferred stock for the year ended December 31, 2003 were excluded from the calculation of diluted net loss per share because their effect was antidilutive. Stock options and warrants totaling 1,130,596 shares for the year ended December 31, 2002 were excluded from the calculation of diluted per share results because the exercise price of these options and warrants was greater than the average market price of the Company’s common stock during the period. Additionally, stock options and warrants totaling 1,018,713 shares as well as 231,000 shares issuable on conversion of Series C preferred stock for the year ended December 31, 2001 were excluded from the calculation of diluted per share results because their effect was antidilutive.

The following schedule sets forth the computation of basic and diluted net income (loss) per share for the years ending December 31, 2003, 2002 and 2001:

In thousands except for share and per share data			2003			2002		2001
Net income (loss) applicable to common shareholders			$	(5,000	)	$	1,338	$	(19,060	)
Common shares outstanding:
	Weighted average common shares used in computing basic net income (loss) per share			6,783,742			6,322,086		2,162,352
	Plus incremental shares from assumed conversions:
		Convertible preferred stock		—			13,833		—
		Stock options		—			11,464		—
		Warrants		—			49,510		—
				—			74,807		—
	Weighted average common shares used in computing diluted net income (loss) per share			6,783,742			6,396,893		2,162,352
	Net income (loss) per common share:
		Basic	$	(0.74	)	$	0.21	$	(8.81	)
		Diluted	$	(0.74	)	$	0.21	$	(8.81	)

F-10

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(l) Stock-based Compensation — ProxyMed applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), and related interpretations in accounting for its stock-based compensation plans. The Company measures compensation expense related to the grant of stock options and stock-based awards to employees (including independent directors) in accordance with the provisions of APB No. 25. In accordance with APB No. 25, compensation expense, if any, is generally based on the difference between the exercise price of an option, or the amount paid for an award, and the market price or fair value of the underlying common stock at the date of the award or at the measurement date for variable awards. Stock-based compensation arrangements involving non-employees are accounted for under SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS No. 123”) as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS No. 148”), under which such arrangements are accounted for based on the fair value of the option or award.

Under SFAS No. 123, as amended by SFAS No. 148, compensation cost for the Company’s stock-based compensation plans would be determined based on the fair value at the grant dates for awards under those plans. The assumptions underlying the fair value calculations of the stock option grants are presented in Note 14. Had the Company adopted SFAS No. 123 in accounting for its stock option plans, the Company’s consolidated net income (loss) and net income (loss) per share for the years ended December 31, 2003, 2002 and 2001 would have been adjusted to the pro forma amounts indicated as follows:

In thousands except for per share data	2003			2002			2001
Net income (loss) applicable to common shareholders, as reported	$	(5,000	)	$	1,338		$	(19,060	)
Total stock-based employee pro forma compensation expense determined under fair value based method for all awards, net of related tax benefits		(4,378	)		(6,814	)		(5,881	)
Pro forma net loss applicable to common shareholders	$	(9,378	)	$	(5,476	)	$	(24,941	)
Basic net income (loss) per common share:
As reported	$	(0.74	)	$	0.21		$	(8.81	)
Pro forma	$	(1.38	)	$	(0.87	)	$	(11.54	)
Diluted net income (loss) per common share:
As reported	$	(0.74	)	$	0.21		$	(8.81	)
Pro forma	$	(1.38	)	$	(0.87	)	$	(11.54	)

F-11

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(m) New Accounting Pronouncements — In January 2003, the FASB issued Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest Entities”. FIN No. 46 expands upon and strengthens existing accounting guidance that addresses when a company should include in its financial statements the assets, liabilities and activities of another entity. A variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights; or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN No. 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Disclosure requirements apply to any financial statements issued after January 31, 2003. Since currently the Company does not have variable interest entities, the Company does not believe that the implementation of FIN No. 46 will have a material effect on the Company’s consolidated financial statements and related disclosures.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, except for certain provisions that relate to SFAS No. 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003 and for hedging relationships designated after June 30, 2003. The Company does not believe that implementation of SFAS N0. 149 will have a material effect on the Company’s consolidated financial statements and related disclosures.

F-12

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”. SFAS No. 150 specifies that instruments within its scope embody obligations of the issuer and that, therefore, the issuer must classify them as liabilities. SFAS No. 150 requires issuers to classify as liabilities the following three types of freestanding financial instruments: (1) mandatory redeemable financial instruments; (2) obligations to repurchase the issuer’s equity shares by transferring assets; and (3) certain obligations to issue a variable number of shares. SFAS No. 150 defines a freestanding financial instrument as a financial instrument that (1) is entered into separately and apart from any of the entity’s other financial instruments or equity transactions; or (2) is entered into in conjunction with some other transaction and can be legally detached and exercised on a separate basis. For all financial instruments entered into or modified after May 31, 2003, SFAS No. 150 is effective immediately. For all other instruments of public companies, SFAS No. 150 goes into effect at the beginning of the first interim period beginning after June 15, 2003. For contracts that were created or modified before May 31, 2003 and still exist at the beginning of the first interim period beginning after June 15, 2003, entities should record the transition to SFAS No. 150 by reporting the cumulative effect of a change in an accounting principle. SFAS No. 150 prohibits entities from restating financial statements for earlier years presented. The Company does not expect the adoption of SFAS No. 150 to have a material impact on its financial statements.

(n) Reclassifications — Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications include the movement of direct labor and manufacturing overhead from selling, general and administrative expenses to cost of tangible products sold in the Laboratory Communications Solutions segment to better reflect the production of tangible products in this segment.

F-13

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(2) Acquisitions of Businesses

(a) MedUnite – On December 31, 2002, the Company acquired all of the capital stock of MedUnite, Inc., a privately-held company founded by seven of the nation’s largest health insurers to provide healthcare claims processing services, for $10.0 million in cash, $13.4 million in 4% convertible promissory notes, and acquisition-related and exit costs of $6.7 million (originally estimated at $8.3 million at December 31, 2002). The purchase price was allocated as follows:

				As
In thousands				Originally			As
				Reported			Adjusted
Cash paid				$	10,000		$	10,000
Convertible debt issued					13,400			13,137
Acquisition-related and exit costs					8,321			6,700
		Total purchase price			31,721			29,837
Allocation of purchase price:
	Cash				(879	)		(879	)
	Other current assets				(3,805	)		(3,770	)
	Property and equipment				(1,793	)		(1,913	)
	Customer relationships				(6,600	)		(6,600	)
	Purchased technology				(6,000	)		(6,000	)
	Other long-term assets, including restricted cash				(1,033	)		(1,033	)
	Current liabilities				9,515			9,638
	Other long-term liabilities				1,233			1,057
			Goodwill	$	22,359		$	20,337

The excess of the consideration paid over the estimated fair value of net assets acquired in the amount of $20.3 million was recorded as goodwill (originally recorded at $22.4 million at December 31, 2002), none of which is deductible for income tax purposes (see Note 8). The weighted average useful life of the customer relationships is approximately 10 years and the weighted average useful life of the purchased technology is 4.2 years. The valuation of MedUnite’s real-time processing platform was based on an independent third-party appraisal of the assets utilizing a replacement cost methodology while the value of the customer relationships was calculated on a discounted cash flow model. The results of MedUnite’s operations have been included in the Company’s consolidated financial statements since January 1, 2003 in its Transaction Services segment.

F-14

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The 4% convertible promissory notes are uncollateralized and mature on December 31, 2008. Interest is payable quarterly in cash in arrears. The notes were convertible into an aggregate of 731,322 shares of the Company’s common stock (based on a conversion price of $18.323 per share which was above the traded fair market value of the Company’s common stock at December 31, 2002) if the former shareholders of MedUnite achieve certain aggregate incremental revenue based targets over a baseline revenue of $16.1 million with the Company over the next three and one-half year period as follows: (i) one-third of the principal if incremental revenues during the measurement period from January 1, 2003 through June 30, 2004 are in excess of $5.0 million; (ii) one-third of the principal if incremental revenues during the measurement period from July 1, 2004 through June 30, 2005 are in excess of $12.5 million; and (iii) one-third of the principal if incremental revenues during the measurement period from July 1, 2005 through June 30, 2006 are in excess of $21.0 million. Amounts in excess of any measurement period will be credited towards the next measurement period; however, if the revenue trigger is not met for any period, the ability to convert that portion of the principal is lost. In the fourth quarter of 2003, the first revenue target was met.

Of the original $13.4 million in principal amount, $4.0 million was held in escrow until December 31, 2003 as a source for limited indemnification conditions of the acquisition. In the fourth quarter of 2003, the escrow agent accepted a claim of $0.4 million from ProxyMed. This claim was settled with the Company via a cash payment of $0.1 million (paid out of undistributed interest received) and an offset against the escrow of $0.3 million. As such, the Company recorded an adjustment to goodwill. The escrow was released on December 31, 2003 and convertible notes totaling $3.7 million were distributed to the former shareholders of MedUnite. The total amount of convertible notes as of December 31, 2003 is $13.1 million. Additionally, as a result of the reduction in principal, the notes are now convertible into 716,968 shares of the Company’s common stock subject to achieving the revenue triggers.

MedUnite had incurred significant losses since its inception and was utilizing cash significantly in excess of amounts it was generating. As a result, at the time it was acquired by ProxyMed, there were substantial liabilities and obligations (both known and unknown at December 31, 2002) associated with the business. Subsequent to the acquisition by ProxyMed, MedUnite’s senior management team was terminated along with approximately 20% of the general workforce in an effort to eliminate duplicative positions and control these costs.

As a result of the acquisition, all notes payable, convertible notes and related accrued interest to MedUnite’s shareholders with a carrying value of $23.4 million (except for a $2.3 million note payable issued to NDCHealth Corporation (“NDCHealth”) in August 2001, plus $0.2 million of accrued interest on this note, and a $2.6 million note payable issued to NDC on December 31, 2002, together know as the “NDCHealth Debt”) were cancelled. Additionally, as part of the acquisition, NDCHealth released MedUnite from $4.0 million of the NDCHealth Debt and agreed to amend certain existing MedUnite agreements in favor of future relationships with ProxyMed to be entered into in good faith. The remaining $1.1 million was included in accrued expenses at December 31, 2002 and ultimately refinanced under the note payable described below in April 2003.

F-15

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

Additionally, during 2003, the Company was successful entering into financing agreements with certain major vendors of MedUnite as a means to settle $5.4 million in liabilities that existed at December 31, 2002. In March 2003, the Company restructured $3.4 million in accounts payable and accrued expenses acquired from MedUnite and outstanding at December 31, 2002 to one vendor by paying $0.8 million in cash and financing the balance of $2.6 million with an unsecured note payable over 36 months at 8% commencing March 2003. Additionally, in April 2003, the Company financed a net total of $2.0 million ($2.8 million in accounts payable and accrued expenses offset by $0.8 million in accounts receivable) existing at December 31, 2002 from MedUnite to NDCHealth by issuing an unsecured note payable over 24 months at 6%.

In June 2003, the Company paid $0.8 million to the leasing company as a result of terminating MedUnite’s facility lease in San Diego, California effective June 30, 2003. As part of the consideration, the landlord was given the furniture at the facility with a value of approximately $0.2 million. The Company incurred other costs in connection with the termination of the lease. As a replacement for this facility, the Company subleased office space in the same geographic area at a significantly lower monthly rent per month through September 2004.

Prior to its acquisition by ProxyMed, in April 2002, MedUnite had entered into a three-year information technology services agreement to outsource certain hosting, system maintenance and operation services. Actual service fees are based on the number of transactions processed by the software being supported; however, MedUnite was committed to pay a minimum annual service fee of $1.2 million. At December 31, 2002, $0.8 million was accrued towards this minimum annual amount and was included in accrued expenses. The Company cancelled this agreement in May 2003 and paid a total of $1.1 million in July 2003.

At the time MedUnite was acquired by ProxyMed, the Company decided to migrate off of a software license used to operate MedUnite’s web portal. At that time, the Company was liable to purchase software maintenance services from the supplier of that license in the total amount of $1.8 million through mid-2005. Such amount was included in the acquisition-related accrual for the MedUnite acquisition at December 31, 2002. However, the Company reached agreement with the software vendor and settled this obligation for $0.9 million. Payments of $0.7 million were made in 2003 and the balance of $0.2 million was paid in January 2004.

F-16

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(b) KenCom Communications & Services — In May 2002, the Company acquired all of the capital stock of KenCom Communications & Services, Inc. (“KenCom”), a privately-owned provider of laboratory communication solutions, for $3.2 million in cash ($3.275 million original cash portion of the purchase price less purchase price adjustments of $38,000 upon settlement of cash holdback), 30,034 shares of unregistered ProxyMed common stock (valued at $0.6 million), and acquisition related costs of $52,000. The number of shares of common stock issued was based on the average of the closing prices of the Company’s common stock for the five days immediately preceding the closing.

The purchase price was allocated as follows:

In thousands
Common stock issued				$	600
Cash paid, net of settlement of cash holdback					3,237
Acquisition-related costs					52
		Total purchase price			3,889
Allocation of purchase price:
	Cash				(305	)
	Other current assets				(694	)
	Property and equipment				(338	)
	Customer relationships				(1,690	)
	Purchased technology				(95	)
	Other long-term assets				(14	)
	Current liabilities				797
	Other long-term liabilities				22
			Goodwill	$	1,572

The excess of the consideration paid over the estimated fair value of net assets acquired in the amount of $1.6 million was recorded as goodwill, none of which is deductible for income tax purposes. The weighted average useful life of the customer relationships is approximately 9.5 years and the weighted average useful life of the purchased technology is 3 years. Additionally, the Company entered into 20-month employment agreements with the former owners of KenCom and one technical employee. In October 2002, one former owner separated from the Company and in January 2003 the other former owner terminated her employment agreement and was retained as a consultant through December 2003. The results of KenCom’s operations have been included in the Company’s consolidated financial statements since May 1, 2002 in its Laboratory Communications Solutions segment.

(c) MDIP — In August 2002, the Company acquired substantially all of the assets of MDIP, Inc. (“MDIP” and d/b/a Medical Data Insurance Processing), a privately-owned company providing institutional claims processing services for $2.4 million in cash and acquisition related costs of $9,000.

F-17

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The purchase price was allocated as follows:

In thousands
Cash paid				$	2,400
Acquisition-related costs					9
		Total purchase price			2,409
Allocation of purchase price:
	Other current assets				(20	)
	Property and equipment				(34	)
	Customer relationships				(1,150	)
	Purchased technology				(300	)
			Goodwill	$	905

The excess of the consideration paid over the estimated fair value of net assets acquired in the amount of $0.9 million was recorded as goodwill, all of which is deductible for income tax purposes. The weighted average useful life of the customer relationships is 7 years and the weighted average useful life of the purchased technology is 3 years. Additionally, the Company entered into 17-month employment agreements with the former owners of MDIP and one technical employee. At the end of December 2003, one former owner declined to renew her employment agreement; the other former owner is still employed by the Company. The results of MDIP have been included in the Company’s consolidated financial statements since August 1, 2002 in its Transaction Services segment.

(3) Equity Transactions

(a) Sales of Common Stock – On December 21, 2001, 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 of $7.2 million after total costs of $0.7 million (including a 7% cash fee and reimbursement of out-of-pocket expenses totaling $0.6 million to Commonwealth Associates, L.P. (“Commonwealth”) who acted as placement agent in the transaction). Certain executive officers, directors and controlling persons of the Company had 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 was declared effective. On February 14, 2002, a registration statement filed by the Company under Form S-3 covering the above shares was declared effective.

F-18

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

On April 5, 2002, the Company sold 1,569,366 shares of unregistered common stock at $15.93 per share (the “Primary Shares”) in a private placement to General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., Gapstar, LLC, GAPCO GmbH & Co. KG. (the “General Atlantic Purchasers”), four companies affiliated with General Atlantic Partners, LLC (“GAP”), a private equity investment fund and received net proceeds of $24.9 million. In addition, the Company also issued two-year warrants for the purchase of 549,279 shares of common stock exercisable at $15.93 per share (the “GAP Warrants”). No placement agent was used in this transaction. The Company granted the General Atlantic Purchasers and certain of their transferees and affiliates certain demand and “piggy back” registration rights starting one year from closing. Additionally, in connection with the transaction, a managing member of GAP was appointed as a director to fill a vacancy on the Company’s Board of Directors.

As a result of the purchase of the Primary Shares, the General Atlantic Purchasers owned approximately 23.4% of the then outstanding shares of the Company’s common stock. At the Company’s Annual Meeting of Shareholders held on May 22, 2002, the shareholders of the Company approved that the GAP Warrants may be exercised at any time after April 5, 2003, and prior to April 5, 2004, pursuant to the original terms of the warrant. On March 25, 2004, GAP exercised these warrants for $8.75 million in cash.

(b) Series B Preferred Stock – In October 2001, the last 110 shares of 6% Series B non-voting, non-redeemable convertible preferred stock (the “Series B Preferred”) originally issued in December 1999 were converted into 8,766 shares of common stock. Additionally, during 2001, cash dividends of $5,000 were paid on the Series B Preferred.

(c) Series B Warrants — As a result of certain anti-dilution provisions triggered in June 2000, 7,111 warrants issued in conjunction with the original Series B Preferred at an exercise price of $180.75 were converted into 85,689 warrants with an exercise price of $15.00 per share. In December 2001, these warrants were reset into 98,493 warrants at an exercise price of $13.05 per share as a result of a conversion offer to convert the Company’s Series C 7% Convertible Preferred Stock (see Note 3(g) below). In December 2002, 34,500 of these warrants were converted into an equivalent number of common shares for $0.5 million in cash. The balance of 63,993 warrants subsequently expired without conversion.

(d) Series B Warrant Exchange – In April 2001, the Company entered into an exchange agreement (the “Series B Exchange Agreements”) with the holders of 13,000 shares of Series B Preferred originally issued in December 1999. Under the Series B Exchange Agreements, the Company canceled and exchanged all outstanding warrants (46,222 warrants at an exercise price of $180.75 and previously referred to as “Exchanged Warrants” and 43,333 warrants at an exercise price of $22.50 and previously referred to as “New Warrants”) for an aggregate of 218,828 shares of common stock. In accordance with the terms of the Series B Exchange Agreements, the Company registered these shares under Form S-3 effective on June 25, 2001. For this transaction, the Company recorded a deemed dividend charge of $1.9 million in the quarter ended June 30, 2001. In connection with the cancellation and exchange of these warrants, the holders of the Series B Preferred and the holders of Series C 7% Convertible Preferred Stock agreed to waive certain anti-dilution rights afforded by certain outstanding warrants, the Series B Preferred and the Series C 7% Convertible Preferred Stock.

F-19

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(e) Series C Preferred Stock — Through December 12, 2001, 49,466 shares of Series C 7% Convertible Preferred Stock (the “Series C Preferred”) originally issued in June and August 2000 had been converted into 329,773 shares of common stock under terms in the Series C Preferred. On December 13, 2001, the Company offered to convert any of the 203,799 outstanding shares of Series C Preferred at a reduced conversion rate (see Note 3(g) below).

Dividends on the Series C Preferred for 2001 valued at $1.7 million were paid with 108,434 shares of common stock (of which 104,254 shares were distributed by December 31, 2001), plus cash for fractional shares of $2,000. Dividends were paid through the date of conversion for all conversions of Series C Preferred.

(f) Series C Warrant Exchange — In June 2001, the Company offered to exchange into shares of common stock (the “Series C Exchange Offer”) (i) 843,667 warrants (the “Investor Warrants”) that were issued to holders of the Series C Preferred; (ii) 552,867 warrants (the “Agent’s Warrants”) that were issued to Commonwealth in connection with the private placement of the Series C Preferred; and (iii) 66,667 warrants (the “Advisory Warrants”) that were issued to Commonwealth for certain advisory services that Commonwealth provided to the Company. Under the terms of the Series C Exchange Offer, the Company would issue 0.75 shares of its common stock for each Investor Warrant, 0.75 shares of its common stock for each Agent’s Warrant, and 0.625 shares of its common stock for each Advisory Warrant. The Investor Warrants, the Agent’s Warrants and the Advisory Warrants are collectively known as the “Series C Warrants”.

On August 15, 2001, the Company canceled and exchanged 1,412,033, or 96.5%, of the 1,463,201 Series C Warrants for 1,050,691 shares of common stock. As required in accordance with terms of the original Subscription Agreement dated June 15, 2000, these shares were registered under a Form S-3 on February 14, 2002. In connection with the cancellation and exchange of the Series C Warrants, the exchanged shares were subject to an additional lock-up period through February 15, 2002. Additionally, for this transaction, the Company recorded a deemed dividend charge of $3.2 million in 2001. In 2002, 8,333 Series C Warrants were converted into 1,190 shares of common stock. As of both December 31, 2003 and 2002, 42,833 of the Series C Warrants remain outstanding.

F-20

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(g) Series C Preferred Conversion Offer — On December 13, 2001, the Company offered to convert its then outstanding 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 were able to convert such shares at a reduced conversion price of $13.05 per share instead of the original conversion price of $15.00. As of December 31, 2001, holders of 83.0% of the outstanding Series C Preferred had converted their shares into 1,296,126 shares of common stock and, as a result, the Company recorded a deemed dividend charge of $3.4 million included in the net loss applicable to common shareholders in the fourth quarter of 2001. At the conclusion of the Conversion Offer on February 11, 2002, holders of 98.5% of the outstanding Series C Preferred had converted their shares into a total of 1,538,636 common shares. A deemed dividend charge of $0.6 million was recorded in the first quarter of 2002 for conversions consummated after the 2001 year-end. Subsequent to February 22, 2002, 1,000 shares of Series C Preferred were converted into 6,667 shares of common stock. As of both December 31, 2003 and 2002, there were 2,000 unconverted shares of Series C Preferred, which are convertible into 13,333 shares of common stock.

In addition, holders of more than two-thirds of the outstanding Series C Preferred had voted to amend the Articles of Designation governing the Series C Preferred and the Subscription Agreement dated as of June 15, 2000. These amendments eliminated certain rights of the Series C Preferred shareholders, including anti-dilution provisions, voting rights and certain restrictive covenants agreed to by the Company, and apply to those Series C Preferred shareholders who decided not to participate in the Conversion Offer.

As noted above, a registration statement filed by the Company under Form S-3 was declared effective on February 14, 2002 covering the resale of the December 2001 private placement shares of the investors, the additional shares that would have been required to be issued to the investors under that private placement if a registration statement was not declared effective by March 20, 2002, 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.

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 to the Remaining Holder in connection with the Company’s Series B Preferred 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. As a result of this reset, the Company recorded a deemed dividend charge of approximately $0.2 million in the fourth quarter of 2001.

F-21

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(h) Warrants — In conjunction with a joint marketing agreement entered into between the Company and a subsidiary of First Data Corporation (“FDC”), an electronic commerce and payment services company, in July 2003, the Company issued to FDC a warrant agreement under which FDC may be entitled to purchase up to 600,000 of the Company’s common stock at $16.50 per share. The ability of FDC to exercise under the warrant agreement is dependent upon the Company achieving certain revenue-based thresholds under such joint marketing agreement over a three and one-half year period. Additionally, in connection with this agreement, four entities affiliated with General Atlantic Partners (“GAP”), current investors in the Company, received an aggregate of 243,882 warrants, as a result of pre-emptive rights relating to their investment in the Company in April 2002. The GAP warrant agreements are subject to the same terms and conditions as those issued to FDC and are exercisable only if FDC’s right to exercise under its warrant agreement is perfected. At the time any of the revenue thresholds is met, the Company may have to record a charge in its statement of operations for the value of the FDC warrants.

(i) Other Warrants – At December 31, 2003, there are 25,000 warrants exercisable at prices ranging from $113.40 to $181.50 at various times through June 2007 issued in connection with prior equity and other business transactions consummated by ProxyMed.

(j) Treasury shares – In October 2002, the Company’s Board of Directors voted to cancel and retire 15,061 shares held by the Company in its treasury related to the 2000 sale of its discontinued operations.

(k) Other — ProxyMed has remaining 1,555,000 authorized but unissued shares of preferred stock, par value $0.01 per share, which are entitled to rights and preferences to be determined at the discretion of the Board of Directors.

The value of any stock options and warrants issued in connection with the sales of common stock and convertible preferred stock are netted against the proceeds within stockholders’ equity, and have no impact on earnings.

F-22

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(4) Segment Information

ProxyMed operates in two reportable segments that are separately managed: Transaction Services (formerly known as Electronic healthcare transaction processing) and Laboratory Communication Solutions. Transaction Services includes transaction and value-added services principally between physicians and insurance companies (Payer Services) and physicians and pharmacies (Prescription Services); and Laboratory Communication Solutions includes the sale, lease and service of communication devices principally to laboratories and the contract manufacturing of printed circuit boards (Laboratory Services). The results for the Transaction Services and Laboratory Communication Solutions segments do not include an allocation of Corporate overhead in assessing the operating performance of the respective segments. Inter-segment sales are not material and there were no foreign sales for any periods presented.

In thousands		Year Ending December 31,
		2003			2002			2001
Net revenues:
	Transaction Services	$	46,673		$	22,439		$	16,938
	Laboratory Communication Solutions		24,883			27,743			26,292
		$	71,556		$	50,182		$	43,230
Operating income (loss):
	Transaction Services		(920	)	$	597		$	(6,859	)
	Laboratory Communication Solutions		1,119			3,535			3,686
	Corporate		(3,841	)		(2,792	)		(3,539	)
		$	(3,642	)	$	1,340		$	(6,712	)
Depreciation and amortization:
	Transaction Services		4,754		$	1,581		$	7,285
	Laboratory Communication Solutions		1,369			857			561
	Corporate		193			198			330
		$	6,316		$	2,636		$	8,176
Capital expenditures and capitalized software:
	Transaction Services	$	3,467		$	1,291		$	771
	Laboratory Communication Solutions		602			693			628
	Corporate		80			22			46
		$	4,149		$	2,006		$	1,445

		December 31,
		2003		2002
Total assets:
	Transaction Services	$	54,052	$	58,957
	Laboratory Communication Solutions		12,053		12,904
	Corporate		7,025		16,843
		$	73,130	$	88,704

F-23

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(5) Investment in Warrant

In June 2003, the Company entered into a joint marketing and distribution agreement with PlanVista to provide the Company’s electronic healthcare transaction processing services and PlanVista’s network access and repricing service product as an integrated package to existing and prospective payer customers. As part of the agreement, PlanVista granted the Company a warrant to purchase 15% of the number of outstanding shares of PlanVista common stock on a fully-diluted basis as of the time of exercise for $1.95 per share. The warrant was exercisable immediately and expired in December 2003.

The initial value of the warrant of approximately $0.5 million (calculated using a Black Scholes model) along with additional amounts of $0.4 million received by the Company under the agreement are being amortized as a reduction of cost of sales over 36 months. For the year ended December 31, 2003, such amortized amount totaled $0.2 million. Upon the consummation of its acquisition of PlanVista on March 2, 2004, the Company wrote off any remaining unamortized amounts as part of the purchase price of the acquisition. During the term the warrant was outstanding, the value of the warrant was evaluated at the end of each calendar quarter. On September 30, 2003, the value of the warrant increased to approximately $5.3 million primarily as a result of an increase in the market value of PlanVista stock and this increase was reflected as other income in the statement of operations during the third quarter of 2003. Upon expiration of the warrant in December 2003, the Company recorded an impairment loss in the amount of $5.3 million. For the year ended December 31, 2003, the Company recorded a net impairment loss in the amount of $0.5 million (representing the original value of the warrant) which is reflected in other expense in the Company’s consolidated statement of operations.

(6) Inventory

Inventory consists of the following at December 31, 2003 and 2002:

In thousands	2003		2002
Materials, supplies and component parts	$	2,013	$	2,015
Work in process		590		261
Finished goods		744		498
	$	3,347	$	2,774

F-24

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(7) Property and Equipment

						Estimated
In thousands		2003		2002		Useful Lives
Furniture, fixtures and equipment		$	2,394	$	2,553	4 to 7 years
Computer hardware and software			6,022		5,109	2 to 5 years
Service vehicles			211		230	5 years
Leasehold improvements			986		887	Life of lease
Revenue earning equipment			1,243		1,357	3 to 5 years
			10,856		10,136
Less accumulated depreciation			6,084		4,417
	Property and equipment, net	$	4,772	$	5,719

     Property and equipment consists of the following at December 31, 2003 and 2002:

     Depreciation expense was $3.1 million in 2003, $1.8 million in 2002 and $1.5 million in 2001. Accumulated depreciation for revenue earning equipment at December 31, 2003 and 2002 was $0.6 million and $0.6 million, respectively. As a result of management’s periodic review for impairment, the Company wrote off $0.1 million of remaining book value in 2001 related to damaged and obsolete computer hardware and software.

(8) Goodwill and Other Intangible Assets

(a) Goodwill – The Company adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002. Under SFAS No. 142, goodwill is reviewed at least annually for impairment. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level at adoption and at least annually thereafter, utilizing a “fair value” methodology versus an undiscounted cash flow method required under previous accounting rules. In accordance with the adoption of SFAS No. 142, the Company completed its annual tests at December 31, 2003 and 2002 utilizing various valuation techniques including a market value analysis. No impairment charges were recorded as a result of these tests.

F-25

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The changes in the carrying amounts of goodwill, net, for 2003 by operating segment are as follows:

					Laboratory
		Transaction			Communication
In thousands		Services			Solutions		Total
Balance as of December 31, 2002		$	30,695		$	2,102	$	32,797
Post-acquisition adjustments			(2,022	)		—		(2,022	)
	Balance as of December 31, 2003	$	28,673		$	2,102	$	30,775

In accordance with SFAS No. 142, a reconciliation of the previously reported net income (loss) applicable to common shareholders and net income (loss) per share to the amounts adjusted for the exclusion of goodwill amortization, net of any related income tax effect, is as follows:

			2001
Reported net loss applicable to common shareholders		$	(19,060	)
Goodwill amortization			4,637
	Adjusted net loss applicable to common shareholders	$	(14,423	)
Basic weighted average common shares outstanding			2,162,352
Basic net loss per share of common stock:
Reported net loss applicable to common shareholders		$	(8.81	)
Goodwill amortization			2.14
	Adjusted net loss applicable to common shareholders	$	(6.67	)
Diluted weighted average common shares outstanding			2,162,352
Diluted net loss per share of common stock:
Reported net loss applicable to common shareholders		$	(8.81	)
Goodwill amortization			2.14
	Adjusted net loss applicable to common shareholders	$	(6.67	)

F-26

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(b) Other Intangible Assets — The carrying amounts of other intangible assets as of December 31, 2003 and 2002 by category, are as follows:

In thousands	December 31, 2003								December 31, 2002
	Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net
Capitalized software	$	1,193	$	(156	)	$	1,037	$	527	$	(58	)	$	469
Purchased technology		9,721		(3,221	)	$	6,500		9,127		(1,315	)	$	7,812
Customer relationships		9,793		(1,446	)	$	8,347		10,251		(312	)	$	9,939
	$	20,707	$	(4,823	)	$	15,884	$	19,905	$	(1,685	)	$	18,220

In mid-September 2002, the Company acquired the customer relationships and related Internet-based revenue stream from Claimsnet.com, a provider of claims processing services, for $0.7 million cash. As part of its acquisition of MedUnite (see Note 2(a)), the Company recorded $6.6 million in customer relationships, and $1.2 million and $4.8 million for the legacy and real-time technology platforms, respectively.

As a result of management’s periodic review for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company wrote off $0.5 million in customer relationships and $0.1 million in capitalized software during the year ended December 31, 2003. Additionally, for the year ended December 31, 2002, $38,000 of previously capitalized real-time software development costs were determined to be impaired as the Company acquired the same functionality through the software platform acquired from MedUnite.

Estimates of useful lives of other intangible assets are based on historical experience, the historical experience of the entity from which the intangible assets were acquired, the industry in which the Company operates, or on contractual terms. If indications arise that would materially affect these lives, an impairment charge may be required. Intangible assets are being amortized over their estimated useful lives as follows:

	Estimated
	useful lives
Capitalized software	3 years
Purchased technology	1 - 12 years
Customer relationships	4.6 - 10 years

F-27

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

Amortization expense of other intangible assets was $3.2 million, $0.8 million and $2.0 million for the years ended December 31, 2003, 2002 and 2001, respectively.

As of December 31, 2003, estimated future amortization expense of other intangible assets in each of the years 2004 through 2008 is as follows:

In thousands
2004	$	2,866
2005		2,808
2006		2,640
2007		2,327
2008		1,944
	$	12,585

(9) Restricted Cash

At December 31, 2003, restricted cash includes $0.2 million to support a letter of credit used as collateral for a financed liability insurance policy. Restricted cash of $0.8 million at December 31, 2002 includes a certificate of deposit of $0.7 million that had been pledged as security for an outstanding letter of credit but was released upon termination of MedUnite’s San Diego operating facility (see Note 2(a)). Restricted cash is included in other assets in the accompanying consolidated balance sheet.

(10) Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses consists of the following at December 31, 2003 and 2002:

In thousands		2003		2002
Accounts payable		$	2,956	$	9,949
Accrued payroll and related costs			3,058		3,091
Acquisition related costs			459		7,149
Other accrued expenses			1,791		1,283
	Total accounts payable and accrued expenses	$	8,264	$	21,472

     Other accrued expenses include the current portion of capital leases payable, customer deposits, estimated property and other taxes.

F-28

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(11) Debt Obligations

(a) Convertible notes — On December 31, 2002, the Company issued $13.4 million in uncollateralized convertible promissory notes at 4% to the former shareholders of MedUnite as part of the consideration paid in its acquisition of MedUnite. Interest is payable quarterly in cash in arrears. The convertible promissory notes are payable in full on December 31, 2008 unless converted earlier upon the meeting of certain aggregate revenue triggers by the former shareholders (see Note 2(a)). After an offsetting claim by the Company in October 2003 in the amount of $0.3 million, as of December 31, 2003, the outstanding balance of these notes is $13.1 million. Additionally, as a result of the reduction in principal, the notes are now convertible into 716,968 shares of the Company’s common stock subject to achieving the revenue triggers.

(b) Other notes payable — In February 2003, the Company financed $0.4 million for a certain liability insurance policy over 7 months at 4.76% to a third-party. This note was unsecured and was paid in full by December 31, 2003.

Also in February 2003, the Company financed $0.3 million for a certain liability insurance policy required for the MedUnite acquisition over 24 months at 5.25% to a third-party. At December 31, 2003, the note is collateralized by a letter of credit in the amount of $0.2 million (supported with restricted cash) and has an outstanding balance of $0.2 million.

In March 2003, the Company restructured $3.4 million in accounts payable and accrued expenses acquired from MedUnite and outstanding at December 31, 2002 to one vendor by paying $0.8 million in cash and financing the balance of $2.6 million with an unsecured note payable over 36 months at 8% commencing March 2003. At December 31, 2003, the balance of this note payable is $2.0 million.

In April 2003, the Company financed a net total of $2.0 million ($2.8 million in accounts payable and accrued expenses offset by $0.8 million in accounts receivable) existing at December 31, 2002 from MedUnite to NDCHealth by issuing an unsecured note payable over 24 months at 6%. At December 31, 2003, the balance of this note payable is $1.5 million.

In June 2003, the Company financed $0.1 million of liability insurance policy premium with another unsecured note, payable over 9 months at 5.4% to a third party. At December 31, 2003, the balance of this note payable is $28,000.

In January 2002, the Company paid in full its $7.0 million promissory note related to its May 2001 acquisition of MDP Corporation.

F-29

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(c) Revolving credit facility — In December 2003, the Company entered into a $12.5 million asset-based line of credit with its commercial bank maturing the earlier of (1) December 2005 or (2) six months prior to the maturity date of the senior debt assumed in the acquisition of PlanVista (which currently matures in May 2005) unless such debt can be repaid or refinanced. Borrowings under such facility are subject to eligible cash, accounts receivable, and inventory and other conditions. Borrowings will bear interest at the prime rate plus 0.5% or at LIBOR plus 2.25% (or LIBOR plus 0.75% in the case of borrowings against eligible cash only.) Interest is payable monthly. As of December 31, 2003, no amounts had been drawn against this facility. Costs related to this facility totaling $0.1 million are being amortized as interest expense over a one-year period. In March 2004, the Company drew down $4.4 million on this facility to fund its acquisition of PlanVista (see Note 20).

(12) Other Long-term Obligations

Other long-term obligations at December 31, 2003, include $0.9 million representing the present value of an obligation acquired in the MedUnite acquisition. This obligation is due in January 2006 and is being accreted to its maturity value using an imputed interest rate of 6%. For the year ended December 31, 2003, the Company recorded a non-cash interest charge of $54,000 associated with this obligation.

F-30

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(13) Income Taxes

     The company did not recognize an income tax provision or benefit for any of the years in the three year period ended December 31, 2003.

     This differed from the amount computed by applying the statutory federal income tax rate to the net loss reflected on the Consolidated Statements of Operations in the three years ended December 31, 2003 due to the following:

In thousands		2003						2002						2001
		Amount			%			Amount			%			Amount			%
Federal income tax benefit at statutory rate			(1,700	)		(34.0	)%		663			34.0	%		(2,311	)		(34.0	)%
State income tax benefit			(174	)		(3.5	)		80			4.1			(245	)		(3.6	)
Non-deductible items			205			4.1			21			1.1			238			3.5
Increase (decrease) in valuation allowance			1,669			33.4			(764	)		(39.2	)		2,318			34.1
	Total provision		—			—	%		—			—	%		—			—	%

     The significant components of the deferred tax asset account is as follows at December 31, 2003 and 2002:

In thousands		2003			2002
Net operating losses — Federal		$	35,674		$	42,456
Net operating losses — State			4,155			7,172
Depreciation and amortization			5,070			4,770
Capitalized start up costs			6,447			9,789
Acquisiton costs			—			2,716
Other — net			681			(833	)
	Total deferred tax assets		52,027			66,070
Less valuation allowance			(52,027	)		(66,070	)
	Net deferred tax assets	$	—		$	—

     Based on the weight of available evidence, a valuation allowance has been provided to offset the entire deferred tax asset amount.

     Total net operating loss carryforwards at December 31, 2003 are $104.9 million, of which $32.6 million is attributed to the acquisition of MedUnite and may only be used to reduce the future taxable income of MedUnite due to the Separate Return Limitation Year (“SRLY”) income tax regulations. These net operating losses will expire between 2008 and 2023. Due to the changes in ownership control of the Company at various dates, as defined under Internal Revenue Code Section 382, net operating losses of $93.7 million ($61.1 million for ProxyMed and $32.6 million for MedUnite) are limited in their availability to offset current and future taxable income. The combined annual limitation is $5.1 million ($3.5 million for ProxyMed and $1.6 million for MedUnite).

     As a result of the change in ownership of MedUnite, the deferred asset attributable to MedUnite’s required net operating loss carryforward was adjusted by approximately $21 million, which represents the amount of net operating loss that will expire unutilized.

F-31

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(14) Stock Options

     ProxyMed has various stock option plans for employees, directors and outside consultants, under which both incentive stock options and non-qualified options may be issued. Under such plans, options to purchase up to 1,281,017 shares of common stock may be granted. Options may be granted at prices equal to the fair market value at the date of grant, except that incentive stock options granted to persons owning more than 10% of the outstanding voting power must be granted at 110% of the fair market value at the date of grant. In addition, as of December 31, 2003, options for the purchase of 407,027 shares to newly-hired employees remained outstanding. Stock options issued by ProxyMed generally vest within three years or upon a change in control of the Company, and expire up to ten years from the date granted. Stock option activity was as follows for the three years ended December 31, 2003:

	Options						Weighted average
	available			Options			exercise price
	for grant			outstanding			of options
Balance, December 31, 2000		30,252			748,329		$	34.50
Options authorized		292,131			—			—
Options granted		(101,236	)		101,236		$	15.97
Options expired/forfeited		11,320			(19,794	)	$	74.58
Balance, December 31, 2001		232,467			829,771		$	31.22
Options authorized		608,000			—			—
Options granted		(330,847	)		330,847		$	16.89
Options expired/forfeited		65,422			(76,063	)	$	82.29
Balance, December 31, 2002		575,042			1,084,555		$	23.27
Options authorized		—			—			—
Options granted		(443,750	)		443,750		$	13.25
Options exercised		—			(556	)	$	12.00
Options expired/forfeited		90,521			(101,080	)	$	36.09
Balance, December 31, 2003		221,813			1,426,669		$	19.26

     The following table summarizes information regarding outstanding and exercisable options as of December 31, 2003:

	Options outstanding						Options exercisable
Range of exercise	Number		Weighted average remaining		Weighted average		Number		Weighted average
prices	outstanding		contractual life (years)		exercise price		exercisable		exercise price
$  7.28 - - $  15.00		271,417		8.5	$	10.92		106,010	$	12.94
$15.01 - $  18.00		534,571		9.2	$	16.09		126,423	$	16.44
$18.01 - $  23.00		594,314		6.6	$	21.78		566,759	$	21.83
$23.01 - $203.40		26,367		1.1	$	112.52		26,256	$	112.15
		1,426,669						825,448

F-32

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

     The following table summarizes information regarding options exercisable as of December 31:

	2003		2002		2001
Number exercisable		825,448		624,075		355,747
Weighted average exercise price	$	22.73	$	26.64	$	41.06

     The weighted average grant date fair value of options granted ($10.63 in 2003, $13.37 in 2002 and $12.65 in 2001) was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2003			2002			2001
Risk-free interest rate		4.08	%		4.46	%		4.75	%
Expected life	10.0 years			9.9 years			9.9 years
Expected volatility		80.8	%		81.0	%		82.8	%
Expected dividend yield		0.0	%		0.0	%		0.0	%

     In April 2001, the Company’s Board of Directors authorized the issuance of 65,000 options to purchase the Company’s common stock to ProxyMed’s executive and senior management as part of their compensation plan for the 2001 year. Of these options granted, 19,333 options were issued with an exercise price of $15.15 under available stock option plans, and the balance of 45,667 options were granted under the Company’s proposed 2001 Stock Option Plan, subject to approval by the Company’s shareholders at its annual meeting on July 25, 2001. In July 2001, the shareholders of the Company approved the 2001 Stock Option Plan pursuant to which options to purchase 333,333 shares of common stock may be issued to employees, officers and directors and, as a result, the 45,667 options were issued with an exercise price of $13.80 per share. These options are for a ten-year term and vest after five years. In addition, these options contained a clause which enabled the accelerated vesting of a portion or all of the options if specific, pre-determined individual performance goals were met during the 2001 year and, as a result of these performance goals being met, 4,978 options with an exercise price of $15.15 and 11,757 options with an exercise price of $13.80 were accelerated to vest on December 31, 2001.

     In January 2002, 40,000 vested stock options for three resigning directors were amended to allow for an extension of the exercise period through December 31, 2003. These options were never exercised and have expired as of December 31, 2003.

     Additionally, in January 2002, the Company’s Board of Directors agreed to cancel up to 37,767 stock options with exercise prices ranging from $57.45 to $202.50 issued to current officers and employees of the Company with the intent of reissuing the same number of options in the future at the then current market price. In September 2002, the Company issued 36,867 stock options, including 25,366 to the Company’s then chief financial officer and three senior executives, at an exercise price of $15.55 per share pursuant to this cancellation and reissuance program.

F-33

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

     At the Company’s Annual Meeting of Shareholders held on May 22, 2002, the shareholders approved a new 2002 Stock Option Plan pursuant to which options to purchase 600,000 shares of common stock may be issued to employees, officers and directors. Subsequent to December 31, 2003, the Company’s shareholders agreed to amend the 2002 Stock Option Plan to allow for the issuance of up to 1,350,000 shares of common stock (see Note 20).

     Additionally, in May 2002, the Company’s non-employee directors were granted a total of 55,000 options at an exercise price of $20.20 to compensate the directors upon initial appointment to the board, re-election to the board, and participation in sub-committees. Option grants for initial appointment and subsequent re-election to the board vest equally over a three-year period. Options for participation in sub-committees vest in full after three years but may be accelerated to vest after each sub-committee meeting attended. In October 2002, 15,000 and 1,875 options with an exercise price of $12.54 were granted to a newly appointed non-employee director for initial appointment and sub-committee membership, respectively. Of the total sub-committee grants, 8,125 options were accelerated to vest on December 31, 2002, 2,500 options were forfeited by a resigning director (see Note 18(d)), and the remaining 6,250 sub-committee grants vested in 2003.

     In June 2002, the Company’s Board of Directors authorized the issuance of stock options to employees and officers of the Company as part of a structured retention and reward plan. Initially in June 2002, 47,267 options were granted at an exercise price of $17.36 per share. Included in these grants were a total of 25,000 options granted to the Company’s chairman/chief executive officer and president/chief operating officer. In September 2002, an additional 38,050 options were granted to other employees and officers at an exercise price of $15.55 per share, including 14,100 stock options to the Company’s former chief financial officer and one other senior executive. These options are for a ten-year term and vest equally over a three-year period.

     Also in June 2002, the Company’s Board of Directors authorized the issuance of stock options to ProxyMed’s executive and senior management as part of their compensation plan for the 2002 year. As a result, 56,440 options were granted to the Company’s chairman/chief executive officer and president/chief operating officer at an exercise price of $17.36. In September 2002, 63,106 options were granted to the remaining executive and senior management at an exercise price of $15.55 per share. All of these options are for a ten-year term, vest in full after five years and contain a clause that enables the accelerated vesting of a portion or all of the options if specific, pre-determined individual and company goals are met during the 2002 year. Of the 119,546 total options granted under the 2002 compensation plan discussed above, 80,194 options were accelerated to vest on December 31, 2002 and the remaining 39,352 options will vest in 2007.

     In March 2003, the Company granted 36,000 stock options at exercise prices of $7.60 to $9.24 per share to certain employees of MedUnite and 10,000 stock options at an exercise price of $7.60 to an executive officer of ProxyMed.

F-34

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

     In April 2003, the six non-employee directors of ProxyMed were each granted 10,000 stock options at an exercise price of $7.28 per share. Such options were granted pursuant to the Company’s approved stock option plans and are for a ten-year term and vest equally over three years from the date of grant. Additionally, in May 2003, the Company’s non-employee directors were granted a total of 30,000 and 15,000 options at an exercise price of $10.63 to compensate the directors upon re-election to the board and participation in sub-committees, respectively, pursuant to guidelines adopted by the Company’s Board of Directors in May 2002. Option grants for the re-election to the board are for a ten-year term and vest equally over a three-year period. Options for participation in sub-committees are for a ten year term and vest in full after five years but a portion may be accelerated to vest after each sub-committee meeting attended. Of the total sub-committee grants, 11,250 options were accelerated to vest on December 31, 2003 and the remaining 3,750 sub-committee grants are expected to vest in 2004.

     In October 2003, the Compensation Committee approved grants of 125,000 and 50,000 stock options at an exercise price of $15.90 per share to the Company’s chairman/chief executive officer and president/chief operating officer, respectively. Such options are for a ten-year term and vest equally over three years from the date of grant.

     In connection with the commencement of employment of the Company’s new chief financial officer in December 2003, the Company granted this executive a total of 100,000 stock options at an exercise price of $16.01 per share. Such options are for a ten-year term and vest equally over three years from the date of grant.

(15) Supplemental Disclosure of Cash Flow Information

In thousands				Year Ending December 31,
				2003		2002			2001
Cash paid for interest				$	932	$	63		$	368
Common stock issued for payment of preferred stock dividends				$	—	$	—		$	1,658
Acquisition of businesses:
	Common stock issued for businesses acquired				—	$	600		$	—
	Debt issued for businesses acquired				—		13,400			7,000
	Other acquisition costs accrued				—		8,382			30
	Details of acquisitions:
		Working capital components, including cash acquired			—		4,609			(303	)
		Property and equipment			—		(2,165	)		(165	)
		Goodwill			—		(24,837	)		(9,558	)
		Intangible assets acquired:					—			—
			Customer Relationships		—		(9,440	)		—
			Purchased Technology				(6,395	)		—
		Other long term liabilities, net			—		209			(4	)
					—		(15,637	)		(3,000	)
	Cash acquired in acquisitions				—		1,184			—
			Net cash used in acquisitions	$	—	$	(14,453	)	$	(3,000	)

F-35

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(16) Concentration of Credit Risk

     Substantially all of ProxyMed’s accounts receivable are due from physicians and various healthcare institutional suppliers (payers, laboratories and pharmacies). Collateral is not required. For the year ended December 31, 2003, approximately 15% of consolidated revenues were from a former shareholder of MedUnite. As a group, the eight former MedUnite shareholders represented approximately 30% of 2003 consolidated revenues. Additionally, for the years ended December 31, 2003 and 2002, approximately 12% and 10%, respectively, of consolidated revenues was from a single customer for the sale, lease and service of communication devices. For the year ended December 31, 2001, approximately 10% of consolidated revenues were from another customer for the sale, lease and service of communication devices.

(17) Employee Benefit Plans

     ProxyMed has a 401(k) retirement plan for substantially all employees who meet certain minimum lengths of employment and minimum age requirements. Contributions may be by employees up to 15% of their annual compensation. Discretionary matching contributions paid to all eligible employees for 2001 were made in February 2002. Such discretionary matching contributions were based on 1% of eligible wages up to $1,000 and limited by the employee’s actual contribution into the plan. Matching contributions totaling $0.1 million for the year ended December 31, 2001, have been expensed. There were no matching contributions for 2003 and 2002. Funding of matching contributions each year may be offset by forfeitures from terminated employees.

     The 401(k) retirement plan acquired with the purchase of MedUnite, Inc. was maintained for substantially all employees who met certain minimum lengths of employment and minimum age requirements. Contributions were made by employees based on the lesser of 60% of eligible compensation or the deferral limit set by the government. Previously non-discretionary employer matching contributions were eliminated under this plan. The MedUnite 401(k) plan was combined with the ProxyMed 401(k) plan in 2003.

F-36

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

     (18) Commitments, Contingencies and Other

(a) Leases – ProxyMed leases certain computer and office equipment used in its transaction services business and also leases equipment used in its contract manufacturing business that have been classified as capital leases. The Company also leases premises, operating and office equipment under operating leases which expire on various dates through 2006. The leases for the premises contain renewal options, and require ProxyMed to pay such costs as property taxes, maintenance and insurance. At December 31, 2003, the present value of the capital leases and the future minimum lease payments under non-cancelable operating leases with initial or remaining lease terms in excess of one year (net of payments to be received under subleases) are as follows:

In Thousands		Capital		Operating
		Leases		Leases
2004		$	218	$	1,275
2005			96		451
2006			6		9
	Total minimum lease payments		320	$	1,735
Less amount representing interest			19
	Present value of minimum lease payments	$	301

The Company recognizes rent expense on a straight-line basis over the related lease term. Total rent expense for all operating leases amounted to $2.1 million in 2003, $1.5 million in 2002 and $1.4 million in 2001. The current portion of capital leases is included in accounts payable and other accrued expenses and the long-term portion of capital leases is included in other long-term liabilities in the balance sheet at December 31, 2002 and 2003.

(b) Settlement of Litigation – In September 2002, the Company favorably settled a contract dispute in the amount of $0.3 million. The settlement resulted in the issuance of a promissory note receivable to the Company, which was recorded at its present value of $0.3 million. The present value of the promissory note, less legal expenses of $34,000, was reported as other income. Under the terms of the promissory note, payments of $25,000 will be made each quarter over the next three years starting October 2002. All payments due have been received to date and as of December 31, 2003, the unpaid balance is $0.2 million.

(c) Employment Agreements – The Company entered into employment agreements with certain executives and other members of management that provide for cash severance payments if these employees are terminated without cause. The Company’s aggregate commitment under these agreements is $1.1 million at December 31, 2003.

(d) Resignation of Director — In February 2003, a director of the Company resigned for personal reasons, and as a result, one vacancy remained unfilled on the Company’s Board of Directors until it was filled by a former director of PlanVista Corporation as part of the merger on March 2, 2004 (see Note 20).

F-37

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(19) Related Party Transactions

     In April 1997, the Company made loans totaling $0.4 million to Mr. Blue, its former chairman of the board and chief executive officer. The funds were advanced pursuant to two demand promissory notes in the principal amounts of $0.3 million and $60,000, respectively, each bearing interest at a rate of 7 3/4% per annum. On June 30, 2000, the Company amended the terms of these notes whereby interest on the notes ceased to accrue subsequent to July 1, 2000 and the loan plus accrued interest, totaling $0.4 million at June 30, 2000, would be payable in a balloon payment in December 2001. At that time, the loans were collateralized with options to purchase 36,667 shares of common stock granted to Mr. Blue under the Company’s stock option plans. Prior to 2000, these loans were included in other assets; as of December 31, 2001, all amounts owed under these loans have been reclassified to stockholders’ equity.

     In December 2001, a payment of $0.3 million was received from Mr. Blue and applied against the outstanding balance of the loans. The Company agreed to refinance the remaining $0.2 million balance and a new promissory note was executed by Mr. Blue. This new note requires monthly interest payments at prime rate plus 1%, established at the beginning of each calendar quarter, and was payable in a balloon payment on or before December 31, 2003. The note was collateralized with options to purchase 36,667 shares of common stock granted to Mr. Blue under the Company’s stock option plans (of which all but 10,000 expired on December 31, 2003 and the remaining options expire in March 2004) along with additional warrants granted to Mr. Blue from various other public companies. In January 2002, Mr. Blue resigned from the Company’s Board of Directors and the remaining Board members agreed to extend the exercise period of certain of the stock options of the Company held as collateral for the note in an effort to maximize the potential for repayment.

     In June 2003, the Company again amended the promissory note executed in December 2001 by Mr. Blue. The amendment extended the maturity date of the promissory for an additional twelve months to December 31, 2004 and also allowed Mr. Blue to offset any principal owed with certain amounts payable to Mr. Blue by the Company as a result of a finder’s fee arrangement with the Company. Also at that time, Mr. Blue prepaid all interest through the maturity date. Through December 31, 2003, no additional principal payments have been received on this note.

     In March 2004, the Company agreed to accept as collateral for this loan 9,250 shares of its common stock that are being issued to Commonwealth Associates (Mr. Blue’s current employer) in conjunction with the Company’s acquisition of PlanVista (see Note 20). As a result, Mr. Blue and the Company amended a previously existing stock pledge agreement to include these shares as additional collateral. In case of default of payment by Mr. Blue, such shares will be liquidated or returned to the Company for liquidation and the cash proceeds will be utilized to partially or fully satisfy the loan depending upon the value of such stock at that time.

F-38

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

     In March 2001, a senior executive of the Company entered into an uncollateralized promissory note for $45,400 for amounts previously borrowed from the Company. The promissory note calls for minimum bi-weekly payments of $350 deducted directly from the executive’s payroll until the note is paid in full on or before February 2006. The note is non-interest bearing but interest is imputed annually based on the Internal Revenue Service Applicable Federal Rate at the time the note was originated (4.98%). Under terms of the promissory note, if the executive is terminated without cause, the note is due in full after nine months from the date of termination as long as the scheduled bi-weekly payments continue to be made. As of December 31, 2003, the unpaid principal balance of the note is approximately $14,000 and is included in other receivables.

     In June 2003, prior to its acquisition of PlanVista (see Note 20), ProxyMed entered into a joint distribution and marketing agreement with PlanVista. PlanVista was controlled by an affiliate of Commonwealth Associates Group Holdings, LLC, whose principal, Michael Falk, is a director of both ProxyMed and PlanVista. Additionally, one senior executive of ProxyMed had an immaterial ownership interest in PlanVista.

(20) Subsequent Events

(a) Acquisition of PlanVista — On December 5, 2003, the Company entered into a definitive agreement to acquire all of the outstanding capital stock of PlanVista Corporation (“PlanVista”), a publicly-held company located in Tampa, Florida and Middletown, New York that provides medical cost containment and business process outsourcing solutions, including claims repricing services, for the medical insurance and managed care industries, as well as services for healthcare providers, including individual providers, preferred provider organizations and other provider groups, for 3,600,000 shares of ProxyMed common stock. The merger was subject to regulatory and shareholder approval of both companies. The Company also raised an additional $24.1 million in a private equity transaction to various entities affiliated with GAP and Commonwealth Associates to pay off certain debts of PlanVista and other obligations as a result of the acquisition. The acquisition enables the Company to enter into a new line of business, provide new end-to-end services, increase sales opportunities with payers, strengthen business ties with certain customers, expand technological capabilities, reduce operating costs and enhance its public profile. The Company had previously entered into a joint marketing agreement for the sale of PlanVista’s services back in June 2003 (see Note 5).

F-39

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

On March 2, 2004, shareholders of both companies approved the merger and ProxyMed acquired all of the outstanding stock of PlanVista by effecting a merger of Planet Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (the “Acquisition Subsidiary”), with and into PlanVista (the “Merger”) upon the terms and conditions set forth in the Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Company, the Acquisition Subsidiary and PlanVista (the “Merger Agreement”). Pursuant to the Merger Agreement and as a result of the Merger, each outstanding share of PlanVista common stock, par value $.01 per share, at the effective time of the Merger was converted into the right to receive 0.08271 of a fully paid and non-assessable share of common stock, par value $.001 per share, of the Company. Following consummation of the Merger, PlanVista’s common stock was delisted from the Over the Counter Bulletin Board. Pursuant to the Merger Agreement and as a result of the Merger, each outstanding share of PlanVista series C preferred stock, par value $.01 per share, at the effective time of the Merger was converted into the right to receive 51.5292 fully paid and non-assessable shares of common stock, par value $.001 per share, of the Company. In addition, the Company provided funds necessary to satisfy $27.4 million of PlanVista’s debt and other obligations outstanding as of the effective time of the Merger. The Company used available cash, a $4.4 million draw on its asset-based line of credit and cash raised through the issuance of shares of common stock in a private placement to fund the acquisition.

The issuance of the Company’s common stock under the Merger Agreement was registered under the Securities Act of 1933 pursuant to the Company’s registration statement on Form S-4 (File No. 333-111024) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”) and declared effective on February 2, 2004.

On December 5, 2003, the Company agreed to sell an aggregate of 1,691,229 shares of unregistered common stock at $14.25 per share in a private placement to General Atlantic Partners 77, L.P., GAP Coinvestment Partners II, L.P., Gapstar, LLC, GAPCO GmbH & Co. KG., PVC Funding Partners, LLC, ComVest Venture Partners, L.P., Shea Ventures, LLC, and Robert Priddy (the “Purchasers”). No placement agent was used in this transaction. The Company has agreed to grant the Purchasers certain demand and “piggy back” registration rights. On March 2, 2004 and concurrently with the closing of the Merger, the Company closed on the transactions with the Purchasers and received gross proceeds of $24.1 million.

In connection with this merger, the Company’s shareholders approved (1) an amendment to the Company’s articles of incorporation to increase the total number of authorized shares of the Company’s common stock from 13,333,333 1/3 shares to 30,000,000 shares; (2) the issuance of 1,691,229 shares of the Company’s common stock at $14.25 per share in a private equity offering valued at $24.1 million (to retire debt of PlanVista and pay certain expenses associated with the merger); (3) the issuance of 3,600,000 shares of the Company’s common stock for the merger; and (4) an amendment to the Company’s 2002 Stock Option Plan to increase the total number of shares available for issuance from 600,000 to 1,350,000. Additionally, one director of PlanVista was appointed to ProxyMed’s board of directors.

F-40

PROXYMED, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

As noted above, upon completion of the merger, each share of PlanVista’s outstanding common stock was cancelled and converted into the right to receive 0.08271 of a share of the Company’s common stock and each holder of PlanVista series C preferred stock received 51.5292 shares of the Company’s common stock in exchange for each share of PlanVista series C preferred stock, representing approximately 23% of the Company’s common stock on a fully converted basis, and the holders of the Company’s outstanding stock, options and warrants retained approximately 77% of the Company.

PlanVista will be operated as a wholly-owned subsidiary of ProxyMed and its operations will be included in its Transaction Services segment commencing March 2004. All officers and employees of PlanVista, with the exception of the PlanVista’s chief financial officer, continued employment with the Company.

Additionally, certain officers, directors and employees of PlanVista were granted options to purchase an aggregate of 200,000 shares of ProxyMed common stock at $17.74 per share. Of these options, 173,120 will vest two-thirds on the first anniversary date of the grant and one-third on the third anniversary date of the grant. The balance of 26,880 options were granted to PlanVista’s former chief financial officer in connection with a consulting arrangement with him. Fifty percent of these options vested immediately upon the change of control and 25% will each vest after three and six months. The Company expects to recognize approximately $0.1 million in compensation expense associated with this grant in 2004.

As described above, to acquire PlanVista the Company issued 3,600,000 shares of its common stock to PlanVista shareholders valued at $68.4 million (based on the closing price of ProxyMed’s common stock on March 2, 2004), assumed debt and other liabilities of PlanVista, and estimated approximately $1.3 million in acquisition-related costs. Additionally, ProxyMed raised $24.1 in a private placement sale of its common stock to partially fund repayment of PlanVista’s debts and other obligations outstanding at the time of the acquisition. Of the total estimated transaction costs expected to be incurred by the Company, $0.9 million are included in other current assets in the consolidated balance sheet at December 31, 2003.

(b) Exercise of Warrants – On March 25, 2004, the GAP Warrants were exercised and the Company issued 549,279 shares of common stock for $8.75 million cash.

F-41

In thousands	Allowance for Doubtful Accounts
			Additions
Year ended	Balance at		Charged to		Charged to				Balance at
December 31,	beginning of year		costs and expenses		other accounts (1)(2)		Deductions (3)		end of year
2003	$	1,096		152		803		1,169	$	882
2002	$	228		38		1,008		178	$	1,096
2001	$	691		70		84		617	$	228

(1)	Includes amounts charged against revenue in 2001 ($65), 2002 ($346) and 2003 ($803)
(2)	Includes amounts acquired through acquisitions in 2001 ($19), 2002 ($662) and 2003 ($-0-)
(3)	Primarily write-off of bad debts and amounts charged against revenues, net of recoveries

F-42

EX-3.4

                                                                     EXHIBIT 3.4
                              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 adopted by
unanimous consent by the Board of Directors at the Company's regularly scheduled
Board of Directors Meeting of May 22, 2002. Shareholder approval is not
required.

                                    ARTICLE 7

      Article 7 of the Company's Restated Articles of Incorporation establishing
the indemnification of its directors is hereby amended as follows:

      1. Article 7, Indemnification, is hereby deleted in its entirety and
replaced with the following:

      "Section 607.0850(1) of the Florida Business Corporation Act empowers a
Florida corporation to indemnify any person, who was or is a party to any
proceeding (other than an action by a corporation, or in the right of such a
corporation) by reason of the fact that such person is or was a director,
officer, employee, or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
against liability incurred in connection with such proceeding, including an
appeal thereof, but only if such person acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, such person
had no reasonable cause to believe his conduct was unlawful.

      "Additionally, Section 607.0850(2) of the Florida Business Corporation Act
empowers a Florida corporation to indemnify any person, who in an action by, or
in the right of such, corporation to procure a judgment in its favor by reason
of the fact that such a person is or was a director, officer, employee, or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred by such person in connection with the defense or settlement
of such proceeding, including any appeal thereof. The






foregoing applies only if such person acted in good faith and in a manner such
person believed to be in, or not opposed to, the best interests of the
corporation. However, no indemnification is permitted in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation, unless and to the extent the court in which such action or suit
was brought or other court of competent jurisdiction shall determine upon
application that, in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.

      "To the extent such person has been successful on the merits or otherwise
in defense of any action referred to above, or in defense of any claim, issue or
matter therein, the corporation will indemnify such person against expenses,
including counsel (including those for appeal) fees actually and reasonably
incurred by such person in connection therewith. The indemnification and
advancement of expenses provided for in, or granted pursuant to, Section
607.0850 is not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation of the corporation or any by-law, agreement, vote of shareholders
or disinterested directors, or otherwise. Section 607.0850 also provides that a
corporation may maintain insurance against liabilities for which indemnification
is not expressly provided by the statute.

      "Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
as disclosed above, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue."

      IN WITNESS WHEREOF, ProxyMed, Inc. has caused these Articles of Amendment
to be signed on behalf of the Company, on this 22nd day of May 2002.

                                        PROXYMED, INC.



                                        By:    /s/ RAFAEL G. RODRIGUEZ
                                               -------------------------------
                                        Name:  Rafael G. Rodriguez
                                        Title: VP, In-House Counsel & Secretary

EX-3.8

                                                                     EXHIBIT 3.8

                              ARTICLES OF AMENDMENT
                                       TO
                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                      PROXYMED, INC., A FLORIDA CORPORATION


        Pursuant to the provisions of Section 607.1006, Florida Statutes,
ProxyMed, Inc. (the "Corporation") adopts the following Articles of Amendment to
its Restated Articles of Incorporation:

FIRST:            The Article III of the Corporation's Restated Articles of
                  Incorporation is amended by striking out the first paragraph
                  thereof and by substituting in lieu of said paragraph the
                  following new first paragraph to Article III:

                  "The Corporation is authorized to issue 100,000,000 shares of
                  Common Stock, par value $.001 per share, and 2,000,000 shares
                  of preferred stock, par value $.01 per share."

SECOND:           This Amendment was adopted by the shareholders at the
                  Corporation's Annual Meeting of Shareholders held on July 7,
                  2000. The number of votes cast were sufficient for approval.

Dated as of the 7th day of July, 2000.

                                     ProxyMed, Inc.




                                     By: /s/ HAROLD S. BLUE
                                         ----------------------------------
                                         Harold S. Blue, Chairman of the Board

EX-10.8

                                                                    EXHIBIT 10.8

[PlanVista LOGO]

CORPORATE HEADQUARTERS
4010 Boy Scout Blvd., Suite 200
Tampa, FL  33607
(813) 353-2300
www.planvista.com


                                                                December 4, 2003

                             PERSONAL & CONFIDENTIAL


Mr. Jeffrey L. Markle
16326 Healthrow Avenue
Tampa, Florida   33629

Dear Mr. Markle:

      This letter serves to confirm certain terms and conditions with regard to
your employment with PlanVista Corporation, its successors and assigns (the
"Company"). As you know, the Company and ProxyMed, Inc. ("ProxyMed") intend to
enter into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to
which the Company will become a wholly-owned subsidiary of ProxyMed on the day
and time the merger becomes effective (the "Effective Date"). ProxyMed would
like to provide the terms and conditions of your employment with the Company and
ProxyMed upon the consummation of the Merger. Accordingly, attached hereto
please find a copy of ProxyMed's form of employment agreement (the "Form of
Employment Agreement"). Except to the extent qualified by the terms and
conditions specified in paragraphs number 1 through 6 below (the "Qualifying
Terms"), the terms and conditions of the Form of Employment Agreement are
generally not subject to modification, except as approved in writing in advance
by the Compensation Committee of ProxyMed's Board of Directors (the
"Compensation Committee").

      Set forth below is a summary of the Qualifying Terms of your employment
with the Company and ProxyMed after the Effective Date.

      1.    Unless otherwise agreed by the parties in writing, your title will
            be President and Chief Operating Officer of the Company and Senior
            Vice President ("SVP") of ProxyMed, reporting to Nancy J. Ham,
            President and Chief Operating Officer of ProxyMed.

      2.    Your annual salary as President and COO of the Company and SVP of
            ProxyMed shall be $197,000, minus all applicable federal, state and
            local taxes and shall be paid in accordance with ProxyMed's then
            applicable policies.

      3.    You shall not be entitled to receive any options as a result of
            executing this letter. However, you shall be eligible to participate
            on the same terms as other SVP's of ProxyMed in all
            ProxyMed-sponsored benefit plans, such as health, dental, life, and



Mr. Jeffrey L. Markle
December 4, 2003
Page 2




            STD/LTD insurances, and shall accrue twenty-two (22) days of paid
            time off per year, pro-rated for your first year.

      4.    As a further incentive and inducement to you to continue your
            employment with the Company and ProxyMed and to devote your best
            efforts to the business and affairs of the Company and ProxyMed, you
            shall be entitled to and may earn such bonuses as may be awarded
            from time to time by the Board of Directors of ProxyMed, sitting as
            a whole or in committee, in its sole discretion, including pursuant
            to any bonus plan, including a possible change of control bonus
            ("Bonus Plan") implemented by ProxyMed, and to participate in any
            stock option plans ("Stock Option Plans") or other Bonus Plans
            (collectively with the Stock Option Plans, the "Plans") which
            ProxyMed may now have, or in the future develop, provided you
            qualify for eligibility under the terms of such Plans. In addition,
            the parties will negotiate an appropriate provision in your
            Employment Agreement (as defined herein) that provides for
            accelerated vesting of some or all of your stock options upon a
            termination of your employment without cause.

      5.    You will be required to execute the attached Non-Disclosure,
            Non-Solicitation and Invention Agreement ("Associate NDA") on or
            before the Effective Date. As of the Effective Date, you will also
            be required to abide by the Company's (and/or ProxyMed's)
            then-current published policies and procedures, the receipt and
            review of which you must acknowledge in writing.

      6.    Unless waived by ProxyMed in writing, the Terms of Employment (as
            defined below) shall be contingent upon (i) your execution and
            delivery to ProxyMed's legal department of the Associate NDA and
            (ii) approval by ProxyMed's Compensation Committee.

      You acknowledge and agree that you have read and understand the terms and
conditions set forth herein, including the Qualifying Terms (jointly, the "Terms
of Employment"), and that no agreements or representations, oral or otherwise,
express or implied, have been made to you that are not set forth expressly in
this letter. Furthermore, you acknowledge and agree that such Terms of
Employment (i) are binding upon you, ProxyMed and the Company and (ii) modify
and amend any employment agreement currently in effect between you and the
Company until the earlier of (a) six (6) months from the date of this letter or
(b) until the execution of an Employment Agreement (as defined herein), during
which time neither party may terminate the Terms of Employment other than for
cause with ninety (90) days prior written notice. The foregoing notwithstanding,
upon the first to occur of either of the aforesaid (a) or (b), this letter shall
immediately terminate and of no force or effect. You agree that you will
cooperate and negotiate in good faith with ProxyMed and the Company with the
objective of entering into a definitive employment agreement with both the
Company and ProxyMed prior to the Effective Date, relating to your employment on
or after the Effective Date, on terms substantially similar to the Terms of
Employment (hereinafter, the "Employment Agreement").




Mr. Jeffrey L. Markle
December 4, 2003
Page 3

      You acknowledge and agree that, unless otherwise waived by Mr. Hoover in
writing, upon execution of the Employment Agreement or the expiration of six (6)
months from the date of this letter, whichever occurs first, in addition to the
termination of this letter, your employment with the Company pursuant to the
terms of that certain Employment and Noncompetition Agreement dated June 1,
2001, as amended on May 22, 2003, and this letter shall automatically and
immediately terminate and be of no further force or effect. Upon such
terminations, neither the Company nor ProxyMed shall have any ongoing
obligations, financial or otherwise, arising from or relating to such employment
agreements, except for the payment to you of earned wages and vacation, or for
any post-termination, surviving obligations you may have to the Company or
ProxyMed, however arisen.

      If you are in agreement with the Terms of Employment stated in pages 1 and
2 of this letter, please sign duplicates of this letter and return it to my
attention on or before December 8, 2003.


                                   Sincerely,

                                   PLANVISTA CORPORATION


                                   By:    /s/ PHILLIP S. DINGLE
                                          ------------------------------

                                   Title: Chairman and CEO
                                          ------------------------------


                                   PROXYMED, INC.


                                   By:    /s/ NANCY J. HAM
                                          ------------------------------

                                   Title: President
                                          ------------------------------

/ir
Enclosures

cc: Rafael G. Rodriguez

                                   AGREED TO:


                                   By:  /s/ JEFFREY L. MARKLE
                                        ----------------------------------
                                        SIGNATURE


                                   Date  DECEMBER 18, 2003
                                         ---------------------------------

EX-10.9

                                                                    EXHIBIT 10.9

                              EMPLOYMENT AGREEMENT


      THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered on December 8,
2003 by and between PROXYMED, INC., a Florida corporation (the "Company"), and
GREGORY J. EISENHAUER ("Executive"), residing at 525 Ebley Place, Alpharetta,
Georgia 30022.

      WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company desires to employ the Executive, and Executive is willing to accept
such employment.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Executive
intending to be legally bound agree as follows:

1.    TERM. The initial term of the Agreement shall commence on December 8,
2003 (the "Effective Date"), and shall continue for three (3) years and shall be
automatically renewed from year to year thereafter (hereafter, the initial term
and any renewals thereof shall constitute the "Term"), unless either party
provides the other party with notice of its intent not to renew this Agreement
not less than ninety (90) days nor more than 120 days prior to the expiration of
the then-current term or unless this Agreement is earlier terminated in
accordance with its terms.

2.    POSITION; DUTIES; LOYALTY.

      a) POSITION. Executive will be employed by Company at the Company's
Atlanta, GA location and shall render service as the Company's EXECUTIVE VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, reporting to Mr. Michael K. Hoover, the
Company's Chief Executive Officer and Chairman of the Board of Directors ,
pursuant to the terms, provisions and conditions hereinafter set forth.

      b) DUTIES. Executive shall be employed by Company on a full-time,
exclusive basis. Executive will be required to travel on business, as is
customary and usual for Executive's position. Executive shall perform such
duties and have such authority and responsibilities customarily accompanying
his/her position and as reasonably directed by the Chief Executive Officer of
the Company consistent with the Executive's position. Executive shall perform
the duties and have the authority and responsibilities customarily accompanying
those of an EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER of a public
company, including without limitations, those prescribed by the Company's
By-laws or as may be assigned to the Executive from time to time by the
Company's Board of Directors.

      c) LOYALTY. Executive shall devote the full working time required for
Executive's position and shall give Executive's best efforts to the business of
the Company and to the performance of the duties and obligations described in
this Agreement. Except as maybe authorized in writing by the CEO of the Company,
Executive shall not, directly or indirectly, alone, or as a partner, officer,
director or shareholder of any other institution, be engaged in any other
commercial activities whatsoever, or continue or assume any other corporate
affiliations except for (i) an Affiliate; (ii) passive investments; and (iii)
minimal time utilized for business activities that do not compete with the
business of the Company or its subsidiaries. As used herein, the term
"Affiliate" shall refer to any entity that is owned or controlled by, under
common ownership or control with, or which owns or controls the Company or any
of its subsidiaries, now or in the future.




3.    COMPENSATION AND EXPENSES.

      a) SALARY. In consideration for the services rendered by the Executive
under this Agreement, Company shall pay the Executive a monthly base salary of
$18,750.00 per month ("Base Salary") in accordance with the Company's customary
payroll practices. Executive performance reviews (with or without a wage
increase) will be conducted at least annually or as otherwise agreed to by the
parties in writing. The Company shall adjust associate's Base Salary for any
wage increases approved in writing by the Board of Directors or its Compensation
Committee in its sole discretion. As used herein, the term "Base Compensation"
shall refer collectively to (i) Executive's Base Salary, adjusted for any wage
increases, (ii) the Options (as defined in Section 3(b)), (iii) future options
granted pursuant to any Stock Option Plans (as defined in Section 3(b)), (iv)
any Bonuses, (v) any bonuses to which Executive may be entitled pursuant to any
Bonus Plan, (vi) Vacation; and (vii) Benefits.

      b) STOCK OPTIONS. As approved by the Company's Compensation Committee,
Executive will receive an initial stock option agreement, in the form attached
hereto as Exhibit A and incorporated herein by reference, which shall have a ten
(10) year term, and which shall allow Executive to purchase up to 100,000 shares
of ProxyMed common stock (the "Stock Options") at its fair market value defined
as the price at which common stock is reported to have traded on the NASDAQ
System at the close of business on December 5, 2003. The options will vest over
a three (3) year period as follows: 1/3 on the first anniversary, 1/3 on the
second anniversary, and 1/3 on the day before the third anniversary of
Executive's employment. The Stock Options granted hereunder shall be governed
exclusively by and issued in accordance with the terms of the applicable Company
stock option plan attached hereto as Exhibit B and incorporated herein by
reference.

      c) BONUS OPPORTUNITY.

            (i) The Executive may earn bonuses of up to fifty per cent (50%) of
Base Salary, as well as any bonuses as may be awarded from time to time at the
discretion of the Compensation Committee or the Board of Directors of the
Company or pursuant to an Incentive Compensation Plan (as defined herein)( the
"Bonuses"). By not later than ninety (90) days after the Effective Date, or as
otherwise agreed to by the parties in writing, the Company and Executive shall
negotiate an incentive compensation plan with objective performance criteria
(the "Incentive Compensation Plan"), which will be incorporated into this
Agreement at the time it is placed into effect. The Company reserves the right
to pay Bonuses in cash, in ProxyMed common stock, or in stock options of
ProxyMed, or a combination of any or all of the above. The Executive will also
earn a guaranteed bonus ("Guaranteed Bonus") of $25,000.00 to be paid in cash
within thirty (30) days after commencement of employment. Such payment of the
Guaranteed Bonus is considered a pre-payment and will be earned by the Executive
pro ratably over the twelve (12) month period following commencement of
employment. If the Executive terminates employment for any reason, such
Guaranteed Bonus will be returned to the Company on a pro rata basis. For
purposes of clarity, one-twelfth (1/12) of such bonus is earned on the
completion of the monthly anniversary date of the Executive's commencement of
employment.

            (ii) Subject only to formal approval by the Company's Compensation
Committee, the Executive shall participate in the Company's Merge-Buyout
Incentive Plan on the same terms and conditions as other Executive Vice
Presidents of the Company.



                                       2


      d) EXPENSES. Company shall promptly pay or reimburse the Executive for all
reasonable business expenses actually incurred or paid by the Executive in the
performance of Executive's services hereunder in accordance with the policies
and procedures of the Company, provided that Executive properly accounts
therefor.

      e) TAX WITHHOLDING. The Company shall have the right to deduct or withhold
from all compensation due Executive hereunder any and all sums required,
including without limitation for Federal income, social security and Medicare
taxes and all state and local taxes now applicable or that may be enacted and
become applicable in the future.

4.    BENEFITS.

      a) VACATION. The Executive shall be entitled to a yearly vacation of four
(4) weeks during the first year of this Agreement, and thereafter such
additional time as may be provided by the Company in writing in its then-current
policies or otherwise, at full pay to be accrued and taken in accordance with
the Company's policies in effect from to time ("Vacation"). Vacation shall
accrue ratably during each calendar year in accordance with Company policies.
Vacation not taken in one calendar year may be carried over to the following
calendar year subject to any limitations set forth in the Company policies in
effect from time to time. Executive shall not be entitled to receive any
additional compensation from the Company for Executive's failure to take all of
Executive's granted vacation time. In the event Executive's employment is
terminated pursuant to Section 5(b) below, any vacation time used but not earned
at the time of termination shall be deducted from any monies owed to Executive.

      b) PARTICIPATION IN BENEFIT PLANS. Executive shall be eligible for and
entitled to receive all other benefits and perquisites ("Benefits") offered or
extended to other Executive Vice Presidents of the Company.

5.    TERMINATION.

      a) INVOLUNTARY TERMINATION FOR DEATH OR DISABILITY. This Agreement shall
terminate immediately upon Executive's death. The Company may terminate
Executive's employment with the Company for Disability. For purposes of this
Agreement, "Disability" is defined to mean the inability of Executive due to
illness or physical or mental infirmity (as determined by a physician selected
by Executive and acceptable to the Company) to perform Executive's duties
hereunder on a full-time basis for six (6) consecutive months with reasonable
accommodation by the Company. Upon termination due to death or Disability,
Executive or Executive's beneficiary or estate or legal representative shall be
entitled to receive the amounts payable under Section 5(c).

      b) TERMINATION BY COMPANY FOR CAUSE. The Company may terminate Executive's
employment with the Company at any time "For Cause" effective immediately,
unless stated otherwise in writing, upon giving written notice thereof to
Executive, which notice shall state with reasonable specificity the facts
supporting the termination "For Cause." "For Cause" shall include the following:

          (i) Conviction of, or pleading guilty to, a felony or any
crime involving moral turpitude, fraud, dishonesty or theft or engaging in any
act which is a violation of any law or regulation protecting the rights of
employees; or

          (ii) Failure by Executive to satisfactorily perform the duties
stated herein or to substantially perform such duties in accordance with any
tasks, goals, and objectives as assigned from time to time by the Company in
writing, if Executive has not corrected or remedied, or has not commenced to
correct or remedy, such unsatisfactorily or non-substantial performance of such
specified duties within thirty (30) days (or such other time as may be provided
in writing by the Company) of Executive's actual receipt of such written notice;
or



                                       3


          (iii) Executive's gross negligence or willful misconduct relating to
the Company that is materially injurious to the Company; or

          (iv) Executive's excessive use of alcohol or illegal drugs that (A)
interferes with the performance of Executive's duties hereunder and (B)
continues even after written warning regarding such excessive use is actually
received by Executive; or

          (v) Executive's abandonment of his position or termination of this
Agreement for "No Good Reason"; or

          (vi) Any material breach by Executive of this Agreement or of any
of the Company's applicable written policies then in effect, including without
limitations, the Company's Code of Ethics for Officers and Directors with
written notice thereof by the Company, provided such notice is actually received
by Executive and an appropriate period to cure such material breach, if such
breach is curable, is given and has expired.

      Upon the Company's termination of this Agreement and Executive's
employment For Cause, the Executive shall be entitled to, and the Company shall
pay the Executive the following "For Cause Separation Pay": the Executive's Base
Salary and benefits through the effective date of termination at the Executive's
then current rate (including any applicable pro rated bonus and accrued vacation
pay). Except as provided for herein or in any other written agreement, the
Company shall have no other liabilities or obligations to Executive upon payment
in full of the For Cause Separation Pay.

      c) TERMINATION BY COMPANY WITHOUT CAUSE. The Company may terminate
"Without Cause" Executive's employment with the Company or this Agreement at any
time for any or no reason. Such termination by Company shall be deemed to be
"without cause" by the Company. In the event of termination by the Company
pursuant to this Section, Executive shall execute a full and complete release of
any and all claims against the Company in a form satisfactory to the Company, in
which event, for a period of six (6) months commencing from the effective date
of termination, the Executive shall be entitled to and shall receive, and the
Company shall pay the following "Without Cause Separation Pay": (i) An amount
equal to Executive's Base Salary as of the date of termination; plus (ii) a pro
rata portion of any accrued vacation not already taken and of any bonus that
would have been paid to Executive under any bonus plan which is adopted by the
Company's Compensation Committee or Board of Directors in such year if the
Company and Executive had met the targeted goals to the date of termination;
plus (iii) the continuation for three (3) months from the effective date of
termination of all of Executive's benefits including, without limitation, all
insurance plans, on the same terms and conditions as had been provided to
Executive prior to the termination, all of the foregoing which shall be payable
in accordance with the Company's customary payroll practices then in effect;
plus (iv) the immediate vesting of all granted options that have not already
expired.

      d) TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate this
Agreement for "Good Reason" by giving the Company thirty (30) days' prior
written notice (the "Notice Period)] to that effect, specifically stating
Executive's Good Reason for terminating in sufficient detail to allow the
Company to respond effectively to the notice, with the termination becoming
effective on the 31st day after such notice is actually received by the Company
(the "Termination Date"), unless the Company at its option cures any alleged
breach, if curable, on or before the Termination Date, or if the breach is not


                                       4


capable of being cured within the Notice Period, Company made good faith efforts
to cure any alleged breach prior to the Termination Date. The stated Good Reason
must be one or more of any of the reasons defined as a "Good Reason" herein. As
used in this Agreement, a "Good Reason" means termination by Executive only for
any one or more of the following reasons:

                  (i) Any reduction of Executive's then-current Base Salary
without Executive's prior written consent; or

                  (ii) Any material breach of this Agreement by the Company, not
cured or in the process of being cured by the Company as provided herein after
the Company receives not less than 30 days prior written notice by the
Executive.

      An Executive's termination for any of the foregoing Good Reasons shall be
treated the same as a termination "Without Cause" by the Company for purposes of
calculating separation pay, entitling the Executive to the Without Cause
Separation Pay set forth in Section 5(c).

      e) TERMINATION BY EXECUTIVE FOR NO GOOD REASON. Executive may terminate
this Agreement for any reason (other than a Good Reason) or no reason at any
time with not less than thirty (30) days prior written notice to the Company
(such termination shall be called a termination for "No Good Reason"). After the
Company receives notice of a termination for No Good Reason, the Company may by
written notice to the Executive cause the effective date of any such termination
to be accelerated without causing such termination to be considered a
termination by the Company Without Cause. Executive's termination for No Good
Reason shall be treated the same as a termination "For Cause" by the Company for
purposes of calculating separation pay, entitling the Executive to the For Cause
Separation Pay set forth in Section 5(b). For avoidance of doubt, a termination
by Executive for any reason that is also a Good Reason shall be treated as a
termination by Executive for Good Reason as set forth in Section 5(d).

      f) RETURN OF COMPANY PROPERTY. Upon any termination of this Agreement,
Executive shall immediately return to the Company all property of the Company in
Executive's possession, including Confidential Information (as defined below).
Executive acknowledges that the Company may withhold any compensation and
benefits owed to Executive hereunder until all such property is returned in good
condition, normal wear and tear excepted.

      g) CHANGE IN CONTROL. If, within ninety (90) days prior to a Change of
Control, as defined in Executive's Stock Option Agreement, the Agreement
terminates for any reason (other than pursuant to Section 5(b) or (e) above),
then, (i) any unvested options shall vest as of the date of the Change of
Control and shall remain vested and exercisable as specified in Executive's
Stock Option Agreement, and (ii) Executive shall receive, and the Company shall
pay the Executive, the "Without Cause Separation Pay" set forth in Section 5(c)
above.

6.   COVENANTS OF EXECUTIVE.

     a) Executive agrees that during the Term of this Agreement and for one (1)
year following its expiration or termination for any or no reason, including
without limitation, "For Cause", "Without Cause", "For Good Reason", or "No Good
Reason", Executive will not, directly or indirectly, without the prior written
consent of the Company, induce or solicit any person employed or hereafter
employed by the Company to leave the employ of the Company, or solicit, recruit,
hire or attempt to solicit, recruit or hire any person employed by the Company.





                                       5



         b) Executive agrees that for a period of three (3) years after the
expiration or termination of this Agreement for any or no reason, including
without limitation, "For Cause", "Without Cause", "For Good Reason", or "No Good
Reason", Executive will not, directly or indirectly, without the prior written
consent of the Company, solicit or attempt to solicit, divert or take away, or
attempt to divert or take away, Customers or their laboratory business from the
Company and/or the Company's then-current Affiliates. As used in the preceding
sentence, the term "Customer" shall include, however known to Executive as of
the date of such termination or expiration, (i) any current end-user of the
Company's or its then-current Affiliates' products or services, or any potential
end-user thereof with whom the Company or its then-current Affiliates have had
contact with within the preceding six (6) months; (ii) any current suppliers of
the Company's or its then-current Affiliates; and/or (iii) vendor of the Company
or its then-current Affiliates or reseller of the Company or its then-current
Affiliates; and/or (iv) their Affiliates, successors or assigns.

         c) Executive agrees and acknowledges that Executive will disclose
promptly to the Company every discovery, improvement and invention made,
conceived or developed by Executive during the entire period of employment
(whether or not during working hours) which discoveries, improvements or
inventions are capable of use in any way in connection with the business of the
Company. To the fullest extent permitted by law, all such discoveries,
inventions and improvements will be deemed works made-for-hire. Executive grants
and agrees to convey to Company or its nominee the entire right, title and
interest, domestic and foreign, which Executive may have in such discoveries,
improvements or inventions, or a lesser interest therein, at the option of
Company. Executive further agrees to promptly, upon request, sign all
applications for patents, copyrights, assignments and other appropriate
documents, and to perform all acts and to do all things necessary and
appropriate to carry out the intent of this section, whether or not Executive is
still an employee of the Company at the time of such requests.

         d) Executive agrees and acknowledges that the Confidential Information
of the Company is valuable, special and unique to its business, that such
business depends on such Confidential Information, and that the Company wishes
to protect such Confidential Information by keeping it confidential for the
exclusive use and benefit of the Company. Based on the foregoing, Executive
agrees to undertake the following obligations with respect to such Confidential
Information:

                  (i) Executive agrees to keep any and all Confidential
Information in trust for the use and benefit of the Company;

                  (ii) Executive agrees that, except as required by Executive's
duties or authorized in writing by the Company, Executive will not at any time
during and for a period of three (3) years after the termination of Executive's
employment with the Company, disclose, directly or indirectly, any Confidential
Information of the Company to any third party; except as may be required by
applicable law or court order, in which case Executive shall promptly notify
Company so as to allow it to seek a protective order if it so elects;

                  (iii) Executive agrees to take all reasonable steps necessary,
or reasonably requested by the Company, to ensure that all Confidential
Information of the Company is kept confidential for the use and benefit of the
Company and its subsidiaries; and

                  (iv) Executive agrees that, upon termination of Executive's
employment by the Company or at any other time the Company may in writing so
request, Executive will promptly deliver to the Company all materials
constituting Confidential Information (including all copies and derivatives
thereof) that are in the possession of or under the control of Executive.
Executive further agrees that, if




                                       6


requested by the Company to return any Confidential Information pursuant to this
Subsection (iv), Executive will not make or retain any copy or extract from such
materials.

      For the purposes of this Section 6(d), "Confidential Information" means
any and all information, including derivative works, developed by or for the
Company or entrusted to the Company in confidence by its customers, of which
Executive gained knowledge by reason of Executive's employment by the Company,
which is not generally known in any industry in which the Company is or may
become engaged, but does not apply to information which is generally known to
the public or the trade, unless such knowledge results from an unauthorized
disclosure by Executive. Confidential Information includes, but is not limited
to, any and all information developed by or for the Company concerning plans,
marketing and sales methods, materials, processes, business forms, procedures,
devices used by the Company, its suppliers and customers with which the Company
had dealt with prior to Executive's termination of employment with the Company,
plans for development of new products, services and expansion into new areas or
markets, internal operations, and any trade secrets, proprietary information of
any type owned by the Company, together with all written, graphic and other
materials relating to all or any part of the same. The Company will receive all
materials, including, software programs, source code, object code,
specifications, documents, abstracts and summaries developed in connection with
Executive's employment. Executive acknowledges that the programs and
documentation developed in connection with Executive's employment with the
Company shall be the exclusive property of the Company, and that the Company
shall retain all right, title and interest in such materials, including without
limitation patent and copyright interests. Nothing herein shall be construed as
a license from the Company to Executive to make, use, sell or copy any
inventions, ideas, trade secrets, trademarks, copyrightable works or other
intellectual property of the Company during the Term of this Agreement or
subsequent to its termination.

      e) Executive acknowledges that there is no general geographical
restriction contained in this Section 6(d) because the Company's and/or
Affiliates' Customers are not confined to one geographical area or operate on a
national level. Notwithstanding the foregoing, if a court of competent
jurisdiction were to determine that any of the foregoing covenants would be held
to be unreasonable in time or distance or scope, the time or distance or scope
may be reduced by appropriate order of the court to that deemed reasonable.

      f) Executive confirms that Executive is not bound by the terms of any
agreement with any previous Company or other party which restricts in any way
Executive's use or disclosure of information or Executive's engagement in any
business, except as Executive may disclose in a separate schedule attached to
this Agreement prior to Company's and Executive's execution of this Agreement.
Further, Executive represents that Executive has delivered to the Company prior
to executing this Agreement true and complete copies of any agreements disclosed
on such attached schedule. Executive represents to the Company that Executive's
execution of this Agreement, employment with the Company and the performance of
Executive's proposed duties for the Company will not violate any obligations
Executive may have to any such previous Company or other party. In any work for
the Company, Executive will not disclose or make use of any information in
violation of any agreements with or rights of any such previous Company or other
party, and will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party. In the event of breach of this
subsection (f) Executive hereby agrees to defend, indemnify and hold harmless
ProxyMed, its officers, directors, employees, agents (the "Indemnified Parties")
from any and all damages, suits, claims, liabilities, actions (individually and
collectively, the "Indemnity Event") arising or resulting from such breach. In
the event of any Indemnity Event, the Indemnified Parties



                                       7


shall provide Executive with timely written notice of same, and thereafter
Executive shall at its own expense defend, protect and hold harmless the
applicable Indemnified Parties against said Indemnity Event. If the Executive
shall fail to so defend and/or indemnify and save harmless the Indemnified
Parties, then in such instance the Indemnified Parties shall have full rights to
defend, pay or settle said Indemnity Event on their behalf without notice to
Executive and with full rights to recourse against Executive for all fees,
costs, expenses and payments made or agreed to be paid to discharge said
Indemnity Event.

      g) ASSISTANCE IN LITIGATION. Executive shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which the Company is, or
may become, a party either during or after Executive's employment with the
Company.

      h) INJUNCTIVE RELIEF.

            i) Executive acknowledges and agrees that the covenants and
obligations contained in this Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of this Section
will cause the Company irreparable injury for which adequate remedies at law are
not available. Therefore, Executive agrees that the Company shall be entitled
(without having to post a bond or other surety) to an injunction, restraining
order, or other equitable relief from any court of competent jurisdiction,
restraining the Executive from committing any violation of the covenants and
obligations set forth in this Section 6.

            ii) The Company's rights and remedies under this Section 6 are
cumulative and are in addition to any other rights and remedies the Company may
have pursuant to the specific provisions of this Agreement and at law or in
equity.

7.    MISCELLANEOUS.

      a) ATTORNEY'S FEES. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations of any party
to this Agreement, each party shall pay their own fees and expenses, including
reasonable attorney's fees and costs

      b) SUCCESSORS AND ASSIGNS. This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable by the Executive.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Company and the Executive, and the Executive's heirs and legal
representatives, and the Company's successors and assigns.

      c) GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the law of the State of Florida, without regard to the application
of Florida's principles of conflict of laws.

      d) ARBITRATION. Except for disputes relating to Section 6(d) of this
Agreement or any injunctions, any and all disputes or controversies that shall
arise under or in connection with this Agreement or in any other way related to
Executive's employment by the Company, including termination of employment,
shall be submitted to a panel of three arbitrators under the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
then in effect. The parties hereby acknowledge that the Federal Arbitration Act
takes precedence over any state arbitration statutes, rules and regulations.
Each of the arbitrators shall be qualified and experienced in employment related
matters with at least one arbitrator being a licensed attorney. The arbitrators
must base their determination solely on the terms and conditions of this
Agreement and the law in the State of Florida. The arbitrators shall have the
authority to award any remedies that a court may order or grant, except that





                                       8


they will have no authority to award punitive damages or any other damages not
measured by the prevailing party's actual damages, and may not, in any event,
make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement. Arbitration shall be held either in Fort
Lauderdale, Florida, and the parties hereby agree to accept service of process
served in accordance with the Notices provision of this Agreement and in the
personal jurisdiction and venue as set out herein. Both parties expressly
covenant and agree to be bound by the decision of the arbitrators as the final
determination of the matter in dispute. Judgment upon the award rendered by the
arbitrators may be entered into any court having jurisdiction thereof.

      e) NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company's then-current CEO at its then principal office, as notified to
Executive, or to the Executive at Executive's most current address as shown in
Executive's personnel file, or to either party hereto at such other address or
addresses as Executive or it may from time to time specify for such purposes in
a notice similarly given.

      f) MODIFICATION; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is approved
by a duly authorized officer of the Company and is agreed to in a writing signed
by the Executive and such officer. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

      g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.

      h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

      i) SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and if any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted.

      k) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

      l) SURVIVING PROVISIONS. Any portion of this Agreement which by it nature
survives the termination of this Agreement, including Section 6, shall survive
the termination of this Agreement.

      m) ENTIRE AGREEMENT. Except as modified by this Agreement, all of
Executive's benefits and obligations are as set forth in the Company's policies
in effect from time to time. Other than the Company's policies in effect from
time to time, as modified herein, no agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party, which are not set forth expressly in this Agreement.
This Agreement constitute the final and entire



                                       9


agreement between the parties, and supersedes all prior written and oral
agreements, understandings, or communications with respect to the subject matter
of this Agreement.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.



PROXYMED, INC.                         EXECUTIVE:


By:  /s/ MICHAEL K. HOOVER             By: /s/ GREGORY J. EISENHAUER
     ----------------------------          ---------------------------------
     SIGNATURE                             SIGNATURE

Print Name: MICHAEL K. HOOVER          Print Name: GREGORY J. EISENHAUER
            ---------------------                  -------------------------
Title:            CEO
            ---------------------









                                       10

EX-10.10

                                                                   EXHIBIT 10.10


                              EMPLOYMENT AGREEMENT


      THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered on May 13,
2003 by and between ProxyMed, Inc., a Florida corporation (the "Company"), and
Thomas Wohlford ("Associate").

      WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company desires to employ the Associate, and Associate is willing to accept
such employment.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Associate
intending to be legally bound agree as follows:

1. TERM. The initial term of the Agreement shall commence on May 13, 2003 (the
"Effective Date"), and shall continue for three (3) years and shall be
automatically renewed from year to year thereafter (hereafter, the initial term
and any renewals thereof shall constitute the "Term"), unless either party
provides the other party with notice of its intent not to renew this Agreement
not less than ninety (90) days nor more than 120 days prior to the expiration of
the then-current term or unless this Agreement is earlier terminated in
accordance with its terms.

2. POSITION; DUTIES; LOYALTY.

      a) POSITION. Associate will be employed by Company and shall render
service to Company as its Vice President of Operations, reporting to the Lonnie
Hardin, Senior Vice President - Payer Services of ProxyMed, or his designees,
pursuant to the terms, provisions and conditions hereinafter set forth.

      b) DUTIES. Associate shall be employed by Company on a full-time,
exclusive basis and will not be required to relocate as a condition of continued
employment. Associate will be required to travel on business, as is customary
and usual for Associate's position. Associate shall perform such duties and have
such authority and responsibilities customarily accompanying his/her position
and as reasonably directed by the Lonnie Hardin, Senior Vice President - Payer
Services of ProxyMed, or his designees of the Company consistent with the
Associate's position. Associate shall perform the duties and have the authority
and responsibilities customarily accompanying those of a Vice President of a
public company, including without limitations, those prescribed by the Company's
By-laws or as may be assigned to the Associate from time to time by the
Company's Board of Directors.

      c) LOYALTY. Associate shall devote the full working time required for
Associate's position and shall give Associate's best efforts to the business of
the Company and to the performance of the duties and obligations described in
this Agreement. Except as maybe authorized in writing by the CEO of the Company,
Associate shall not, directly or indirectly, alone, or as a partner, officer,
director or shareholder of any other institution, be engaged in any other
commercial activities whatsoever, or continue or assume any other corporate
affiliations except for (i) an Affiliate; (ii) passive investments; and (iii)
minimal time utilized for business activities that do not compete with the
business of the Company or its subsidiaries. As used herein, the term
"Affiliate" shall refer to any entity that is owned or controlled by, under
common ownership or control with, or which owns or controls the Company or any
of its subsidiaries, now or in the future.




3. COMPENSATION AND EXPENSES.

      a) SALARY. In consideration for the services rendered by the Associate
under this Agreement, Company shall pay the Associate a monthly base salary of
$14,583.33 per month ("Base Salary") in accordance with the Company's customary
payroll practices. Associate performance reviews (with or without a wage
increase) will be conducted at least annually or as otherwise agreed to by the
parties in writing. The Company shall adjust associate's Base Salary for any
wage increases approved in writing by the Board of Directors or its Compensation
Committee in its sole discretion. As used herein, the term "Base Compensation"
shall refer collectively to (i) Associate's Base Salary, adjusted for any wage
increases, (ii) the Options (as defined in Section 3(b)), (iii) future options
granted pursuant to any Stock Option Plans (as defined in Section 3(b)), (iv)
any Bonuses, (v) any bonuses to which Associate may be entitled pursuant to any
Bonus Plan, (vi) Vacation; and (vii) Benefits.

      b) BONUS AND STOCK OPTIONS. Associate will receive an initial stock option
agreement, incorporated herein by reference, which shall have a ten (10) year
term, and which shall allow Associate to purchase up to 10,000 shares of
ProxyMed common stock (the "Stock Options") at its fair market value defined as
the price at which common stock is reported to have traded on the NASDAQ System
at the close of business on the Effective Date. The options will vest over a
three (3) year period as follows: 1/3 on the first anniversary of the Effective
Date, 1/3 on the second anniversary of the Effective Date, and 1/3 on the day
before the third anniversary of the Effective Date. The Stock Options granted
hereunder shall be governed exclusively by and issued in accordance with the
terms of the Company's 2002 Stock Option Plan, incorporated herein by reference.
As a further incentive and inducement to the Associate to commence and continue
his employment with the Company and to devote his best efforts to the business
and affairs of the Company, the Associate shall be entitled to and may earn such
bonuses ("Bonuses") as may be awarded from time to time by the Board of
Directors of the Company, sitting as a whole or in committee, in its sole
discretion, including pursuant to any bonus plan ("Bonus Plan") implemented by
the Company, and to participate in any stock option plans ("Stock Option Plans")
or other Bonus Plans which the Company may now have or in the future develop and
for which the Associate qualifies for eligibility under the terms of such plan.

      c) EXPENSES. Company shall promptly pay or reimburse the Associate for all
reasonable business expenses actually incurred or paid by the Associate in the
performance of Associate's services hereunder in accordance with the policies
and procedures of the Company, provided that Associate properly accounts
therefor.

      d) TAX WITHHOLDING. The Company shall have the right to deduct or withhold
from all compensation due Associate hereunder any and all sums required,
including without limitation for Federal income, social security and Medicare
taxes and all state and local taxes now applicable or that may be enacted and
become applicable in the future.

      e) TIME IN SERVICE. The Company will recognize Associate's time in service
as January 2, 2002 as it relates to all benefits, stock option vesting rights
and other such benefits where time in service is a determinative factor.

4. BENEFITS.

      a) VACATION. The Associate shall be entitled to a yearly vacation of three
(3) weeks during the first year of this Agreement, and thereafter such
additional time as may be provided by the Company in writing in its then-current
policies or otherwise, at full pay to be accrued and taken in accordance with
the Company's policies in effect from to time ("Vacation"). Vacation shall
accrue ratably during each





                                       2



calendar year in accordance with Company policies. Vacation not taken in one
calendar year may be carried over to the following calendar year subject to any
limitations set forth in the Company policies in effect from time to time.
Associate shall not be entitled to receive any additional compensation from the
Company for Associate's failure to take all of Associate's granted vacation
time. In the event Associate's employment is terminated pursuant to Section 5(b)
below, any vacation time used but not earned at the time of termination shall be
deducted from any monies owed to Associate.

      b) PARTICIPATION IN BENEFIT PLANS. Associate shall be eligible for and
entitled to receive all other benefits and perquisites ("Benefits") offered or
extended to other Vice Presidents of the Company.

      c) CHANGES IN FORM OF EMPLOYMENT AGREEMENT. If the Compensation Committee
of ProxyMed's Board of Directors amends the form of employment agreement to be
used for vice presidents of the company, as approved by them on March 28, 2003,
then this agreement shall be likewise amended.

5. TERMINATION.

      a) INVOLUNTARY TERMINATION FOR DEATH OR DISABILITY. This Agreement shall
terminate immediately upon Associate's death. The Company may terminate
Associate's employment with the Company for Disability. For purposes of this
Agreement, "Disability" is defined to mean the inability of Associate due to
illness or physical or mental infirmity (as determined by a physician selected
by Associate and acceptable to the Company) to perform Associate's duties
hereunder on a full-time basis for six (6) consecutive months with reasonable
accommodation by the Company. Upon termination due to death or Disability,
Associate or Associate's beneficiary or estate or legal representative shall be
entitled to receive the amounts payable under Section 5(c).

      b) TERMINATION BY COMPANY FOR CAUSE. The Company may terminate Associate's
employment with the Company at any time "For Cause" effective immediately,
unless stated otherwise in writing, upon giving written notice thereof to
Associate, which notice shall state with reasonable specificity the facts
supporting the termination "For Cause." "For Cause" shall include the following:

            (i) Conviction of, or pleading guilty to, a felony or any
crime involving moral turpitude, fraud, dishonesty or theft or engaging in any
act which is a violation of any law or regulation protecting the rights of
employees or

            (ii) Failure by Associate to satisfactorily perform the duties
stated herein or to substantially perform such duties in accordance with any
tasks, goals, and objectives as assigned from time to time by the Company in
writing, if Associate has not corrected or remedied, or has not commenced to
correct or remedy, such unsatisfactorily or non-substantial performance of such
specified duties within thirty (30) days (or such other time as may be provided
in writing by the Company) of Associate's actual receipt of such written notice;
or

            (iii) Associate's gross negligence or willful misconduct relating to
the Company that is materially injurious to the Company; or

            (iv) Associate's excessive use of alcohol or illegal drugs
that (A) interferes with the performance of Associate's duties hereunder and (B)
continues even after written warning regarding such excessive use is actually
received by Associate; or



                                       3


            (v) Associate's abandonment of his position or termination of this
Agreement for "No Good Reason;" or

            (vi) Any material breach by Associate of this Agreement or of
any of the Company's applicable written policies then in effect, including
without limitations, the Company's Code of Ethics for Officers and Directors
with written notice thereof by the Company, provided such notice is actually
received by Associate and an appropriate period to cure such material breach, if
such breach is curable, is given and has expired.

      Upon the Company's termination of this Agreement and Associate's
employment For Cause, the Associate shall be entitled to, and the Company shall
pay the Associate the following "For Cause Separation Pay": the Associate's Base
Salary and benefits through the effective date of termination at the Associate's
then current rate (including any applicable pro rated bonus and accrued vacation
pay). Except as provided for herein or in any other written agreement, the
Company shall have no other liabilities or obligations to Associate upon payment
in full of the For Cause Separation Pay.

      c) TERMINATION BY COMPANY WITHOUT CAUSE. The Company may terminate
"Without Cause" Associate's employment with the Company or this Agreement at any
time for any or no reason by giving the Associate thirty (30) days prior written
notice to the termination date. Such termination by Company shall be deemed to
be "without cause" by the Company. In the event of termination by the Company
pursuant to this Section, Associate shall execute a full and complete release of
any and all claims against the Company in a form satisfactory to the Company, in
which event, for a period of three (3) months commencing from the effective date
of termination, the Associate shall be entitled to and shall receive, and the
Company shall pay the following "Without Cause Separation Pay": (i) An amount
equal to Associate's Base Salary as of the date of termination; plus (ii) a pro
rata portion of any accrued vacation not already taken and of any bonus that
would have been paid to Associate under any bonus plan which is adopted by the
Company's Compensation Committee or Board of Directors in such year if the
Company and Associate had met the targeted goals to the date of termination;
plus (iii) the continuation for three (3) months from the effective date of
termination of all of Associate's benefits including, without limitation, all
insurance plans, on the same terms and conditions as had been provided to
Associate prior to the termination, all of the foregoing which shall be payable
in accordance with the Company's customary payroll practices then in effect;
plus (iv) the immediate vesting of all granted options that have not already
expired.

      d) TERMINATION BY ASSOCIATE FOR GOOD REASON. Associate may terminate this
Agreement for "Good Reason" by giving the Company thirty (30) days prior written
notice (the "Notice Period)] to that effect, specifically stating Associate's
Good Reason for terminating in sufficient detail to allow the Company to respond
effectively to the notice, with the termination becoming effective on the 31st
day after such notice is actually received by the Company (the "Termination
Date"), unless the Company at its option cures any alleged breach, if curable,
on or before the Termination Date, or if the breach is not capable of being
cured within the Notice Period, Company made good faith efforts to cure any
alleged breach prior to the Termination Date. The stated Good Reason must be one
or more of any of the reasons defined as a "Good Reason" herein. As used in this
Agreement, a "Good Reason" means termination by Associate only for any one or
more of the following reasons:

            (i) Any reduction of Associate's then-current Base Salary without
Associate's prior written consent; or



                                       4


            (ii) Any material breach of this Agreement by the Company, not
cured or in the process of being cured by the Company as provided herein after
the Company receives not less than 30 days prior written notice by the
Associate.

      An Associate's termination for any of the foregoing Good Reasons shall be
treated the same as a termination "Without Cause" by the Company for purposes of
calculating separation pay, entitling the Associate to the Without Cause
Separation Pay set forth in Section 5(c).

      e) TERMINATION BY ASSOCIATE FOR NO GOOD REASON. Associate may terminate
this Agreement for any reason (other than a Good Reason) or no reason at any
time with not less than thirty (30) days prior written notice to the Company
(such termination shall be called a termination for "No Good Reason"). After the
Company receives notice of a termination for No Good Reason, the Company may by
written notice to the Associate cause the effective date of any such termination
to be accelerated without causing such termination to be considered a
termination by the Company Without Cause. Associate's termination for No Good
Reason shall be treated the same as a termination "For Cause" by the Company for
purposes of calculating separation pay, entitling the Associate to the For Cause
Separation Pay set forth in Section 5(b). For avoidance of doubt, a termination
by Associate for any reason that is also a Good Reason shall be treated as a
termination by Associate for Good Reason as set forth in Section 5(d).

      f) RETURN OF COMPANY PROPERTY. Upon any termination of this Agreement,
Associate shall immediately return to the Company all property of the Company in
Associate's possession, including Confidential Information (as defined below).
Associate acknowledges that the Company may withhold any compensation and
benefits owed to Associate hereunder until all such property is returned in good
condition, normal wear and tear excepted.

      g) CHANGE IN CONTROL. If, within ninety (90) days prior to a Change of
Control, as defined in Associate's Stock Option Agreement, the Agreement
terminates for any reason (other than pursuant to Section 5(b) or (e) above),
then, (i) any unvested options shall vest as of the date of the Change of
Control and shall remain vested and exercisable as specified in Associate's
Stock Option Agreement, and (ii) Associate shall receive, and the Company shall
pay the Associate, the "Without Cause Separation Pay" set forth in Section 5(c)
above.

6.    COVENANTS OF ASSOCIATE.

      a) Associate agrees that during the Term of this Agreement and for one (1)
year following its expiration or termination for any or no reason, including
without limitation, "For Cause", "Without Cause", "For Good Reason", or "No Good
Reason", Associate will not, directly or indirectly, without the prior written
consent of the Company, induce or solicit any person employed or hereafter
employed by the Company to leave the employ of the Company, or solicit, recruit,
hire or attempt to solicit, recruit or hire any person employed by the Company.

      b) Associate agrees that for a period of two (2) years after the
expiration or termination of this Agreement for any or no reason, including
without limitation, "For Cause", "Without Cause", "For Good Reason", or "No Good
Reason", Associate will not, directly or indirectly, without the prior written
consent of the Company, solicit or attempt to solicit, divert or take away, or
attempt to divert or take away, Customers or their laboratory business from the
Company and/or the Company's then-current Affiliates. As used in the preceding
sentence, the term "Customer" shall include, however known to Associate as of
the date of such termination or expiration, (i) any current end-user of the
Company's or its then-current Affiliates' products or services, or any potential
end-user thereof with whom the




                                       5


Company or its then-current Affiliates have had contact with within the
preceding six (6) months; (ii) any current suppliers of the Company's or its
then-current Affiliates; and/or (iii) vendor of the Company or its then-current
Affiliates or reseller of the Company or its then-current Affiliates; and/or
(iv) their Affiliates, successors or assigns. The foregoing notwithstanding for
purposes of this covenant the term "Customer" shall not include those customers
previously known to Affiliate and listed on Exhibit "A" hereto, which is hereby
incorporated by reference, as mutually amended by the parties from time to time.

      c) Associate agrees and acknowledges that Associate will disclose promptly
to the Company every discovery, improvement and invention made, conceived or
developed by Associate during the entire period of employment (whether or not
during working hours) which discoveries, improvements or inventions are capable
of use in any way in connection with the business of the Company. To the fullest
extent permitted by law, all such discoveries, inventions and improvements will
be deemed works made-for-hire. Associate grants and agrees to convey to Company
or its nominee the entire right, title and interest, domestic and foreign, which
Associate may have in such discoveries, improvements or inventions, or a lesser
interest therein, at the option of Company. Associate further agrees to
promptly, upon request, sign all applications for patents, copyrights,
assignments and other appropriate documents, and to perform all acts and to do
all things necessary and appropriate to carry out the intent of this section,
whether or not Associate is still an employee of the Company at the time of such
requests.

      d) Associate agrees and acknowledges that the Confidential Information of
the Company is valuable, special and unique to its business, that such business
depends on such Confidential Information, and that the Company wishes to protect
such Confidential Information by keeping it confidential for the exclusive use
and benefit of the Company. Based on the foregoing, Associate agrees to
undertake the following obligations with respect to such Confidential
Information:

            (i) Associate agrees to keep any and all Confidential Information in
trust for the use and benefit of the Company;

            (ii) Associate agrees that, except as required by Associate's duties
or authorized in writing by the Company, Associate will not at any time during
and for a period of three (3) years after the termination of Associate's
employment with the Company, disclose, directly or indirectly, any Confidential
Information of the Company to any third party; except as may be required by
applicable law or court order, in which case Associate shall promptly notify
Company so as to allow it to seek a protective order if it so elects;

            (iii) Associate agrees to take all reasonable steps necessary, or
reasonably requested by the Company, to ensure that all Confidential Information
of the Company is kept confidential for the use and benefit of the Company and
its subsidiaries; and

            (iv) Associate agrees that, upon termination of Associate's
employment by the Company or at any other time the Company may in writing so
request, Associate will promptly deliver to the Company all materials
constituting Confidential Information (including all copies and derivatives
thereof) that are in the possession of or under the control of Associate.
Associate further agrees that, if requested by the Company to return any
Confidential Information pursuant to this Subsection (iv), Associate will not
make or retain any copy or extract from such materials.

      For the purposes of this Section 6(d), "Confidential Information" means
any and all information, including derivative works, developed by or for the
Company or entrusted to the Company in confidence by its customers, of which
Associate gained knowledge by reason of Associate's




                                       6


employment by the Company, which is not generally known in any industry in which
the Company is or may become engaged, but does not apply to information which is
generally known to the public or the trade, unless such knowledge results from
an unauthorized disclosure by Associate. Confidential Information includes, but
is not limited to, any and all information developed by or for the Company
concerning plans, marketing and sales methods, materials, processes, business
forms, procedures, devices used by the Company, its suppliers and customers with
which the Company had dealt with prior to Associate's termination of employment
with the Company, plans for development of new products, services and expansion
into new areas or markets, internal operations, and any trade secrets,
proprietary information of any type owned by the Company, together with all
written, graphic and other materials relating to all or any part of the same.
The Company will receive all materials, including, software programs, source
code, object code, specifications, documents, abstracts and summaries developed
in connection with Associate's employment. Associate acknowledges that the
programs and documentation developed in connection with Associate's employment
with the Company shall be the exclusive property of the Company, and that the
Company shall retain all right, title and interest in such materials, including
without limitation patent and copyright interests. Nothing herein shall be
construed as a license from the Company to Associate to make, use, sell or copy
any inventions, ideas, trade secrets, trademarks, copyrightable works or other
intellectual property of the Company during the Term of this Agreement or
subsequent to its termination.

      e) Associate acknowledges that there is no general geographical
restriction contained in this Section 6(d) because the Company's and/or
Affiliates' Customers are not confined to one geographical area or operate on a
national level. Notwithstanding the foregoing, if a court of competent
jurisdiction were to determine that any of the foregoing covenants would be held
to be unreasonable in time or distance or scope, the time or distance or scope
may be reduced by appropriate order of the court to that deemed reasonable.

      f) Associate confirms that Associate is not bound by the terms of any
agreement with any previous Company or other party which restricts in any way
Associate's use or disclosure of information or Associate's engagement in any
business, except as Associate may disclose in a separate schedule attached to
this Agreement prior to Company's and Associate's execution of this Agreement.
Further, Associate represents that Associate has delivered to the Company prior
to executing this Agreement true and complete copies of any agreements disclosed
on such attached schedule. Associate represents to the Company that Associate's
execution of this Agreement, employment with the Company and the performance of
Associate's proposed duties for the Company will not violate any obligations
Associate may have to any such previous Company or other party. In any work for
the Company, Associate will not disclose or make use of any information in
violation of any agreements with or rights of any such previous Company or other
party, and will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party. In the event of breach of this
subsection (f) Associate hereby agrees to defend, indemnify and hold harmless
ProxyMed, its officers, directors, employees, agents (the "Indemnified Parties")
from any and all damages, suits, claims, liabilities, actions (individually and
collectively, the "Indemnity Event") arising or resulting from such breach. In
the event of any Indemnity Event, the Indemnified Parties shall provide
Associate with timely written notice of same, and thereafter Associate shall at
its own expense defend, protect and hold harmless the applicable Indemnified
Parties against said Indemnity Event. If the Associate shall fail to so defend
and/or indemnify and save harmless the Indemnified Parties, then in such
instance the Indemnified Parties shall have full rights to defend, pay or settle
said Indemnity Event on their behalf without notice to Associate and with full
rights to recourse against Associate for all fees, costs, expenses and payments
made or agreed to be paid to discharge said Indemnity Event.



                                       7


      g) ASSISTANCE IN LITIGATION. Associate shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which the Company is, or
may become, a party either during or after Associate's employment with the
Company.

      h) INJUNCTIVE RELIEF.

            i) Associate acknowledges and agrees that the covenants and
obligations contained in this Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of this Section
will cause the Company irreparable injury for which adequate remedies at law are
not available. Therefore, Associate agrees that the Company shall be entitled
(without having to post a bond or other surety) to an injunction, restraining
order, or other equitable relief from any court of competent jurisdiction,
restraining the Associate from committing any violation of the covenants and
obligations set forth in this Section 6.

            ii) The Company's rights and remedies under this Section 6 are
cumulative and are in addition to any other rights and remedies the Company may
have pursuant to the specific provisions of this Agreement and at law or in
equity.

7. MISCELLANEOUS.

      a) ATTORNEY'S FEES. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations of any party
to this Agreement, each party shall pay their own fees and expenses, including
reasonable attorney's fees and costs

      b) SUCCESSORS AND ASSIGNS. This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable by the Associate.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Company and the Associate, and the Associate's heirs and legal
representatives, and the Company's successors and assigns.

      c) GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the law of the State of Georgia.

      d) ARBITRATION. Except for disputes relating to Section 6(d) of this
Agreement or any injunctions, any and all disputes or controversies that shall
arise under or in connection with this Agreement or in any other way related to
Associate's employment by the Company, including termination of employment,
shall be submitted to a panel of three arbitrators under the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
then in effect. The parties hereby acknowledge that the Federal Arbitration Act
takes precedence over any state arbitration statutes, rules and regulations.
Each of the arbitrators shall be qualified and experienced in employment related
matters with at least one arbitrator being a licensed attorney. The arbitrators
must base their determination solely on the terms and conditions of this
Agreement and the law in the State of Georgia. The arbitrators shall have the
authority to award any remedies that a court may order or grant, except that
they will have no authority to award punitive damages or any other damages not
measured by the prevailing party's actual damages, and may not, in any event,
make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement. Arbitration shall be held either in Atlanta,
Georgia, and the parties hereby agree to accept service of process served in
accordance with the Notices provision of this Agreement and in the personal
jurisdiction and venue as set out herein. Both parties expressly covenant and
agree to be bound by the decision of the arbitrators as the final determination

                                       8



of the matter in dispute. Judgment upon the award rendered by the arbitrators
may be entered into any court having jurisdiction thereof.

      e) NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company's then-current CEO at its then principal office, as notified to
Associate, or to the Associate at Associate's most current address as shown in
Associate's personnel file, or to either party hereto at such other address or
addresses as Associate or it may from time to time specify for such purposes in
a notice similarly given.

      f) MODIFICATION; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is approved
by a duly authorized officer of the Company and is agreed to in a writing signed
by the Associate and such officer. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

      g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.

      h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

      i) SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and if any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted.

      k) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

      l) SURVIVING PROVISIONS. Any portion of this Agreement which by it nature
survives the termination of this Agreement, including Section 6, shall survive
the termination of this Agreement.

      m) ENTIRE AGREEMENT. Except as modified by this Agreement, all of
Associate's benefits and obligations are as set forth in the Company's policies
in effect from time to time. Other than the Company's policies in effect from
time to time, as modified herein, no agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party, which are not set forth expressly in this Agreement.
This Agreement constitute the final and entire agreement between the parties,
and supercedes all prior written and oral agreements, understandings, or
communications with respect to the subject matter of this Agreement.



                                       9


         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.

PROXYMED, INC.                             ASSOCIATE


By:  /s/ NANCY J. HAM                      By: /s/ THOMAS C. WOHLFORD, III
     ----------------------------              --------------------------------
     SIGNATURE                                 SIGNATURE

Print Name:  NANCY J. HAM                  Print Name:  THOMAS C. WOHLFORD, III
             --------------------                       -----------------------




                                       10



                                   EXHIBIT "A"



 (TO BE PROVIDED BY ASSOCIATE IN WRITING TO THE COMPANY'S SR. CORPORATE COUNSEL
            WITHIN NINETY (90) DAYS OF EXECUTION OF THIS AGREEMENT.)













                                       11

EX-10.15

                                                                   EXHIBIT 10.15
                        AMENDMENT TO EMPLOYMENT AGREEMENT


      This Amendment to that certain Employment Agreement (the "Amendment") by
and between PROXYMED, INC., a Florida corporation (the "Company"), and TIMOTHY
J. TOLAN (the "Executive") dated January 23, 2001, is entered into as of JANUARY
1, 2004 (the "Amendment Date"). In consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:

      WHEREAS, the Company and the Executive have agreed to amend that certain
Employment Agreement;

      NOW, THEREFORE, the parties agree as follows:

      1. The Employment Agreement of the Executive shall automatically renewed
for a period of one (1) year from January 29, 2004 to January 28, 2005, and
shall be automatically extended from year to year thereafter unless otherwise
terminated in accordance with the terms of the Employment Agreement.

      2. Commencing on the Amendment Date, the Executive's position shall be
Executive Vice President-Sales and Account Management, reporting to the Chief
Operating Officer.

      3. Commencing on the Amendment Date, the Executive's annual salary shall
be $175,000.00 payable in accordance with the Company's then-current payroll
practices and subject to any subsequent increases recommended by the Company's
Compensation Committee and approved by the Company's Board of Directors in
writing. Any such subsequent written document is hereby incorporated by
reference and made a part of and shall amend the relevant terms of the
Employment Agreement automatically.

      4. Except as otherwise modified herein, all terms and conditions of the
Executive's Employment Agreement shall remain in full force and effect. To the
extent that a conflict shall exist as between the terms or conditions of the
Employment Agreement and this Amendment, those of this Amendment shall prevail.

      5. This Amendment may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.

      6. This Amendment constitutes the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the transactions contemplated hereby, and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies.

      IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

PROXYMED, INC.                         EXECUTIVE:


By:  /s/ NANCY J. HAM                  By: /s/ TIMOTHY J. TOLAN
     -----------------------------         -----------------------------------
     SIGNATURE                                           SIGNATURE

Print Name:  NANCY J. HAM              Print Name:  TIMOTHY J. TOLAN
           -----------------------                 ---------------------------

Title: PRESIDENT
       ---------------------------

EX-10.17

                                                                   EXHIBIT 10.17
                        AMENDMENT TO EMPLOYMENT AGREEMENT


      This Amendment to that certain Employment Agreement (the "Amendment") by
and between ProxyMed, Inc. (the "Company") and Michael K. Hoover (the
"Executive") dated July 28, 2000 is entered into as of October 9, 2003 (the
"Amendment Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

      WHEREAS, the Employment Agreement had an initial term of three (3) years;

      WHEREAS, the Company's Compensation Committee of the Board of Directors
has reviewed the 2003 performance goals applicable to Executive and has
determined that it is in the best interest of the Company and its shareholders
to allow the Employment Agreement to automatically renew for one (1) year; and

      WHEREAS, the Company and the Executive have agreed to amend that certain
Employment Agreement.

      NOW, THEREFORE, the parties agree as follows:

      1.    The Employment Agreement of the Executive was automatically renewed
            for a period of one (1) year from July 29, 2003 to July 28, 2004 and
            shall be automatically extended from year to year thereafter unless
            otherwise terminated in accordance with the terms of the Employment
            Agreement.

      2.    The Executive's annual salary for the period commencing January 1,
            2004 and expiring on July 28, 2004 shall be $275,000.00, subject to
            any subsequent increases recommended by the Company's Compensation
            Committee and approved by the Company's Board of Directors in
            writing. Any such subsequent written document is hereby incorporated
            by reference and made a part of and shall amend the relevant terms
            of the Employment Agreement automatically.

      3.    Except as otherwise modified herein, all terms and conditions of the
            Executive's Employment Agreement shall remain in full force and
            effect. To the extent that a conflict shall exist as between the
            terms or conditions of the Employment Agreement and this Amendment,
            those of this Amendment shall prevail.

      4.    This Amendment may be executed in one or more counterparts, all of
            which shall be considered one and the same agreement and shall
            become effective when one or more counterparts have been signed by
            each of the parties and delivered to the other parties.

                                       1




      5.    This Amendment constitutes the entire agreement, and supersede all
            prior agreements and understandings, both written and oral, among
            the parties with respect to the transactions contemplated hereby,
            and (b) is not intended to confer upon any person other than the
            parties hereto any rights or remedies.

         IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

PROXYMED, INC.                         EXECUTIVE:



By: /s/ NANCY J. HAM                   By: /s/ MICHAEL K. HOOVER
    ------------------------------         -----------------------------------
    SIGNATURE                              SIGNATURE

Print Name: NANCY J. HAM                Print Name: MICHAEL K. HOOVER
            ----------------------                  --------------------------






                                       2

EX-10.20

                                                                   Exhibit 10.20


                        AMENDMENT TO EMPLOYMENT AGREEMENT


      This Amendment to that certain Employment Agreement (the "Amendment") by
and between ProxyMed, Inc. (the "Company") and Nancy J. Ham (the "Executive")
dated October 16, 2000 is entered into as of October 9, 2003 (the "Amendment
Date"). In consideration of the mutual covenants and agreements hereinafter set
forth, the parties agree as follows:

      WHEREAS, the Employment Agreement had an initial term of three (3) years;

      WHEREAS, the Company's Compensation Committee of the Board of Directors
has reviewed the 2003 performance goals applicable to Executive and has
determined that it is in the best interest of the Company and its shareholders
to allow the Employment Agreement to automatically renew for one (1) year; and

      WHEREAS, the Company and the Executive have agreed to amend that certain
Employment Agreement.

      NOW, THEREFORE, the parties agree as follows:

      1.    The Employment Agreement of the Executive was automatically renewed
            for a period of one (1) year from October 16, 2003 to October 15,
            2004 and shall be automatically extended from year to year
            thereafter unless otherwise terminated in accordance with the terms
            of the Employment Agreement.

      2.    The Executive's annual salary for the period commencing January 1,
            2004 to October 15, 2004 shall be $225,000.00, subject to any
            subsequent increases recommended by the Company's Compensation
            Committee and approved by the Company's Board of Directors in
            writing. Any such subsequent written document is hereby incorporated
            by reference and made a part of and shall amend the relevant terms
            of the Employment Agreement automatically.

      3.    Except as otherwise modified herein, all terms and conditions of the
            Executive's Employment Agreement shall remain in full force and
            effect. To the extent that a conflict shall exist as between the
            terms or conditions of the Employment Agreement and this Amendment,
            those of this Amendment shall prevail.

      4.    This Amendment may be executed in one or more counterparts, all of
            which shall be considered one and the same agreement and shall
            become effective when one or more counterparts have been signed by
            each of the parties and delivered to the other parties.


                                       1



      5.    This Amendment constitutes the entire agreement, and supersede all
            prior agreements and understandings, both written and oral, among
            the parties with respect to the transactions contemplated hereby,
            and (b) is not intended to confer upon any person other than the
            parties hereto any rights or remedies.

      IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

PROXYMED, INC.                           EXECUTIVE:



By:  /s/ MICHAEL K. HOOVER               By: /s/ NANCY J. HAM
    ---------------------------------        ---------------------------------
    SIGNATURE                                SIGNATURE

Print Name: MICHAEL K. HOOVER            Print Name: NANCY J. HAM
            -----------------------                  -------------------------









                                       2

EX-10.23

                                                                   EXHIBIT 10.23
                                 PROXYMED, INC.

                             2002 STOCK OPTION PLAN

                           AS AMENDED ON MARCH 1, 2004


      1. PURPOSE OF THE PLAN

The purpose of this Plan is to further the growth of ProxyMed, Inc., a Florida
corporation, and its subsidiaries (the "Company") by offering an incentive to
officers, directors, other key employees and consultants of the Company to
continue in the employ of the Company, and to increase the interest of these
individuals in the Company, through additional ownership of its common stock.

      2. DEFINITIONS

Whenever used in this Plan, the following terms shall have the meanings set
forth in this Section:

      a)    "Board of Directors" means the Board of Directors of the Company.

      b)    "Change of Control" means any of the following events:

            i) an acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any Person (as
defined in the Exchange Act of 1934, as amended (the "1934 Act") immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of two-thirds (2/3) or more of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (x)
an employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (y) the Company or any Subsidiary,
or (z) any Person in connection with a Non-Control Transaction (as hereinafter
defined).

            ii) the individuals who, as of the date this Plan is approved by the
Company's Board of Directors (the "Board"), are members of the Board (the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board; provided, however, that the voluntary resignation of a member of
the Incumbent Board unrelated to a Change of Control shall not affect such
calculation; provided, further, however, that if the election or nomination for
election by the Company's stockholders or Board of any new director was approved
by a vote of at least two-thirds (2/3) of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered a member of the Incumbent
Board; provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board (a "proxy contest"), including by
reason of any agreement intended to avoid or settle any election contest or
proxy contest; or

            iii) approval by stockholders of the Company of:

                  a) a merger, consolidation or reorganization involving the
Company, unless

                        (1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such merger or consolidation
or reorganization or the ultimate entity controlling such corporation (the
"Surviving Corporation") in






substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;

                        (2) the individuals who are members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds (2/3) of
the members of the board of directors of the Surviving Corporation and no
agreement, plan or arrangement is in place to change the composition of the
board following the merger, consolidation or reorganization such that the
Incumbent Board would constitute less than two-thirds (2/3) of the reconstituted
board;

                        (3) no person (other than the Company, any Subsidiary,
or any employee benefit plan (or any trust forming a part thereof) maintained by
the Company, the Surviving Corporation or any Subsidiary, or any Person who
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then-outstanding Voting
Securities) has Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation's then-outstanding Voting
Securities; and

                        (4) a transaction described in clauses (1) through (3)
shall herein be referred to as a "Non-Control Transaction".

            b) a complete liquidation or dissolution of the Company; or

            c) an agreement for the sale or other disposition of all of the
operating assets of the Company to any Person (other than a transfer to a
Subsidiary).

      Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the
then-outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.

      c) "Code" means the Internal Revenue Code of 1986, as amended.

      d) "Committee" means the Compensation Committee or similar committee of
the Board of Directors.

      e) "Common Stock" means the common stock, par value $.001 per share, of
the Company.

      f) "Corporate Transaction" means any (i) reorganization or liquidation of
the Company, (ii) reclassification of the Company's capital stock, (iii) merger
of the Company with or into another corporation, or (iv) the sale of all or
substantially all the assets of the Company, which results in a significant
number of employees being transferred to a new employer or discharged or in the
creation or severance of a parent-subsidiary relationship.

      g) "Date of Grant" means, as the case may be: (i) the date the Committee
approves the grant of an Option pursuant to this Plan; or (ii) such later date
as may be specified by the Committee as the date a particular Option granted
pursuant to this Plan will become effective.

      h) "Employee" means any person employed by the Company within the meaning
of Section 3401(c) of the Code and the regulations promulgated thereunder. For
purposes of any Non-Qualified Option only, any officer or director of the
Company shall be considered an Employee even if he is not an employee within the
meaning of the first sentence of this subsection.

                                       2

      i) "Exercise Price" means the price per share which must be paid upon
exercise of an Option in cash or property or a combination of both.

      j) "Fair Market Value" means: (i) if the Common Stock is traded in a
market in which actual transactions are reported, the mean of the high and low
prices at which the Common Stock is reported to have traded on the relevant date
in all markets on which trading in the Common Stock is reported or, if there is
no reported sale of the Common Stock on the relevant date, the mean of the
highest reported bid price and lowest reported asked price for the Common Stock
on the relevant date; (ii) if the Common Stock is Publicly Traded but only in
markets in which there is no reporting of actual transactions, the mean of the
highest reported bid price and the lowest reported asked price for the Common
Stock on the relevant date; or (iii) if the Common Stock is not Publicly Traded,
the value of a share of Common Stock as determined by the most recent valuation
prepared by an independent expert at the request of the Committee.

      k) "Incentive Stock Option" means any Option which, at the time of the
grant, is an incentive stock option within the meaning of Section 422 of the
Code.

      l) "Non-Qualified Option" means any Option that is not an Incentive Stock
Option pursuant to the terms of this Plan..

      m) "Option" means any option granted pursuant to this Plan.

      n) "Publicly Traded" means that a class of stock is required to be
registered pursuant to Section 12 of the Exchange Act, or that stock of that
class has been sold within the preceding 12 months in an underwritten public
offering, or stock that is regularly traded in a public market.

      o) "Retirement" means a Termination of Employment by reason of an
Employee's retirement at a time when the Employee is at least 65 years old,
other than by reason of a termination by resignation, discharge, death or Total
Disability or the resignation, failure to stand for re-election or dismissal
from the Board of Directors.

      p) "Termination of Employment" means the time when the employee-employer
relationship between an Employee and the Company ceases to exist for any reason
including, but not limited to, a termination by resignation, discharge, death,
Total Disability or Retirement, or the resignation, failure to stand for
re-election or dismissal from the Board of Directors.

      q) "Total Disability" means the inability of an Employee to perform the
material duties of his or her job by reason of a medically determinable physical
or mental impairment that can be expected to result in death or that has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months. All determinations as to the date and extent of disability of an
Employee will be made in accordance with the written policy pertaining to
Employee disability, if any, of the Company by which the Employee is employed.
In the absence of a written policy pertaining to Employee disability, all
determinations as to the date and extent of disability of an Employee will be
made by the Committee in its sole and absolute discretion. In making its
determination, the Committee may consider the opinion of the personal physician
of the Employee or the opinion of an independent licensed physician of the
Company's choosing.

      3. EFFECTIVE DATE OF THE PLAN

The "effective date" of this Plan is May 22, 2002.

      4. ADMINISTRATION OF THE PLAN

Either the Board of Directors or the Committee shall be responsible for the
administration of this Plan, and shall grant Options pursuant to this Plan.
Subject to the express provisions of this Plan, the Committee shall have full
authority to interpret this Plan, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other determinations which it
believes to be necessary or advisable in administering this Plan. The
determinations of the Committee on the matters referred to in this section shall
be conclusive. The Committee may not amend this Plan. No member of the Committee
shall be liable for any act or omission in connection with the administration of
this Plan unless it resulted from the member's willful misconduct.


                                       3


      5. THE COMMITTEE

The Committee shall hold its meeting at such times and places as it may
determine and shall maintain written minutes of its meetings. A majority of the
members of the Committee shall constitute a quorum at any meeting of the
Committee. All determinations of the Committee shall be made by the vote of a
majority of the members who participate in a meeting. The members of the
Committee may participate in a meeting of the Committee in person or by
conference telephone or similar communications equipment by means of which all
members can hear each other. Any decision or determination by written consent of
all of the members of the Committee shall be as effective as if it had been made
by a vote of a majority of the members who participate in a meeting.

      6. STOCK SUBJECT TO THE PLAN

The maximum number of shares of Common Stock as to which Options may be granted
pursuant to this Plan is 1,350,000 shares. The maximum number of shares of such
Common Stock shall be reduced each year by the grant of Options as provided
herein. If any Option expires or is canceled without being exercised in full,
the number of shares as to which the Option is not exercised will once again
become shares as to which new Options may be granted. The Common Stock that is
issued on exercise of Options may be authorized but unissued shares or shares
that have been issued and reacquired by the Company.

      7. PERSONS ELIGIBLE TO RECEIVE OPTIONS

Options may be granted only to Employees, as defined in Section 2(h) above.

      8. GRANTS OF OPTIONS

            a) IN GENERAL. Except as otherwise provided herein, the Committee
shall have complete discretion to determine when and to which Employees Options
are to be granted, the number of shares of Common Stock as to which Options
granted to each Employee will relate, whether Options granted to an Employee
will be Incentive Stock Options or Non-Qualified Options or partly Incentive
Stock Options and partly Non-Qualified Options and, subject to the limitations
in Sections 9 and 10 below, the Exercise Price and the term of Options granted
to an Employee. Any Options that are not designated as Incentive Stock Options
when they are granted shall be Non-Qualified Options. No grant of an Incentive
Stock Option may be conditioned upon a Non-Qualified Option's having yet been
exercised in whole or in part, and no grant of a Non-Qualified Option may be
conditioned upon an Incentive Stock Option's having not been exercised in whole
or in part.

      9. OPTION PROVISIONS

            a) EXERCISE PRICE. The Exercise Price of each Option shall be as
determined by the Committee; provided, however, that in the case of Incentive
Stock Options, the Exercise Price shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant of the Option.

            b) TERM. The term of each Option shall be as determined by the
Committee, but in no event shall the term of an Option (whether or not an
Incentive Stock Option) be longer than ten (10) years from the Date of Grant.

            c) MANNER OF EXERCISE. An Option that has vested pursuant to the
terms of this Plan may be exercised in whole or in part, in increments of a
minimum of one hundred (100) shares, at any time, or from time to time, during
its term. To exercise an Option, the Employee exercising the Option must deliver
to the Company, at its principal office:

                  i) a written notice of exercise of the Option, which states
the extent to which the Option is being exercised and which is executed by the
Employee;


                                       4




                  ii) a check in an amount, or Common Stock with a Fair Market
Value, equal to the Exercise Price of the Option times the number of shares
being exercised, or a combination of the foregoing; and

                  iii) a check equal to any withholding taxes the Company is
required to pay as a result of the exercise of the Option by the Employee. If
permitted by the Board of Directors or the Committee, either at the time of the
grant of the Option or the time of exercise, the Employee may elect, at such
time and in such manner as the Board of Directors or the Committee may
prescribe, to satisfy such withholding obligation by (A) delivering to the
Company Common Stock (which in the case of Common Stock acquired from the
Company shall have been owned by the Employee for at least six months prior to
the delivery date) having a fair market value equal to such withholding
obligation, or (B) requesting that the Company withhold from the shares of
Common Stock to be delivered upon the exercise a number of shares of Common
Stock having a fair market value equal to such withholding obligation. The day
on which the Company receives all of the items specified in this subsection
shall be the date on which the Option is exercised to the extent described in
the notice of exercise.

            d) DELIVERY OF STOCK CERTIFICATES. As promptly as practicable after
an Option is exercised, the Company shall cause the transfer agent to deliver to
the Employee who exercises the Option certificates, registered in that person's
name, representing the number of shares of Common Stock that were purchased by
the exercise of the Option. Unless the Common Stock was issued in a transaction
that was registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), each certificate may bear a legend to indicate that if the
Common Stock represented by the certificate was issued in a transaction that was
not registered pursuant to the Securities Act, and may only be sold or
transferred in a transaction that is registered pursuant to the Securities Act
or is exempt from the registration requirements of the Securities Act.

            e) VESTING OF OPTIONS. Except as otherwise provided in this Plan,
the Options granted hereunder to Employees shall be subject to such conditions
as to vesting as shall be determined by the Committee, in its sole and absolute
discretion, at the Date of Grant of the Option, and the terms of such vesting
shall be clearly set forth in the instrument granting the Option; provided,
however, that upon a Change of Control, any Options that have not yet vested in
accordance with the terms of this Plan and the Stock Option Agreement shall vest
upon such Change of Control. An Option shall "vest" at such time as it becomes
exercisable in accordance with this Plan and the Stock Option Agreement. Upon
exercise of an Option and the delivery the stock certificates as provided
herein, the Common Stock acquired upon exercise of the Option shall not be
subject to forfeiture by the Employee for any reason whatsoever.

            f) NON-TRANSFERABILITY OF OPTIONS. During the lifetime of a person
to whom an Option is granted pursuant to this Plan, the Option may be exercised
only by that person or by his or her guardian or legal representative, except to
the extent the Board of Directors or the Compensation Committee shall otherwise
determine, whether at the time the option is granted or thereafter, and then
only for estate planning purposes to a trust wherein the option holder is the
trustee, and except to the extent the Board of Directors or the Committee shall
otherwise determine, whether at the time Option is granted or thereafter. An
Option may not be assigned, transferred, sold, pledged or hypothecated in any
way; shall not be subject to levy or execution or disposition under the
Bankruptcy Code of 1978, as amended, or any other state or federal law granting
relief to creditors, whether now or hereafter in effect; and shall not be
transferable otherwise than by will or the laws of descent and distribution. The
Company will not recognize any attempt to assign, transfer, sell, pledge,
hypothecate or otherwise dispose of an Option contrary to the provisions of this
Plan, or to levy any attachment, execution or similar process upon any Option
and, except as expressly stated in this Plan, the Company shall not be required
to, and shall not, issue Common Stock on the exercise of an Option to anyone who
claims to have acquired that Option from the person to whom it was granted in
violation of this subsection.

            g) RETIREMENT OF HOLDER OF OPTION. If there is a Termination of
Employment of an Employee to whom an Option has been granted due to Retirement,
each Incentive Stock Option held by the retired




                                       5


Employee, whether or not then vested, may be exercised until the earlier of: (x)
the end of the three (3) month period immediately following the date of such
Termination of Employment; or (y) the expiration of the term specified in the
Option. In the case of a Non-Qualified Option, there shall be substituted the
words, "the end of the twelve (12) month period" for the words "the end of the
three (3) month period" in the immediately preceding sentence.

            h) TOTAL DISABILITY OF HOLDER OF OPTION. If there is a Termination
of Employment of an Employee to whom an Option has been granted by reason of his
or her Total Disability, each Option held by the Employee, whether or not then
vested, may be exercised until the earlier of: (x) the end of the twelve (12)
month period immediately following the date of such Termination of Employment;
or (y) the expiration of the term specified in the Option.

            i) DEATH OF HOLDER OF OPTION. If there is a Termination of
Employment of an Employee to whom an Option has been granted by reason of (i)
his or her death, or (ii) the death of a former Employee within three (3) months
following the date of his or her Retirement (or, in the case of a Non-Qualified
Option, within twelve (12) months following the date of his or her Retirement),
or (iii) the death of a former Employee within twelve (12) months following the
date of his or her Termination of Employment by reason of Total Disability, then
each Option held by the person at the time of his or her death, whether or not
then vested, may be exercised by the person or persons to whom the Option shall
pass by will or by the laws of descent and distribution (but by no other
persons) until the earlier of: (x) the end of the twelve (12) month period
immediately following the date of death (or such longer period as is permitted
by the Committee); and (y) the expiration of the term specified in the Option,
provided, however, that in no event is the term of the Option to be deemed to
expire prior to the end of three (3) months from the date of death of the
Employee.

            j) TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT, DEATH OR
DISABILITY. Unless the Committee or the Board of Directors states otherwise with
respect to a specific Option, if there is a Termination of Employment of an
Employee to whom an Option has been granted pursuant to this Plan for any reason
other than the Retirement, death or Total Disability of the Employee, then all
Options held by such Employee which are then vested may be exercised until the
earlier of: (x) the three (3) month period immediately following the date of
such Termination of Employment; or (y) the expiration of the term specified in
the Option.

            k) STOCK OPTION AGREEMENT. As promptly as practicable after an
Employee is granted an Option pursuant to this Plan, the Committee shall send
the Employee a document setting forth the terms and conditions of the grant. The
form of grant document shall be substantially as set forth in Exhibit "A"
attached hereto. Each Option granted pursuant to this Plan must be clearly
identified as to whether it is or is not an Incentive Stock Option and shall set
forth all other terms and conditions relating to the exercise thereof. In the
case of an Incentive Stock Option, the document shall include all terms and
provisions that the Committee determines to be necessary or desirable in order
to qualify the Option as an Incentive Stock Option within the meaning of Section
422 of the Code. If an Employee is granted an Incentive Stock Option and a
Non-Qualified Option at the same time, the Committee shall send the Employee a
separate document relating to each of the Incentive Stock Option and the
Non-Qualified Option.

            l) REGISTRATION OF PLAN. Upon a Change of Control, the Company
agrees to use its best efforts to cause the Plan to be registered under the
Securities Act at the earliest possible time. The Company shall have no other
obligations to register the Plan unless directed to do so by the Board of the
Company based on the Company's best interests.

      10. SPECIAL PROVISIONS RELATING TO INCENTIVE STOCK OPTIONS

No Incentive Stock Option may be granted pursuant to this Plan after ten (10)
years from the first to occur of: (i) the date this Plan is adopted by the Board
of Directors; or (ii) the date this Plan is approved by the stockholders of the
Company. No Incentive Stock Option may be exercised after the expiration of ten
(10) years from the Date of Grant or such shorter period as is provided herein.
Notwithstanding Section 8(b)




                                       6


hereof, Incentive Stock Options may not be granted to an Employee who, at the
time the Option is granted, owns more than ten percent (10%) of the total
combined voting power of the stock of the Company, unless: (i) the purchase
price of the Common Stock pursuant to the Incentive Stock Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
Date of Grant; and (ii) the Incentive Stock Option by its terms is not
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee is authorized, pursuant to the last sentence of Section 422(b) of the
Code, to provide at the time an Option is granted, pursuant to the terms of such
Option, that such Option shall not be treated as an Incentive Stock Option even
though it would otherwise qualify as an Incentive Stock Option. The terms of any
Incentive Stock Option granted hereunder shall, in the hands of any individual
grantee thereof, be subject to the dollar limitations set forth in Section
422(d) of the Code (pertaining to the $100,000 per year limitation).

      11. RECAPITALIZATION

            a) IN GENERAL. If the Company increases the number of outstanding
shares of Common Stock through a stock dividend or a stock split, or reduces the
number of outstanding shares of Common Stock through a combination of shares or
similar recapitalization then, immediately after the record date for the change:
(i) the number of shares of Common Stock issuable on the exercise of each
outstanding Option granted pursuant to this Plan (whether or not then vested)
shall be increased in the case of a stock dividend or a stock split, or
decreased in the case of a combination or similar recapitalization that reduces
the number of outstanding shares, by a percentage equal to the percentage change
in the number of outstanding shares of Common Stock as a result of the stock
dividend, stock split, combination or similar recapitalization; (ii) the
Exercise Price of each outstanding Option granted pursuant to this Plan (whether
or not then vested) shall be adjusted so that the total amount to be paid upon
exercise of the Option in full will not change; and (iii) the number of shares
of Common Stock that may be issued on exercise of Options granted pursuant to
this Plan (whether or not then vested) and that are outstanding or remain
available for grant shall be increased or decreased by a percentage equal to the
percentage change in the number of outstanding shares of Common Stock. Any
fractional shares will be rounded up to whole shares.

            b) CORPORATE TRANSACTIONS. If, as a result of a Corporate
Transaction while an Option granted pursuant to this Plan is outstanding
(whether or not then vested), and the holders of the Common Stock become
entitled to receive, with respect to their Common Stock, securities or assets
other than, or in addition to, their Common Stock, then upon exercise of that
Option the holder shall receive what the holder would have received if the
holder had exercised the Option immediately before the first Corporate
Transaction that occurred while the Option was outstanding and as if the Company
had not disposed of anything the holder would have received as a result of that
and all subsequent Corporate Transactions. the Company shall not agree to any
Corporate Transaction unless the other party to the Corporate Transaction agrees
to make available on exercise of the Options granted pursuant to this Plan that
are outstanding at the time of the Corporate Transaction, the securities or
other assets the holders of those Options are entitled pursuant to this
subsection to receive.

      12. RIGHTS OF OPTION HOLDER

            a) STOCKHOLDER. The holder of an Option (whether or not then vested)
shall not have any rights as a stockholder by reason of holding that Option.
Upon exercise of an Option granted pursuant to this Plan, the holder shall be
deemed to acquire the rights of a stockholder when, but not before, the issuance
of Common Stock as a result of the exercise is recorded in the stock transfer
records of the Company.

            b) EMPLOYMENT. Nothing in this Plan or in the grant of an Option
shall confer upon any Employee the right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the Company
to discharge any Employee at any time for any reason whatsoever, with or without
cause.



                                       7


      13. LAWS AND REGULATIONS

The obligation of the Company to sell and deliver shares of Common Stock on
vesting and exercise of Options granted pursuant to this Plan shall be subject
to the condition that counsel for the Company be satisfied that the sale and
delivery thereof will not violate the Securities Act or any other applicable
laws, rules or regulations. In addition, the Company may, as a condition to such
sale and delivery, require the Employee to represent and warrant at the time of
any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required pursuant
to such securities laws.

      14. WITHHOLDING OF TAXES

            a) IN GENERAL. In addition to the requirement set forth in Section
9(c) above that, in order to exercise an Option granted pursuant to this Plan a
person must make a payment to the Company or authorize withholding in order to
enable the Company to pay any withholding taxes due as a result of the exercise
of that Option, if an Employee who exercised an Incentive Stock Option disposes
of shares of Common Stock acquired through exercise of that Incentive Stock
Option either (x) within two years after the Date of Grant of the Incentive
Stock Option or (y) within one year after the issuance of the shares on exercise
of the Incentive Stock Option then, promptly thereafter, the Employee shall
notify the Company of the occurrence of the event and the amount realized upon
the disposition of such Common Stock by the Employee, and pay any federal, state
and other taxes due as a result thereof.

            b) WITHHOLDING OF TAXES. If, whether because of a disposition of
Common Stock acquired on exercise of an Incentive Stock Option, the exercise of
a Non-Qualified Option or otherwise, the Company becomes required to pay
withholding taxes to any federal, state or other taxing authority and the
Employee fails to provide the Company with the funds with which to pay that
withholding tax, then the Company may withhold, subject to applicable state law,
up to 50% of each payment of salary or bonus to the Employee (which will be in
addition to any other required or permitted withholding), until the Company has
been reimbursed for the entire withholding tax it was required to pay.

      15. RESERVATION OF SHARES

The Company shall at all times keep reserved for issuance on exercise of Options
granted pursuant to this Plan a number of authorized but unissued or reacquired
shares of Common Stock equal to the maximum number of shares the Company may be
required to issue on exercise of outstanding Options (whether or not then
vested) granted pursuant to this Plan.

      16. AMENDMENT OF THE PLAN

The Board of Directors may, at any time and from time to time, modify or amend
this Plan in any respect effective at any date the Board of Directors
determines; provided, however, that, without the approval of the stockholders of
the Company the Board of Directors may not increase the maximum number of
Incentive Stock Options that may be granted under the Plan. No modification or
amendment of this Plan shall, without the consent of the holder of an
outstanding Option (whether nor not then vested), adversely affect the holder's
rights pursuant to that Option.

      17. TERMINATION OF THE PLAN

The Board of Directors may suspend or terminate this Plan at any time or from
time to time, but no such action shall adversely affect the rights of a person
holding an outstanding Option, whether or not then vested, granted pursuant to
this Plan prior to that date.



                                       8


                                   EXHIBIT "A"

                             STOCK OPTION AGREEMENT


      This Agreement is made as of ___________, 20__, by and between PROXYMED,
INC. (the "Company") and _____________, who is an employee, officer or director
of the Company or one of its subsidiaries (the "Employee").

      WHEREAS, the Employee is a valuable and trusted employee, officer or
director of the Company, and the Company considers it desirable and in its best
interests that the Employee be given an inducement to acquire a further
proprietary interest in the Company, and an added incentive to advance the
interests of the Company by possessing a right (the "Option Right") to purchase
shares of the Company's common stock, $.001 par value (the "Option Stock"), in
accordance with the PROXYMED, INC. 2002 Stock Option Plan (the "Plan").

      NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:

1. DEFINITIONS. All terms not defined herein and defined in the Plan shall be
given the meaning expressed in the Plan.

2. GRANT OF OPTION. The Company hereby grants to the Employee the right,
privilege and option to purchase the number of shares of Option Stock, at the
purchase price as shown on Schedule I attached hereto (the "Option Price"), in
the manner and subject to the conditions hereinafter provided in this Agreement
and as provided in the Plan. The Option Right granted hereunder is either an
Incentive Stock Option or Non-Qualified Option, as specified on Schedule

3. TIME OF EXERCISE OF OPTION. The aforesaid Option Right may be exercised at
any time, subject to Section 4, below, and from time to time, until the
termination thereof as provided in Paragraph 6, below, or as otherwise provided
in the Plan; provided, however, that the Option Right granted herein may not be
exercised after the termination date as shown on Schedule I, unless provided
otherwise in the Plan.

4. VESTING OF OPTION RIGHT. The Option Right shall vest as provided in Schedule
I.

5. METHOD OF EXERCISE. The Option Right shall be exercised in whole or in part,
in increments of a minimum of one hundred (100) shares, at any time, or from
time to time, during its term. To exercise an option, the Employee shall deliver
written notice in the form attached hereto as Schedule II to the Company at its
principal place of business, accompanied by payment of the Option Price per
share and compliance with such other conditions and requirements as set forth in
the Plan. Payment shall be made by a check, plus a check equal to any
withholding taxes that the Company is required to pay as a result of the
exercise of the Option by the Employee.



                                       9


Subject to the terms and conditions set forth in the Plan, as promptly as
practicable after an Option is exercised, the Company shall deliver such shares
issuable upon exercise of the Option.

6. TERMINATION OF EMPLOYMENT. The rights and obligations of the Employee upon
Termination of Employment shall be as set forth in the Plan.

7. RESTRICTIONS ON CERTAIN RESALES. The shares issuable upon exercise of this
Option have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering. The holder may not resell the shares purchased
hereunder except pursuant to registration under the Securities Act or an
exemption therefrom.

        Resales of shares issuable hereunder may be subject to other state and
federal securities laws. The Employee is advised to consult with legal counsel
as to compliance with the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and such other laws prior to resale of such
shares.

         The Company, as a condition to the exercise of an Option to acquire
shares not registered under the Securities Act, may require the Employee to
represent and warrant at the time of any exercise that the shares are being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by the Securities Act.

8. RECLASSIFICATION, MERGER, ETC. The rights and obligations of the Company and
the Employee as a result of the transactions specified in Section 11 of the Plan
shall be as provided therein.

9. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option Right is nonassignable and
nontransferable by the Employee except as provided in the Plan and, during his
lifetime, is exercisable only by him. The Employee shall have no rights as a
stockholder with respect to the Option Stock until payment of the Option Price
and delivery to him of such shares as herein provided. Nothing in this Agreement
shall confer any right in an employee to continue in the employment of the
Company or interfere in any way with the right of the Company to terminate such
employment at any time.

10. BINDING EFFECT. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

11. DISCREPANCIES. If there appears to be any discrepancies between this
Agreement and the Plan, they shall be interpreted and determined by the terms
and conditions of the Plan.

                                       10




        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

                                           PROXYMED, INC.



By:                                        By:
    ------------------------------            ---------------------------------
    Rafael G. Rodriguez, Secretary            Michael K. Hoover, Chairman and
                                              Chief Executive Officer


        I hereby accept the stock option right offered to me by the Company, as
set forth in this Stock Option Agreement dated as of ________, 20__, and
Schedule I which is attached thereto.


                                           Accepted by:

                                           Employee:


                                           ------------------------------------
                                           EMPLOYEE SIGNATURE


                                           ------------------------------------
                                           Date






                                       11


                                   SCHEDULE I


         The information set forth in this Schedule I is subject to all of the
terms of the PROXYMED, INC. 2002 Stock Option Agreement to which this Schedule
is attached.


         1.       Name of Employee, Officer or Director:


                  --------------------------------------

         2.       Address:

                  --------------------------------------

                  --------------------------------------

         3.       Social Security Number:  _____________


         4.       Number of Shares:  ___________________

         5.       Exercise Price:  $____ per share [closing price at
                                   close of business on _____]

         6.       Type of Option (check one):

                      [  ]       Incentive Stock Option

                      [  ]       Non-Qualified Stock Option

        7.        NUMBER OF SHARES      DATE VESTED         TERMINATION DATE
                  ----------------      -----------         ----------------




REFERENCE IS MADE TO THE 2002 STOCK OPTION PLAN FOR CERTAIN EVENTS SUCH AS
DEATH, DISABILITY, CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT THAT CAUSE
THESE OPTIONS TO EXPIRE PRIOR TO THE TERMINATION DATE SET FORTH ABOVE.





                                       12



                                   SCHEDULE II

                               NOTICE OF EXERCISE

        I, the undersigned Employee, hereby give notice of the exercise of the
Option described below, to the extent and in the manner specified herein,
subject to the all of the terms and conditions of the PROXYMED, INC. STOCK
OPTION AGREEMENT granting this Option and the PROXYMED, INC. 2002 STOCK OPTION
PLAN. If the shares to be acquired pursuant to this exercise of the Option are
not registered under the Securities Act of 1933, as amended, the undersigned
represents and warrants that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares.

        1.     Name of Employee, Officer or Director:


               -----------------------------------------


        2.     Address:

               -----------------------------------------

               -----------------------------------------

               -----------------------------------------

        3.     Social Security Number:  ________________

        4.     Number of Shares Being Exercised on This Date:  ______________

        5.     Exercise Price:  $____ per share

        6.     Manner of Payment:

               ______  Check (amount enclosed:  $________________)




                                            EMPLOYEE SIGNATURE

                                            DATE:
                                                  ----------------------------

SIGNATURE GUARANTEE:



- ------------------------------------



                                       13

EX-10.34

                                                                   EXHIBIT 10.34

                PROXYMED, INC., KEY COMMUNICATIONS SERVICE, INC.,
                                and MEDUNITE INC.
                                  as Borrowers

                           LOAN AND SECURITY AGREEMENT

                             Dated: December 4, 2003

                                   $12,500,000

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                                    as Lender



                                TABLE OF CONTENTS

                                                                   
Section 1.     DEFINITIONS, TERMS AND REFERENCES.......................   1
        1.1.   Certain Definitions.....................................   1
        1.2.   Accounting Terms........................................  31
        1.3.   Other Terms.............................................  31
        1.4.   Certain Matters of Construction.........................  31
        1.5.   Schedules and Exhibits..................................  32
Section 2.     CREDIT facility.........................................  32
        2.1.   Revolver Commitment.....................................  32
        2.2.   Intentionally Omitted...................................  33
        2.3.   LC Facility.............................................  33
Section 3.     INTEREST, fees and charges..............................  36
        3.1.   Interest................................................  36
        3.2.   Fees....................................................  39
        3.3.   Computation of Interest and Fees........................  40
        3.4.   Reimbursement of Expenses...............................  40
        3.5.   Lender Charges..........................................  41
        3.6.   Illegality..............................................  41
        3.7.   Increased Costs.........................................  42
        3.8.   Capital Adequacy........................................  43
        3.9.   Funding Losses..........................................  44
        3.10.  Maximum Interest........................................  44
Section 4.     LOAN ADMINISTRATION.....................................  46
        4.1.   Manner of Borrowing and Funding Revolver Loans..........  46
        4.2.   Special Provisions Governing Euro-Dollar Loans..........  47
        4.3.   Borrowers' Representative...............................  48
        4.4.   All Loans to Constitute One Obligation..................  48
Section 5.     PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY...........  48
        5.1.   General Repayment Provisions............................  48
        5.2.   Repayment of Revolver Loans.............................  49
        5.3.   Conditional Application Exemption.......................  50
        5.4.   Payment of Other Obligations............................  50
        5.5.   Marshaling; Payments Set Aside..........................  51
        5.6.   Application of Payments and Collateral Proceeds.........  51
        5.7.   Loan Account; Account Stated............................  51
        5.8.   Gross Up for Taxes......................................  52
        5.9.   Nature and Extent of Each Borrower's Liability..........  52
Section 6.     TERM AND TERMINATION OF COMMITMENTS.....................  54
        6.1.   Term of Commitments.....................................  54
        6.2.   Termination or Reduction................................  54
Section 7.     COLLATERAL SECURITY.....................................  55
        7.1.   Grant of Security Interest in Collateral................  55



                                        i


                                                                   
        7.2.   Lien on Deposit Accounts................................  56
        7.3.   Intentionally Omitted...................................  57
        7.4.   Other Collateral........................................  57
        7.5.   No Assumption of Liability..............................  57
        7.6.   Lien Perfection; Further Assurances.....................  57
        7.7.   Exclusion for Certain Contracts and Leases..............  58
Section 8.     COLLATERAL ADMINISTRATION...............................  58
        8.1.   General.................................................  58
        8.2.   Administration of Accounts..............................  60
        8.3.   Administration of Inventory.............................  61
        8.4.   Administration of Equipment.............................  62
        8.5.   Borrowing Base Certificates.............................  63
Section 9.     REPRESENTATIONS AND WARRANTIES..........................  63
        9.1.   General Representations and Warranties..................  63
        9.2.   Reaffirmation of Representations and Warranties.........  70
        9.3.   Survival of Representations and Warranties..............  70
Section 10.    COVENANTS AND CONTINUING AGREEMENTS.....................  70
        10.1.  Affirmative Covenants...................................  70
        10.2.  Negative Covenants......................................  74
        10.3.  Specific Financial Covenant.............................  78
Section 11.    CONDITIONS PRECEDENT....................................  79
        11.1.  Conditions Precedent to Initial Credit Extensions.......  79
        11.2.  Conditions Precedent to All Credit Extensions...........  81
        11.3.  Limited Waiver of Conditions Precedent..................  82
Section 12.    EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.......  83
        12.1.  Events of Default.......................................  83
        12.2.  Acceleration of  Obligations; Termination of
               Commitments.............................................  86
        12.3.  Other Remedies..........................................  86
        12.4.  Setoff..................................................  88
        12.5.  Remedies Cumulative; No Waiver..........................  88
Section 13.    MISCELLANEOUS...........................................  89
        13.1.  Power of Attorney.......................................  89
        13.2.  General Indemnity.......................................  90
        13.3.  Survival of All Indemnities.............................  90
        13.4.  Modification of Agreement; Sale of Interest.............  90
        13.5.  Severability............................................  91
        13.6.  Cumulative Effect; Conflict of Terms....................  91
        13.7.  Execution in Counterparts...............................  91
        13.8.  Lender's Consent........................................  91
        13.9.  Notice..................................................  91
        13.10. Performance of Borrowers' Obligations...................  92
        13.11. Credit Inquiries........................................  93
        13.12. Time of Essence.........................................  93
        13.13. Indulgences Not Waivers.................................  93



                                       ii

                                                                   
        13.14. Entire Agreement; Successors and Assigns................  93
        13.15. Interpretation..........................................  93
        13.16. Advertising and Publicity...............................  94
        13.17. Governing Law; Consent To Forum.........................  94
        13.18. Waivers by Borrower.....................................  94



                                       iii


                                LIST OF EXHIBITS

Exhibits

Exhibit A-1      Form of Revolver Note
Exhibit B        Form of Notice of Conversion/Continuation
Exhibit C        Form of Notice of Borrowing
Exhibit D        Form of Compliance Certificate
Exhibit E        Form of Borrowers' Counsel Opinion
Exhibit F        Form of Letter of Credit Procurement Request
Exhibit H        Form of Borrowing Base Certificate
Exhibit I        Form of Blocked Account Agreement
Exhibit J        Form of Covenant Calculation Report
Exhibit K        Form of Guaranty Agreement
Exhibit L        Form of Guarantors' Security Agreement
Exhibit M        Form of Patent and Trademark Security Agreement
Exhibit N        Form of Copyright Security Agreement
Exhibit O        Form of Secretary's Certificate

Schedules

1.1              Lockbox
8.1.1            Business Locations
8.1.2            Insurance
8.4              Fixtures
9.1.1            Jurisdictions in which Borrowers and their Subsidiaries are
                 Authorized to do Business
9.1.4            Capital Structure
9.1.5            Corporate Names
9.1.12           Surety Obligations
9.1.13           Tax Identification Numbers
9.1.15           Patents, Trademarks, Copyrights and Licenses
9.1.19           Litigation
9.1.21           Capitalized and Operating Leases
9.1.22           Pension Plans
9.1.23           Trade Relations
9.1.24           Labor Contracts
9.1.28           Hazardous Materials
10.2.3           Permitted Subordinated Debt
10.2.5           Permitted Liens

                                       iv



                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT is made on December 4, 2003, by and
among PROXYMED, INC., a Florida corporation ("ProxyMed" individually and, in its
capacity as the representative of the other Borrowers pursuant to SECTION 4.3
hereof, "Borrowers' Agent"), KEY COMMUNICATIONS SERVICE, INC., an Indiana
corporation ("Key Communications"), and MEDUNITE INC., a Delaware corporation
("Medunite" and together with ProxyMed and Key Communications, collectively, the
"Borrowers" and each individually, a "Borrower"), and WACHOVIA BANK, NATIONAL
ASSOCIATION (together with its successors and assigns, "Lender"), a national
banking association.

                            R E C I T A L S:

         Each Borrower has requested that Lender make available revolving credit
and letter of credit facilities to Borrowers, which facilities shall be used by
Borrowers to finance their mutual and collective enterprise. In order to utilize
the financial powers of each Borrower in the most efficient and economical
manner, and in order to facilitate the financing of each Borrower's needs,
Lender will, at the request of any Borrower, make loans to Borrowers under the
credit facilities on a combined basis and in accordance with the provisions
hereinafter set forth. Borrowers' business is a mutual and collective
enterprise, and Borrowers believe that the consolidation of all loans under this
Agreement will enhance the aggregate borrowing powers of each Borrower and ease
the administration of their loan relationship with Lender, all to the mutual
advantage of Borrowers. Lender's willingness to extend credit to Borrowers and
to administer each Borrower's collateral security therefor, on a combined basis
as more fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers' request in furtherance of Borrowers' mutual and
collective enterprise.

         Lender is willing to extend financing to Borrowers in accordance with
the terms hereof upon the execution of this Agreement by Borrowers, compliance
by Borrowers with all of the terms and provisions of this Agreement and
fulfillment of all conditions precedent to Lender's obligations herein
contained.

         NOW, THEREFORE, to induce Lender to extend the financing provided for
herein, and for other good and valuable consideration, the sufficiency and
receipt of all of which are acknowledged by Borrowers, the parties hereto hereby
agree as follows:

SECTION 1. DEFINITIONS, TERMS AND REFERENCES

         1.1. CERTAIN DEFINITIONS. In addition to such other terms as elsewhere
defined herein, as used in this Agreement, in any Exhibits and in any
Supplements, the following terms shall have the following meanings:

                  Account - shall have the meaning ascribed to "account" in the
         UCC and shall include any and all of a Borrower's now owned or
         hereafter acquired accounts and all other rights to payment for goods
         sold or leased or for services rendered that are not



         evidenced by an Instrument or Chattel Paper, whether or not they have
         been earned by performance.

                  Account Debtor - a Person who is or becomes obligated under or
         on account of an Account, Instrument, Chattel Paper or Payment
         Intangible.

                  Accounts Collateral - all Accounts of a Borrower and all
         right, title and interest of a Borrower in or to any returned Goods the
         sale or other disposition of which gave rise to an Account, together
         with all rights, titles, securities and guarantees with respect to any
         Account, including any rights to stoppage in transit, replevin,
         reclamation and resales, and all related security Liens, whether
         voluntary or involuntary, in each case whether now existing or owned or
         hereafter created, arising or acquired.

                  Accounts Formula Amount - on any date of determination
         thereof, an amount equal to the lesser of (i) the Revolver Commitment
         Amount on such date or (ii) an amount equal to eighty percent (80%) of
         Eligible Accounts on such date, subject to dilution of less than ten
         percent (10%) (or such lesser percentage as Lender may in its
         reasonable credit judgment determine from time to time). As used
         herein, the phrase "net amount of Eligible Accounts" shall mean the
         face amount of such Accounts on any date less any and all returns,
         Rebates, discounts (which may, at Lender's option, be calculated on
         shortest terms), credits, allowances or Taxes (including sales, excise
         or other taxes) at any time issued, owing, claimed by Account Debtors,
         granted, outstanding or payable in connection with, or any interest
         accrued on the amount of, such Accounts at such date.

                  Adjusted Euro-Dollar Rate - with respect to each Interest
         Period for a Euro-Dollar Loan, an interest rate per annum (rounded
         upwards, to the next 1/16 of 1%) equal to the quotient of (a) the
         Euro-Dollar Rate in effect for such Interest Period divided by (b) a
         percentage (expressed as a decimal) equal to 100% minus Statutory
         Reserves.

                  Adjusted Net Earnings - with respect to any fiscal period of
         Borrowers, the net earnings (or loss) for such fiscal period, all as
         reflected on the financial statement of Borrowers supplied to Lender
         pursuant to SECTION 10.1.3 hereof, but excluding: (i) any gain arising
         from the sale of capital assets; (ii) any gain arising from any
         write-up of assets during such period; (iii) earnings of any Subsidiary
         accrued prior to the date it became a Subsidiary; (iv) earnings of any
         Person, substantially all the assets of which have been acquired in any
         manner by Borrowers, realized by such Person prior to the date of such
         acquisition; (v) net earnings of any entity (other than a Subsidiary of
         Borrowers) in which Borrowers has an ownership interest unless such net
         earnings have actually been received by Borrowers in the form of cash
         Distributions; (vi) any portion of the net earnings of any Subsidiary
         which for any reason is unavailable for payment of Distributions to
         Borrowers; (vii) the earnings of any Person to which any assets of
         Borrowers shall have been sold, transferred or disposed of, or into
         which a Borrower shall have merged, or been a party to any
         consolidation or other form of reorganization, prior to the date of
         such transaction; (viii) any gain arising from the acquisition of any

                                       2


         Securities by Borrowers; and (ix) any gain arising from extraordinary
         or non-recurring items, all as determined in accordance with GAAP.

                  Affiliate - a Person (other than a Subsidiary): (i) which
         directly or indirectly through one or more intermediaries controls, or
         is controlled by, or is under common control with, a Person; (ii) which
         beneficially owns or holds 10% or more of any class of the Equity
         Interests of a Person; or (iii) 10% or more of the Equity Interests
         with power to vote of which is beneficially owned or held by a Person
         or a Subsidiary of a Person. For purposes hereof, "control" means the
         possession, directly or indirectly, of the power to direct or cause the
         direction of the management and policies of a Person, whether through
         the ownership of any Equity Interest, by contract or otherwise.

                  Agreement - this Loan and Security Agreement, and all Exhibits
         and Schedules hereto.

                  Applicable Law - all laws, rules and regulations applicable to
         the Person, conduct, transaction, covenant, Loan Document or Material
         Contract in question, including all applicable common law and equitable
         principles; all provisions of all applicable state, federal and foreign
         constitutions, statutes, rules, regulations and orders of governmental
         bodies; and orders, judgments and decrees of all courts and
         arbitrators.

                  Applicable Margin - As of any measurement date in which the
         Revolver Loan Balance is equal to or less than an amount equal to 95%
         of the average amount of Liquid Collateral included in the Borrowing
         Base for such date, a percentage equal to 0.75% with respect to
         Revolver Loans that bear interest as a Euro-Dollar Loan and 0% with
         respect to Revolver Loans that bear interest as Base Rate Loans. As of
         any measurement date in which the Revolver Loan Balance is greater than
         an amount equal to 95% of the average amount of Liquid Collateral
         included in the Borrowing Base for such date, (i) with respect to
         borrowings against Liquid Collateral, a percentage equal to 0.75% with
         respect to Revolver Loans that bear interest as a Euro-Dollar Loan and
         0% with respect to Revolver Loans that bear interest as Base Rate
         Loans, and (ii) with respect to borrowings against components of the
         Borrowing Base other than Liquid Collateral, a percentage equal to
         2.25% with respect to Revolver Loans that bear interest as a
         Euro-Dollar Loan and 0% with respect to Revolver Loans that bear
         interest as Base Rate Loans.

                  Availability - on any date, the amount that Borrowers are
         entitled to borrow as Revolver Loans on such date, such amount being
         the difference derived when the sum of the principal amount of Revolver
         Loans then outstanding (including any amounts that Lender may have paid
         for the account of Borrowers pursuant to any of the Loan Documents and
         that have not been reimbursed by Borrowers) is subtracted from the
         Borrowing Base. If the amount outstanding is equal to or greater than
         the Borrowing Base, then Availability is zero.

                  Availability Reserve - on any date of determination thereof,
         if deemed necessary by Lender in its sole and absolute discretion, an
         amount equal to the sum of the following

                                       3


         (without duplication) (i) the Inventory Reserve; (ii) all amounts of
         past due rent, fees or other charges owing at such time by any Obligor
         to any landlord of any premises where any of the Collateral is located
         or to any processor, repairman, mechanic or other Person who is in
         possession of any Collateral or has asserted any Lien or claim thereto;
         (iii) any amounts which any Obligor is obligated to pay pursuant to the
         provisions of any of the Loan Documents that Lender elects to pay for
         the account of such Obligor in accordance with authority contained in
         any of the Loan Documents; (iv) the LC Reserve; (v) reserves
         established by Lender with respect to any Banking Relationship Debt, to
         the extent past due or payable; (vi) all customer deposits or other
         prepayments held by any Borrower; (vii) the Foreign Exchange Agreement
         Reserve, if any; (viii) the Interest Rate Contract Reserve; and (ix)
         such additional reserves as Lender in the exercise of its reasonable
         credit judgment may elect to impose from time to time; provided,
         however, that items (i), (ii) and (vi) shall not apply in the
         calculation of Availability Reserves for borrowings against Liquid
         Collateral.

                  Average Availability - for any period, an amount equal to the
         sum of the actual amount of Availability on each day during such
         period, as determined by Lender, divided by the number of days in such
         period.

                  Banking Relationship Debt - Debt or other obligations of a
         Borrower to Lender (or any Affiliate of Lender), including any Debt
         arising out of or relating to (i) checking and operating account
         relationships between a Borrower and Lender (or any Affiliate of
         Lender), including any obligations under Cash Management Agreements,
         (ii) Interest Rate Contracts with Lender (or any Affiliate or Lender),
         (iii) Foreign Exchange Contracts, and (iv) other products provided by
         Lender (or any Affiliate of Lender) to a Borrower, including ACH
         transfer services.

                  Bankruptcy Code - Title 11 of the United States Code.

                  Base Rate - the greater from time to time of (i) the rate of
         interest announced or quoted by Lender from time to time as its prime
         rate or (ii) the Federal Funds Rate in effect from time to time plus
         0.5%. The prime rate announced by Lender is a reference rate and does
         not necessarily represent the lowest or best rate charged by Lender.
         Lender may make loans or other extensions of credit at, above or below
         its announced prime rate. If the prime rate is discontinued by Lender
         as a standard, a comparable reference rate designated by Lender as a
         substitute therefor shall be the Base Rate.

                  Base Rate Loan - a Loan, or portion thereof, during any period
         in which it bears interest at a rate based upon the Base Rate.

                  Blocked Account - a Deposit Account of a Borrower which is
         subject to a Blocked Account Agreement.

                  Blocked Account Agreement - means an agreement among a
         Borrower, the Lender and a Clearing Bank, substantially in the form
         attached hereto as EXHIBIT I, concerning

                                       4


         the collection, treatment and remission of payments or other deposits
         which represent the proceeds of Collateral.

                  Board of Governors - the Board of Governors of the Federal
         Reserve System.

                  Borrowing - a borrowing consisting of Loans of one Type made
         on the same day and of the same Type by Lender or a conversion of a
         Loan or Loans of one Type from Lender on the same day.

                  Borrowing Base - On any date of determination thereof which is
         prior to the date on which the Expanded Borrowing Base Conditions have
         been satisfied, an amount equal to the lesser of (a) an amount equal to
         (i) the Revolver Commitment Amount minus (ii) the aggregate LC
         Outstandings on such date, or (b) an amount equal to (i) 95% of the
         amount of Liquid Collateral on such date minus (ii) the Availability
         Reserve on such date. On any date of determination thereof which is on
         or after the date on which the Expanded Borrowing Base Conditions have
         been satisfied, an amount equal to the lesser of (a) an amount equal to
         (i) the Revolver Commitment Amount minus (ii) the aggregate LC
         Outstandings on such date, or (b) an amount equal to (i) 95% of the
         amount of Liquid Collateral on such date plus (ii) the Accounts Formula
         Amount on such date plus (iii) an amount equal to the lesser of (A) the
         Inventory Formula Amount on such date or (B) $2,000,000 minus (iv) the
         Availability Reserve on such date.

                  Borrowing Base Certificate - a certificate, in the form
         attached hereto as EXHIBIT H, by which Borrowers shall certify to
         Lender the respective amounts of the components of the Borrowing Base
         as of the date of the certificate and the calculation or other
         determination of such amounts.

                  Borrowing Base Reporting Event - means the occurrence of the
         following on any date: the Revolver Loan Balance shall exceed an amount
         equal to 95% of the Liquid Collateral on such date minus the
         Availability Reserve on such date.

                  Business Day - any day excluding Saturday, Sunday and any
         other day that is a legal holiday under the laws of the State of
         Georgia and the State of North Carolina or is a day on which banking
         institutions located in such state are closed; provided, however, that
         when used with reference to a Euro-Dollar Loan (including the making,
         continuing, prepaying or repaying of any Euro-Dollar Loan), the term
         "Business Day" shall mean a "Euro-Dollar Business Day."

                  Capital Expenditures - with respect to any Person,
         expenditures made or liabilities incurred by such Person for
         capitalized software or for the acquisition or leasing pursuant to a
         capital lease of any fixed or capital assets or improvements,
         replacements, substitutions or additions thereto, to the extent that
         the same are properly treated as capital expenditures under GAAP on a
         balance sheet of such Person, including the total principal portion of
         Capitalized Lease Obligations.

                                       5


                  Capitalized Lease Obligation - any Debt represented by
         obligations under a lease that is required to be capitalized for
         financial reporting purposes in accordance with GAAP.

                  Cash Collateral - cash or Cash Equivalents, and any interest
         earned thereon, that is deposited in an account opened with and
         maintained by Lender in accordance with this Agreement as security for
         any of the Obligations.

                  Cash Collateral Account - a demand deposit, money market or
         other account established with and maintained by Lender, which account
         shall be in Lender's name and subject to Lender's Liens.

                  Cash Equivalents - (i) marketable direct obligations issued or
         unconditionally guaranteed by the United States government and backed
         by the full faith and credit of the United States government having
         maturities of not more than 12 months from the date of acquisition;
         (ii) domestic certificates of deposit and time deposits having
         maturities of not more than 12 months from the date of acquisition,
         bankers' acceptances having maturities of not more than 12 months from
         the date of acquisition and overnight bank deposits, in each case
         issued by any commercial bank organized under the laws of the United
         States, any state thereof or the District of Columbia, which at the
         time of acquisition are rated A-1 (or better) by S&P or P-1 (or better)
         by Moody's and (unless issued by Lender) not subject to offset rights
         in favor of such bank arising from any banking relationship with such
         bank; (iii) repurchase obligations with a term of not more than 30 days
         for underlying securities of the types described in clauses (i) and
         (ii) entered into with any financial institution meeting the
         qualifications specified in clause (ii) above; and (iv) commercial
         paper having at the time of investment therein or a contractual
         commitment to invest therein a rating of A-1 (or better) by S&P or P-1
         (or better) by Moody's and having a maturity within 9 months after the
         date of acquisition thereof.

                  Cash Management Agreements - any agreement entered into at any
         time between a Borrower or any of its Subsidiaries, on the one hand,
         and Lender or any of its Affiliates in connection with cash management
         services for operating, collections, payroll and trust accounts of such
         Borrower or its Subsidiaries provided by such banking or financial
         institution, including automatic clearinghouse services, controlled
         disbursement services, electronic funds transfer services, information
         reporting services, lockbox services, stop payment services and wire
         transfer services.

                  CERCLA - the Comprehensive Environmental Response Compensation
         and Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing
         regulations.

                  Change of Control - shall mean the occurrence of any of the
         following:

                  (a)      with respect to any Borrower, less than a majority of
                           the members of such Borrower's Board of Directors
                           shall be persons who either (i) were serving as
                           directors on the Closing Date or (ii) were nominated
                           as directors by a majority of

                                       6


                           the directors who are either directors referred to in
                           clause (i) above or directors nominated and approved
                           pursuant to this clause (ii); or

                  (b)      with respect to any Borrower, the stockholders of
                           such Borrower shall approve any plan or proposal for
                           the liquidation or dissolution of the Borrower; or

                  (c)      a Person or group of Persons acting in concert (i)
                           shall, as a result of a tender or exchange offer,
                           open market purchases, privately negotiated purchases
                           or otherwise, have become the direct or indirect
                           beneficial owner (within the meaning of Rule 13d-3
                           under the Securities Exchange Act of 1934, as amended
                           from time to time) of Equity Interests of ProxyMed
                           aggregating more than forty-nine percent (49%) of the
                           combined voting power of the outstanding Equity
                           Interests in ProxyMed entitled to vote for the
                           election of directors, or (ii) with respect to any
                           Borrower, shall have the right to elect a majority of
                           the Board of Directors of such Borrower.

                  Chattel Paper - shall have the meaning ascribed to "chattel
         paper" in the UCC and shall include Electronic Chattel Paper.

                  Claim - any and all claims, demands, liabilities, obligations,
         losses, damages, penalties, actions, judgments, suits, awards, remedial
         response, costs, expenses or disbursements of any kind or nature
         whatsoever (including reasonable attorneys', accountants' or
         consultants' fees and expenses), whether arising under or in connection
         with the Loan Documents, under any Applicable Law (including any
         Environmental Laws) or otherwise, that may now or hereafter be suffered
         or incurred by a Person and whether suffered or incurred in or as a
         result of any investigation, litigation, arbitration or other judicial
         or non-judicial proceeding or any appeals related thereto.

                  Clearing Bank - means any banking institution with which a
Blocked Account has been established pursuant to an Blocked Account Agreement.

                  Closing Date - the date on which all of the conditions
         precedent in SECTION 11.4 of this Agreement are satisfied.

                  Collateral - all of the Property and interests in Property
         described in SECTION 7 of this Agreement, all Property described in any
         of the Security Documents as security for payment or performance of the
         Obligations and all other Property and interests in Property that now
         or hereafter secure (or are intended to secure) the payment and
         performance of any of the Obligations.

                  Collateral Reserve Account - a Deposit Account which has been
         opened and maintained by the Borrowers with the Lender pursuant to
         SECTION 11.1.8.

                  Commercial Tort Claim - shall have the meaning ascribed to
         "commercial tort claim" in the UCC.

                                       7


                  Commitment Termination Date - the date that is the soonest to
         occur of (i) the last day of the Term; (ii) the date on which Borrowers
         elect to terminate the Commitments pursuant to SECTION 6.2 of this
         Agreement; or (iii) the date on which the Commitments are automatically
         terminated pursuant to SECTION 12.2 of this Agreement.

                  Commitments - at any date, the Revolver Commitment Amount.

                  Compliance Certificate - a Compliance Certificate to be
         provided by Borrowers to Lender in accordance with, and in the form
         annexed as EXHIBIT D to, this Agreement.

                  Consolidated - the consolidation in accordance with GAAP of
         the accounts or other items as to which such term applies in reference
         to two or more Persons.

                  Consolidating - the presentation of the separate accounts or
         other items to which such term applies in reference to two or more
         Persons where such accounts or items are also presented on a
         Consolidated basis, in accordance with GAAP.

                  Consolidated EBITDA - for any period, an amount equal to the
         sum for such period of (i) Adjusted Net Earnings, plus (ii) provision
         for Taxes based on income that are actually deducted in calculating
         Adjusted Net Earnings, plus (iii) Interest Expense, plus (iv)
         depreciation and amortization expense, on a Consolidated basis.

                  Contingent Obligation - with respect to any Person, any
         obligation of such Person arising from any guaranty, indemnity or other
         assurance or payment or performance of any Debt, lease, dividend or
         other obligation ("primary obligations") of any other Person (the
         "primary obligor") in any manner, whether directly or indirectly,
         including (i) the direct or indirect guaranty endorsement (other than
         for collection or deposit in the Ordinary Course of Business),
         co-making, discounting with recourse or sale with recourse by such
         Person of the obligation of a primary obligor, (ii) the obligation to
         make take-or-pay or similar payments, if required, regardless of
         nonperformance by any other party or parties to an agreement, (iii) any
         obligation of such Person, whether or not contingent, (A) to purchase
         any such primary obligation or any Property constituting direct or
         indirect security therefor, (B) to advance or supply funds (1) for the
         purchase or payment of any such primary obligations or (2) to maintain
         working capital or equity capital of the primary obligor or otherwise
         to maintain the net worth or solvency of the primary obligor, (C) to
         purchase Property, Securities or services primarily for the purpose of
         assuring the owner of any such primary obligation of the ability of the
         primary obligor to make payment of such primary obligation or (D)
         otherwise to assure or hold harmless the holder of such primary
         obligation against loss in respect thereof; provided, however, that the
         term "Contingent Obligation" shall not include any product warranties
         extended in the Ordinary Course of Business. The amount of any
         Contingent Obligation shall be deemed to be an amount equal to the
         stated or determinable amount of the primary obligation with respect to
         which such Contingent Obligation is made (or, if less, the maximum
         amount of such primary obligation for which such Person may be liable
         pursuant to the terms of the instrument evidencing such Contingent
         Obligation) or, if not

                                       8


         stated or determinable, the maximum reasonably anticipated liability
         with respect thereto (assuming such Person is required to perform
         thereunder), as determined by such Person in good faith.

                  Control or controlled by or under common control - possession,
         directly or indirectly, of the power to direct or cause the direction
         of management or policies (whether through ownership of Voting
         Securities, by contract or otherwise, but not solely by being an
         officer or director of a Person); provided, however, that any Person
         which beneficially owns, directly or indirectly, 10% or more (in number
         of votes) of the Equity Interests ordinarily having Voting Power with
         respect to a corporation shall be conclusively presumed to control such
         corporation.

                  Controlled Disbursement Account - a demand deposit account
         maintained by Borrowers at Lender and to which proceeds of Revolver
         Loans will be deposited from time to time.

                  Copyright Security Agreement - the Copyright Security
         Agreement to be executed by Borrowers in favor of Lender and by which
         Borrowers shall assign to Lender, as security for the Obligations, all
         of their right, title and interest in and to all of their copyrights.

                  Current Assets - at any date, the amount at which all of the
         current assets of a Person would be properly classified as current
         assets shown on a balance sheet at such date in accordance with GAAP
         except that amounts due from Affiliates and investments in Affiliates
         shall be excluded therefrom.

                  CWA - the Clean Water Act (33 U.S.C. Sections 1251 et seq.).

                  Debt - as applied to a Person means, without duplication: (i)
         all items which in accordance with GAAP would be included in
         determining total liabilities as shown on the liability side of a
         balance sheet of such Person as at the date as of which Debt is to be
         determined, including Capitalized Lease Obligations; (ii) all
         Contingent Obligations of such Person; (iii) all reimbursement
         obligations in connection with letters of credit or letter of credit
         guaranties issued for the account of such Person; and (iv) in the case
         of Borrowers (without duplication), the Obligations. The Debt of a
         Person shall include any recourse Debt of any partnership or joint
         venture in which such Person is a general partner or joint venturer.

                  Default - an event or condition the occurrence of which would,
         with the lapse of time or the giving of notice, or both, become an
         Event of Default.

                  Default Rate - on any date, a rate per annum that is equal to
         2% plus the highest Applicable Margin for Base Rate Loans plus the Base
         Rate in effect on such date.

                                       9


                  Deposit Accounts - a demand, time, savings, passbook, money
         market or other depository account, and a certificate of deposit
         maintained by a Person with any bank, savings and loan association,
         credit union or other depository institution.

                  Distribution - in respect of any entity, (i) any payment of
         any dividends or other distributions on Equity Interests of the entity
         (except distributions in such Equity Interests) and (ii) any purchase,
         redemption or other acquisition or retirement for value of any Equity
         Interests of the entity or any Affiliate of the entity unless made
         contemporaneously from the net proceeds of the sale of Equity
         Interests.

                  Document - shall have the meaning given to "document" in the
         UCC.

                  Dollar Equivalent - with respect to any monetary amount in any
         foreign currency at any date for the determination thereof, the amount
         of Dollars obtained by converting such foreign currency into Dollars at
         the spot rate for the purchase of Dollars with such foreign currency as
         quoted by Bank at approximately 11:00 a.m. on the date of determination
         thereof.

                  Dollars and the sign "$" - lawful money of the United States
         of America.

                  Domestic Subsidiary - a Subsidiary of Borrower that is
         incorporated under the laws of a state of the United States or the
         District of Columbia.

                  Effective Date - the date on which all of the conditions
         precedent in SECTION 11 of this Agreement are satisfied.

                  Electronic Chattel Paper - shall have the meaning ascribed to
         "electronic chattel paper" in the UCC.

                  Eligible Account - an Account that arises in the Ordinary
         Course of Business of a Borrower from the sale of goods or rendition of
         services, is payable in Dollars, is subject to Lender's duly perfected
         first priority security interest, uses the Lockbox remittance address
         for invoices with respect to such Account, meets such other specific
         criteria as Lender, in its reasonable credit judgment, may determine
         after Lender undertakes the Initial Field Exam, and is deemed by
         Lender, in its reasonable credit judgment, to be an Eligible Account.
         Without limiting the generality of the foregoing and without
         duplication, no Account shall be an Eligible Account if: (i) it arises
         out of a sale of goods or rendition of services made by a Borrower to
         an Excluded Account Debtor; (ii) it is unpaid for more than 60 days
         after the original due date shown on the invoice; (iii) it is due or
         unpaid more than 90 days after the original invoice date; (iv) 50% or
         more of the Accounts from the Account Debtor are not deemed Eligible
         Accounts hereunder; (v) the total unpaid Accounts of the Account Debtor
         exceed 10% of the net amount of all Eligible Accounts in the aggregate,
         to the extent of such excess; (vi) any covenant, representation or
         warranty contained in this Agreement with respect to such Account has
         been breached; (vii) the Account Debtor is also a Borrower's creditor
         or supplier, or the

                                       10


         Account Debtor has disputed liability with respect to such Account, or
         the Account Debtor has made any claim with respect to any other Account
         due from such Account Debtor to a Borrower, or the Account otherwise is
         or may become subject to any right of setoff, counterclaim, recoupment,
         reserve or chargeback (including, in any such case, with respect to any
         royalty or licensing fees payable by a Borrower), provided that, the
         Accounts of such Account Debtor shall be ineligible only to the extent
         of such offset, counterclaim, disputed amount, reserve or chargeback;
         (viii) it arises from a sale to an Account Debtor organized under the
         laws of a jurisdiction outside of the United States of America
         (including the District of Columbia and the Commonwealth of Puerto
         Rico, but otherwise excluding its territories and possessions) or
         having its principal office, assets or place of business outside the
         United States of America (including the District of Columbia and the
         Commonwealth of Puerto Rico, but otherwise excluding its territories
         and possessions), unless the sale is backed by an irrevocable letter of
         credit issued or confirmed by a bank acceptable to Lender and that is
         in form and substance acceptable to Lender in the exercise of its
         reasonable credit judgment and payable in the full amount of the
         Account in freely convertible Dollars at a place of payment within the
         United States and, if requested by Lender, such letter of credit, or
         amounts payable thereunder, is assigned to Lender (with such assignment
         acknowledged by the issuing or confirming bank); (ix) it arises from a
         sale to the Account Debtor on a bill and hold in excess of $500,000 at
         any one time (provided that it shall be ineligible only to the extent
         of such excess), guaranteed sale, sale or return, sale on approval,
         consignment or any other repurchase or return basis; (x) the Account
         Debtor is the United States of America or any department, agency or
         instrumentality thereof, unless such Borrower is not prohibited from
         assigning the Account and does assign its right to payment of such
         Account to Lender, if requested by Lender, in a manner satisfactory to
         Lender in the exercise of its reasonable credit judgment, so as to
         comply with the Assignment of Claims Act of 1940 (31 U.S.C. Section
         3727 and 41 U.S.C. Section 15), or is a state, county or municipality,
         or a political subdivision or agency thereof and Applicable Law
         disallows or restricts an assignment of Accounts on which it is the
         Account Debtor in a manner that prohibits Borrower from assigning such
         account to Lender; (xi) the Account is subject to a Lien other than a
         Permitted Lien; (xii) the goods giving rise to such Account have not
         been delivered to and accepted by the Account Debtor or the services
         giving rise to such Account have not been performed by such Borrower
         and accepted by the Account Debtor or the Account otherwise does not
         represent a final sale; (xiii) the Account is evidenced by Chattel
         Paper or an Instrument of any kind, or has been reduced to judgment;
         (xiv) the Account represents a progress billing or a retainage; (xv)
         such Borrower has made any agreement with the Account Debtor for any
         deduction therefrom, except for discounts or allowances which are made
         in the Ordinary Course of Business provided that it shall be ineligible
         only to the extent of discounts or allowances which are reflected in
         the calculation of the face value of each invoice related to such
         Account; (xvi) the Account represents, in whole or in part, a billing
         for interest, fees or late charges, or includes amounts which
         constitute rebates or advertising or similar allowances from a vendor,
         provided that such Account shall be ineligible only to the extent of
         the amount of such billing; (xvii) the Account Debtor has made a
         partial payment with respect to such Account, but only to the

                                       11


         extent of the unpaid balance of such payment, or any Payment Item
         previously given by or on behalf of the Account Debtor was returned
         unpaid or otherwise dishonored, but only to the extent of the
         dishonored or returned amount; (xviii) it arises from a retail sale of
         Inventory to a Person who is purchasing the same primarily for
         personal, family or household purposes; (xix) it arises out of a sale
         of goods or rendition of services that contravenes in any material
         respect any Applicable Law (including laws relating to usury, consumer
         protection, truth-in-lending, fair credit billing, fair credit
         reporting, equal credit opportunity, fair debt collection practices and
         privacy) or with respect to which any party to the contract therefor is
         in violation of any such law that could have an adverse effect upon the
         collectibility, value or payment terms of such Account; (xx) it
         constitutes a rebilled amount arising from a deduction taken by an
         Account Debtor with respect to a previously arising Account; (xxii) the
         right to payment thereof is not freely assignable; (xxii) the Account
         represents in whole or in part a pre-billing to the extent of such
         pre-billing; or (xxiii) Lender otherwise determines such Account to be
         ineligible hereunder based upon Lender's reasonable credit judgment
         following not less than five (5) days prior written notice to Borrower
         of such ineligibility.

                  Eligible Cash - as of any date, an amount equal to the
         aggregate amount of all Cash Collateral provided by the Borrowers to,
         and held by, the Lender which has been designated by the Borrowers and
         the Lender as "Eligible Cash" for purposes of inclusion in the
         Borrowing Base, expressly excluding the amount of any Cash Collateral
         which is permitted or required to be deposited with the Lender pursuant
         to this Agreement or any of the other Loan Documents for any purpose
         other than creating Availability under the Borrowing Base.

                  Eligible Inventory - Inventory which is owned by a Borrower
         (other than packaging materials, display items, labels, samples, bags,
         replacement parts and supplies) and of a type held for sale in the
         Ordinary Course of Business of such Borrower, meets such other specific
         criteria as Lender, in its reasonable credit judgment, may determine
         after Lender undertakes the Initial Field Exam and which Lender, in its
         reasonable credit judgment, deems to be Eligible Inventory.

                  Environmental Laws - all federal, state, local and foreign
         laws, rules, regulations, codes, ordinances, orders and consent decrees
         (together with all programs, permits and guidance documents promulgated
         by regulatory agencies, to the extent having the force of law), now or
         hereafter in effect, that relate to public health (but excluding
         occupational safety and health, to the extent regulated by OSHA) or the
         protection or pollution of the environment, whether new or hereafter in
         effect, including CERCLA, RCRA and CWA.

                  Environmental Liabilities - means all liabilities,
         obligations, responsibilities, remedial actions, removal costs, losses,
         damages of whatever nature, costs and expenses (including all
         reasonable fees, disbursements and expenses of counsel, experts and
         consultants and costs of investigation and feasibility studies), fines,
         penalties, sanctions and interest incurred as a result of any claim,
         suit, action or demand of whatever nature by any

                                       12


         Person and which relate to any health or safety condition regulated
         under any Environmental Law, environmental permits or in connection
         with any Environmental Release, threatened Environmental Release, or
         the presence of a Hazardous Material.

                  Environmental Release - a release as defined in CERCLA or
         under any other applicable Environmental Laws.

                  Equipment - shall have the meaning ascribed to "equipment" in
         the UCC and shall include Fixtures.

                  Equity Interest - the interest of (i) a shareholder in a
         corporation, (ii) a partner (whether general or limited) in a
         partnership (whether general, limited or limited liability), (iii) a
         member in a limited liability company, or (iv) any other Person having
         any other form of equity security or ownership interest.

                  ERISA - the Employee Retirement Income Security Act of 1974
         and all rules and regulations from time to time promulgated thereunder.

                  Eurocurrency Liabilities - as defined in Regulation D.

                  Euro-Dollar Business Day - means any Domestic Business Day on
         which dealings in Dollar deposits are carried out in the London
         interbank market.

                  Euro-Dollar Lending Office - the office designated as a
         Euro-Dollar Lending Office for Lender on the signature page hereof and
         such other office of Lender or any of its Affiliates that is hereafter
         designated by Lender as provided in SECTION 4.2.3 of this Agreement.

                  Euro-Dollar Loan - a Loan, or portion thereof, during any
         period in which it bears interest at a rate based upon the applicable
         Adjusted Euro-Dollar Rate.

                  Euro-Dollar Rate - with respect to the applicable Interest
         Period of any Euro-Dollar Loan, an interest rate per annum determined
         by Lender from time to time on the basis of the offered rate for
         deposits in Dollars in the London Interbank borrowing market of amounts
         equal to or comparable to the principal amount of a requested
         Euro-Dollar Loan, as applicable, to which such Interest Period relates
         offered for a term comparable to such Interest Period, which rate
         appears on the display designated as page "3750" on the Telerate
         Service as of 11:00 a.m. (London Time), 2 Euro-dollar Business Days
         prior to the first day of such Interest Period (which rate shall be
         rounded upward, if necessary, to the next higher 1/10,000 of 1%);
         provided, however, that if no such offered rates appear on such page or
         if more than one such offered rate appears on such service on such
         date, the "Euro-Dollar Rate" for such Interest Period will be the
         arithmetic average (rounded upward, if necessary, to the next higher
         1/100th of 1%) of the offered rates quoted by not less than 2 major
         banks in New York City, selected by the Lender, at approximately 10:00
         a.m., New York City time, 2 Euro-Dollar Business Days prior to the

                                       13


         first day of such Interest Period, for deposits in Dollars offered by
         leading European banks in the London Interbank borrowing market for a
         period comparable to such Interest Period in amounts equal or
         comparable to the principal amount of the requested Euro-Dollar Loan.

                  Event of Default - as defined in SECTION 12.1 of this
         Agreement.

                  Excluded Account Debtor - an Account Debtor that (i) is a
         Subsidiary, Affiliate, officer, agent or employee of a Borrower; (ii)
         is a Person controlled by an Affiliate of a Borrower; (iii) has
         suspended or ceased business or has ceased to be Solvent; (iv) has
         filed, or has had filed against it, an Insolvency Proceeding; (v) is
         located in any state or other jurisdiction that imposes conditions on
         the right of a creditor to collect accounts receivable, unless such
         Borrower has either qualified to transact business in such state as a
         foreign entity or filed any required Notice of Business Activities
         Report or other required report or notice with the appropriate
         officials in such state or jurisdiction for the then current year; (vi)
         is located in a state in which a Borrower is deemed to be doing
         business under the laws of such state and which denies creditors access
         to its courts in the absence of qualification to transact business in
         such state or the filing of any reports with such state, unless such
         Borrower has qualified as a foreign entity authorized to transact in
         such state or has filed all required reports; or (vii) is designated as
         an Excluded Account Debtor upon 10 days written notice from Lender to
         Borrowers.

                  Expanded Borrowing Base Conditions - means each and all of the
         following:

                  (i) Lender has conducted a Field Exam, with results
                  satisfactory to the Lender in its sole discretion, within 90
                  days prior to the date of the initial request for a borrowing
                  against components of the Borrowing Base other than Liquid
                  Collateral; and

                  (ii) the Fixed Charge Coverage Ratio of the Borrowers, on a
                  consolidated basis, which shall be calculated by using
                  annualized amounts of each and all of Consolidated EBITDA,
                  Capital Expenditures, cash income taxes, cash Distributions,
                  and cash interest expense, has not been less than 1.0 to 1 for
                  each of the three most recent successive Fiscal Months prior
                  to the date of the initial request for a borrowing against
                  components of the Borrowing Base other than Liquid Collateral
                  (as used herein, the term "annualized" shall mean multiplied
                  by 4), evidence of which shall be provided to the Lender on a
                  Covenant Calculation Report in the form of EXHIBIT J attached
                  hereto; and

                  (iii) there exists no Default or Event of Default.

                  Extraordinary Expenses - all costs, expenses, fees and
         advances which Lender may suffer or incur in connection with an Event
         of Default, and whether prior to, after or during the pendency of an
         Insolvency Proceeding of an Obligor, on account of or in connection
         with (i) the audit, inspection, repossession, storage, repair,
         appraisal, insuring,

                                       14


         completion of the manufacture of, preparing for sale, advertising for
         sale, selling, collecting or otherwise preserving or realizing upon any
         Collateral; (ii) the defense of Lender's Lien upon any Collateral or
         the priority thereof or any adverse claim with respect to the Loans,
         the Loan Documents or the Collateral asserted by any Obligor, any
         receiver or trustee for any Obligor or any creditor or representative
         of creditors of any Obligor; (iii) the settlement or satisfaction of
         any Liens upon any Collateral (whether or not such Liens are Permitted
         Liens); (iv) the collection or enforcement of any of the Obligations;
         (v) the negotiation, documentation, and closing of any restructuring or
         forbearance agreement with respect to the Loan Documents or
         Obligations; (vi) amounts advanced by Lender pursuant to SECTION 8.1.3
         of this Agreement; (vii) the enforcement of any of the provisions of
         any of the Loan Documents; or (viii) any payment under a guaranty,
         indemnity or other payment agreement provided by Lender which is
         reimbursable to Lender by Borrowers pursuant to SECTION 3.4 of this
         Agreement. Such costs, expenses, fees and advances may include transfer
         fees, taxes, storage fees, insurance costs, permit fees, utility
         reservation and standby fees, legal fees, appraisal fees, brokers' fees
         and commissions, auctioneers' fees and commissions, accountants' fees,
         environmental study fees, wages and salaries paid to employees of a
         Borrower or independent contractors in liquidating any Collateral,
         travel expenses, all other fees and expenses payable or reimbursable by
         a Borrower or any other Obligor under any of the Loan Documents, and
         all other fees and expenses associated with the enforcement of rights
         or remedies under any of the Loan Documents, but excluding compensation
         paid to employees (including inside legal counsel who are employees) of
         Lender.

                  Federal Funds Rate - for any period, a fluctuating interest
         rate per annum equal for each date during such period to the weighted
         average of the rates on overnight federal funds transactions with
         members of the Federal Reserve System arranged by federal funds
         brokers, as published for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) in Atlanta, Georgia by the
         Federal Reserve Bank of Atlanta, or if such rate is not so published
         for any day which is a Business Day, the average of the quotations for
         such day on such transactions received by Lender from 3 federal funds
         brokers of recognized standing selected by Lender.

                  FEIN - with respect to any Person, the Federal Employer
         Identification Number of such Person.

                  Field Exam - any field examination after the Closing Date by
         Lender of Borrower's property comprising Collateral and Borrower's
         records, reporting systems and other items or matters related thereto.

                  Financed Capital Expenditures - Capital Expenditures that are
         financed by a Borrower with Funded Debt.

                  Finished Goods - Inventory consisting of completed goods that
         require no additional processing or manufacturing in order to be sold
         in the Ordinary Course of Business of a Borrower.

                                       15


                  Fiscal Month - each of the twelve (12) monthly accounting
         periods of a Borrowers comprising its Fiscal Year.

                  Fiscal Quarter - each consecutive period of 13 weeks beginning
         on the first day of a Fiscal Year (and, in the case of any Fiscal Year
         of 53 weeks, the 14-week period occurring at the end thereof).

                  Fiscal Year - the fiscal year of Borrowers and their
         Subsidiaries for accounting and tax purposes, which ends on December 31
         of each year.

                  Fixed Charge Coverage Ratio - for any period of a Person, the
         ratio of such Person's (i) Consolidated EBITDA minus cash income taxes
         paid minus Capital Expenditures (other than Financed Capital
         Expenditures) for such period minus cash Distributions permitted under
         this Agreement and paid, to (ii) Fixed Charges for such period.

                  Fixed Charges - for any fiscal period of a Person, the sum of
         such Person's (i) cash interest expense in respect of its Funded Debt,
         plus (ii) the current portion of Funded Debt due during the immediately
         succeeding 12-month period, plus (iii) without duplication, cash
         payments of principal and interest on Subordinated Debt made during
         such period. Without duplication, and solely for purposes of the
         definition of Fixed Charge Coverage Ratio, the preceding subsection
         (iii) of this definition of "Fixed Charges" shall refer to annualized
         payments of principal and interest on Subordinated Debt made during
         such period.

                  Fixtures - shall have the meaning ascribed to "fixtures" in
         the UCC.

                  FLSA - the Fair Labor Standards Act of 1938.

                  Foreign Exchange Contract - any foreign exchange contract,
         currency swap agreement and other similar agreement and arrangement at
         any time entered into by a Borrower with Lender that is designed to
         protect such Borrower against fluctuations in foreign exchange rates.

                  Foreign Exchange Contract Reserve - on any date, a reserve
         imposed by Lender in its discretion, equal to the aggregate amount, as
         determined by Lender, of all Foreign Exchange Contracts with Lender or
         any of its Affiliates and in effect on such date, as determined by
         Lender applying its customary methodology.

                  Foreign Subsidiary - a Subsidiary that is not a Domestic
         Subsidiary.

                  Full Payment - as with respect to any of the Obligations,
         full, final and indefeasible payment of such Obligations in cash or
         immediately available funds and, in the case of any Contingent
         Obligations (including any LC Outstandings that exist by virtue of an
         outstanding undrawn Letter of Credit), Lender's receipt of either cash
         or a direct pay letter of credit naming Lender as beneficiary and in
         form and substance, and from an

                                       16


         issuing bank, acceptable to Lender, in each case in an amount not less
         than 105% of the aggregate amount of all such Contingent Obligations.

                  Funded Debt - collectively, for any Person, (a) the aggregate
         principal amount of Debt for Money Borrowed which would, in accordance
         with GAAP, be classified as long-term debt, together with the current
         maturities thereof, plus (b) all Debt outstanding under any revolving
         credit, line of credit or renewals thereof, notwithstanding that any
         such Debt is created or incurred within one year of the expiration of
         such facility, plus (c) all Capitalized Lease Obligations.

                  GAAP - generally accepted accounting principles in the United
         States of America in effect from time to time.

                  General Intangibles - shall have the meaning ascribed to
         "general intangible" in the UCC and shall include Payment Intangibles,
         Software, inventions, blueprints, designs, patents, patent
         applications, trademarks, trademark applications, trade names, trade
         secrets, service marks, goodwill, brand names, copyrights,
         registrations, licenses, franchises, customer lists, tax refund claims,
         operational manuals, permits, internet addresses and domain names,
         insurance refunds and premium rebates, and all rights of a Borrower to
         indemnification and all other intangible property of a Borrower of
         every kind and nature (other than Accounts).

                  Goods - shall have the meaning ascribed to "goods" in the UCC.

                  Governmental Approvals - all authorizations, consents,
         approvals, licenses and exemptions of, registrations and filings with,
         and reports to, all Governmental Authorities.

                  Governmental Authority - any federal, state, municipal,
         national or other governmental department, commission, board, bureau,
         court, agency or instrumentality or political subdivision thereof or
         any entity or officer exercising executive, legislative, judicial,
         regulatory or administrative functions (within the scope of his/her
         authority) of or pertaining to any government or any court, in each
         case whether associated with a state of the United States, the District
         of Columbia or a foreign entity or government.

                  Guarantors - means WPJ, Inc., a California corporation and
         ProxyMed Acquisition Corp II, a/k/a Davie Corporation, a Florida
         corporation.

                  Guarantors' Security Agreement - a Guarantors' Security
         Agreement substantially in the form of EXHIBIT L, attached hereto,
         executed by each of the Guarantors in favor of Lender.

                  Guaranty Agreements - the Guaranty Agreements, each
         substantially in the form of EXHIBIT K, attached hereto, executed by
         the Guarantors in favor of Lender with respect to the Obligations.

                                       17


                  Hazardous Material - means any substance, material or waste
         that is regulated by or forms the basis of liability now or hereafter
         under, any Environmental Laws, including any material or substance that
         is (a) defined as a "solid waste," "hazardous waste," "hazardous
         material," "hazardous substance," "extremely hazardous waste,"
         "restricted hazardous waste," "pollutant," "contaminant," "hazardous
         constituent," "special waste," "toxic substance" or other similar term
         or phrase under any Environmental Laws, (b) petroleum or any fraction
         or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
         any radioactive substance."Hazardous Waste" has the meaning ascribed to
         such term in the Resource Conservation and Recovery Act (42 U.S.C.
         Sections 6901 et. seq.).

                  Indemnified Amount - in the case of Lender Indemnitees, the
         amount of any loss, cost, expenses or damages suffered or incurred by
         Lender Indemnitees and against which any Borrower or any other Obligor
         has agreed to indemnify Lender Indemnitees pursuant to the terms of
         this Agreement or any of the other Loan Documents.

                  Indenture - has the meaning ascribed to such term in SECTION
         9.1.27 of this Agreement.

                  Indenture Debt - Debt incurred by ProxyMed under the
         Indenture.

                  Initial Field Exam - the first Field Exam after the Closing
         Date.

                  Insolvency Proceeding - any action, case or proceeding
         commenced by or against an Obligor, or any agreement of such Obligor,
         for (i) the entry of an order for relief under any chapter of the
         Bankruptcy Code or other insolvency or debt adjustment law (whether
         state, federal or foreign), (ii) the appointment of a receiver,
         trustee, liquidator or other custodian for such Obligor or any part of
         its Property which remains unstayed for sixty (60) days, (iii) an
         assignment or trust mortgage for the benefit of creditors of such
         Obligor, or (iv) the liquidation, dissolution or winding up of the
         affairs of such Obligor.

                  Instrument - shall have the meaning ascribed to the term
         "instrument" in the UCC.

                  Intellectual Property - all intellectual and similar Property
         of a Person of every kind and description, including inventions,
         designs, patents, patent applications, copyrights, trademarks, service
         marks, trade names, mask works, trade secrets, confidential or
         proprietary information, know-how, software and databases and all
         embodiments or fixations thereof and related documentation,
         registrations and franchises, all books and records describing or used
         in connection with the foregoing and all licenses, or other rights to
         use any of the foregoing.

                  Intellectual Property Claim - the assertion by any Person of a
         claim (whether asserted in writing, by action, suit or proceeding or
         otherwise) that a Borrower's ownership, use, marketing, sale or
         distribution of any Inventory, Equipment, Intellectual Property or
         other Property is violative of any ownership or right to use any
         Intellectual

                                       18


         Property of such Person, which claim has not been resolved within sixty
         (60) days of receipt by the Borrower thereof.

                  Interest Expense - for any fiscal period of a Person, total
         interest expense of such Person during such period, (including that
         portion attributable to capitalized leases and capitalized interest)
         with respect to all outstanding Debts of such Person, including all
         commissions, discounts and other fees and charges owed with respect to
         Letters of Credit and net cost under Interest Rate Contracts, as
         determined on a Consolidated basis in accordance with GAAP.

                  Interest Period - shall have the meaning ascribed to it in
         SECTION 3.1.3 of this Agreement.

                  Interest Rate Contract - any interest rate agreement, interest
         rate collar agreement, interest rate swap agreement, or other agreement
         or arrangement at any time entered into by a Borrower with Lender that
         is designed to protect against fluctuations in interest rates.

                  Interest Rate Contract Reserve - on any date, a reserve
         imposed by Lender in its discretion, equal to the aggregate amount, as
         determined by Lender, of all Interest Rate Contracts with Lender or any
         of its Affiliates and in effect on such date, as determined by Lender
         applying its customary methodology.

                  Inventory - shall have the meaning ascribed to "inventory" in
         the UCC and shall include all goods intended for sale or lease by a
         Borrower, for display or demonstration, all work in process, all raw
         materials and other materials and supplies of every nature and
         description used or usable in connection with the manufacture,
         printing, packing, shipping, advertising, selling, leasing or
         furnishing of such goods or otherwise used or consumed in such
         Borrower's business (but excluding Equipment).

                  Inventory Formula Amount - on any date of determination
         thereof, an amount equal to up to thirty percent (30%) of the Value of
         Eligible Inventory on such date as Lender, in its reasonable credit
         judgment, establishes, with notice to the Borrowers, after the Initial
         Field Exam (or such lesser percentage as Lender may in its reasonable
         credit judgment determine from time to time).

                  Inventory Reserve - such reserves as may be established from
         time to time by Lender in the exercise of its reasonable credit
         judgment to reflect changes in the salability of any Eligible Inventory
         in the Ordinary Course of Business or such other factors as may
         negatively affect the Value of any Eligible Inventory. Without limiting
         the generality of the foregoing, such reserves may include a reserve
         based upon obsolescence, seasonality, theft or other shrinkage,
         imbalance, change in composition or mix, or markdowns; (ii) a reserve
         for discrepancies that arise pertaining to Inventory quantities on hand
         between Borrowers' perpetual accounting system and physical counts of
         the Inventory, which shall equal an amount reasonably determined by
         Lender; and (iii) a lower of cost or market

                                       19


         reserve for any differences between Borrowers' actual cost to produce
         versus its selling price to third parties, determined on a product-line
         basis.

                  Investment Property - shall have the meaning ascribed to
         "investment property" in the UCC and shall include all Securities
         (whether certificated or uncertificated), security entitlements,
         securities, accounts, commodity contracts and commodity accounts.

                  LC Application - an application by Borrowers to Lender,
         pursuant to a form approved by Lender, for the issuance of a Letter of
         Credit that is submitted to Lender at least 5 Business Days prior to
         the requested issuance of such Letter of Credit.

                  LC Conditions - the following conditions, the satisfaction of
         each of which is required before Lender shall be obligated to issue any
         Letter of Credit: (i) each of the conditions set forth in SECTION 11 of
         this Agreement has been and continues to be satisfied, including the
         absence of any Default or Event of Default; (ii) after giving effect to
         the issuance of the requested Letter of Credit and all other unissued
         Letters of Credit for which an LC Application has been signed by
         Lender, the LC Outstandings would not exceed $5,000,000, and no
         Out-of-Formula Condition would exist, and, if no Revolver Loans are
         outstanding, the LC Outstandings do not, and would not upon the
         issuance of the requested Letter of Credit, exceed the Revolver
         Commitment Amount; (iii) such Letter of Credit has an expiration date
         that is no more than 365 days from the date of issuance in the case of
         standby Letters of Credit and no more than 180 days from the date of
         issuance in the case of documentary Letters of Credit and, in either
         event, such expiration date is at least 30 days prior to the last day
         of the Term; and (iv) the currency in which payment is to be made under
         the Letter of Credit is Dollars.

                  LC Documents - any and all agreements, instruments and
         documents (other than an LC Application) required by Lender to be
         executed by a Borrower or any other Person and delivered to Lender for
         the issuance of a Letter of Credit.

                  LC Facility - a subfacility of the Revolver Facility
         established pursuant to SECTION 2.3 of this Agreement.

                  LC Outstandings - on any date of determination thereof, an
         amount (in Dollars) equal to the sum of (i) all amounts then due and
         payable by any Obligor on such date by reason of any payment made on or
         before such date by Lender, plus (ii) the aggregate undrawn amount of
         all Letters of Credit which are then outstanding or for which an LC
         Application has been delivered to and accepted by Lender.

                  LC Request - a Letter of Credit Procurement Request from
         Borrowers to Lender in the form of EXHIBIT F attached hereto.

                  LC Reserve - on any date, the aggregate of all LC Outstandings
         on such date, other than the LC Outstandings that are fully secured by
         Cash Collateral.

                                       20


                  Lender Indemnitees - Lender and each of its Affiliates and
         each officer, director, employee, agent, attorney and shareholder of
         Lender or any of its Affiliates.

                  Letter of Credit - any standby letter of credit or documentary
         letter of credit issued by Lender for the account of a Borrower.

                  Letter of Credit Rights - shall have the meaning ascribed to
         "letter of credit right" in the UCC.

                  License Agreement - any agreement between a Borrower and a
         Licensor pursuant to which such Borrower is authorized to use any
         Intellectual Property in connection with the manufacturing, marketing,
         sale or other distribution of any Inventory of such Borrower.

                  Licensor - any Person from whom a Borrower obtains the right
         to use (whether on an exclusive or non-exclusive basis) any
         Intellectual Property in connection with such Borrower's manufacture,
         marketing, sale or other distribution of any Inventory or other Goods.

                  Licensor/Lender Agreement - an agreement between Lender and a
         Licensor by which Lender is given the unqualified right, upon notice to
         such Licensor if notice is required by the Licensor, vis-a-vis such
         Licensor, to enforce Lender's Liens with respect to, and to dispose of
         Borrowers' Inventory with the benefit of any Intellectual Property
         applicable thereto, irrespective of Borrowers' default under any
         License Agreement with such Licensor and which is otherwise in form and
         substance satisfactory to Lender.

                  Lien - any interest in Property securing an obligation owed
         to, or a claim by, a Person other than the owner of the Property,
         whether such interest is based on common law, statute or contract. The
         term "Lien" shall also include reservations, exceptions, encroachments,
         easements, rights-of-way, covenants, conditions, restrictions, leases
         and other title exceptions and encumbrances affecting Property. For the
         purpose of this Agreement, a Borrower shall be deemed to be the owner
         of any Property which it has acquired or holds subject to a conditional
         sale agreement or other arrangement pursuant to which title to the
         Property has been retained by or vested in some other Person for
         security purposes.

                  Lien Waiver - an agreement duly executed in favor of Lender,
         in form and content acceptable to Lender, by which (i) for locations
         leased by an Obligor, an owner or mortgagee of premises upon which any
         Property of an Obligor is located agrees to waive or subordinate any
         Lien it may have with respect to such Property in favor of Lender's
         Lien therein and to permit Lender to enter upon such premises and
         remove such Property or to use such premises to store or dispose of
         such Property, or (ii) for locations at which any Obligor places
         Inventory with a warehouseman or a processor, such warehouseman or
         processor agrees to waive or subordinate any Lien it may have with
         respect to such Property in favor of Lender's Lien therein and to
         permit Lender to enter upon such

                                       21


         premises and remove such Property or to use such premises to store or
         dispose of such Property.

                  Liquid Collateral - as of any date, the aggregate amount of
         Eligible Cash.

                  Loan - a Revolver Loan (and each Base Rate Loan and
         Euro-Dollar Loan comprising any such Loan).

                  Loan Account - the loan account established by Lender on its
         books pursuant to SECTION 5.7 of this Agreement.

                  Loan Documents - this Agreement, the Guaranty Agreements, the
         Other Agreements and the Security Documents.

                  Loan Year - a period commencing each calendar year on the same
         month and day as the date of this Agreement and ending on the same
         month and day in the immediately succeeding calendar year, with the
         first such period (i.e., the first Loan Year) to commence on the date
         of this Agreement.

                  Lockbox - the lockbox belonging to Lender identified on
         SCHEDULE 1.1.

                  Margin Stock - shall have the meaning ascribed to it in
         Regulation U of the Board of Governors.

                  Material Adverse Effect - the effect of any event, condition,
         action, omission or circumstance which, alone or when taken together
         with other events, conditions, actions, omissions or circumstances
         occurring or existing concurrently therewith, (i) has a material
         adverse effect upon the business, operations, Properties or condition
         (financial or otherwise) or any Obligor; (ii) has or could be
         reasonably expected to have any material adverse effect whatsoever upon
         the validity or enforceability of any of the Loan Documents; (iii) has
         any material adverse effect upon the value of the whole or any material
         part of the Collateral, the Liens of Lender with respect to the
         Collateral or the priority of such Liens; (iv) materially impairs the
         ability of any Obligor to perform its obligations under this Agreement
         or any of the other Loan Documents, including repayment of any of the
         Obligations when due; or (v) materially impairs the ability of Lender
         to enforce or collect the Obligations or realize upon any of the
         Collateral in accordance with the Loan Documents and Applicable Law.

                  Material Contract - an agreement to which an Obligor is a
         party (other than the Loan Documents) (i) which is deemed to be a
         material contract as provided in Regulation S-K promulgated by the SEC
         under the Securities Act of 1933 or (ii) for which breach, termination,
         cancellation, nonperformance or failure to renew could reasonably be
         expected to have a Material Adverse Effect.

                  Maximum Rate - the maximum non-usurious rate of interest
         permitted by Applicable Law that at any time, or from time to time, may
         be contracted for, taken,

                                       22


         reserved, charged or received on the Debt in question or, to the extent
         that at any time Applicable Law may thereafter permit a higher maximum
         non-usurious rate of interest, then such higher rate. Notwithstanding
         any other provision hereof, the Maximum Rate shall be calculated on a
         daily basis (computed on the actual number of days elapsed over a year
         of 365 or 366 days, as the case may be).

                  Money Borrowed - as applied to any Obligor, (i) Debt arising
         from the lending of money by any other Person to such Obligor; (ii)
         Debt, whether or not in any such case arising from the lending of money
         by another Person to such Obligor, (A) which is represented by notes
         payable or drafts accepted that evidence extensions of credit, (B)
         which constitutes obligations evidenced by bonds, debentures, notes or
         similar instruments, or (C) upon which interest charges are customarily
         paid (other than accounts payable) or that was issued or assumed as
         full or partial payment for Property; (iii) Debt that constitutes a
         Capitalized Lease Obligation; (iv) reimbursement obligations with
         respect to letters of credit or guaranties of letters of credit, and
         (v) Debt of such Obligor under any guaranty of obligations that would
         constitute Debt for Money Borrowed under clauses (i) through (iii)
         hereof, if owed directly by such Obligor.

                  Moody's - Moody's Investors Services, Inc.

                  Multiemployer Plan - has the meaning set forth in Section
         4001(a)(3) of ERISA.

                  Net Disposition Proceeds - with respect to a disposition of
         any Collateral, proceeds (including cash receivable (when received) by
         way of deferred payment) received by a Borrower in cash from the sale,
         lease, transfer or other disposition of the Collateral, including
         insurance proceeds and awards of compensation received with respect to
         the destruction or condemnation of all or part of the Collateral, net
         of: (i) the reasonable and customary costs and expenses of such sale,
         lease, transfer or other disposition (including legal fees and sales
         commissions); (ii) amounts applied to repayment of Debt (other than the
         Obligations) secured by a Permitted Lien on such Collateral disposed of
         that is senior to Lender's Liens; and (iii) in connection with any sale
         of Collateral, a reasonable reserve (not to exceed 5% of the total
         purchase price) for post-closing adjustments to the purchase price,
         provided that upon the expiration of not more than 90 days after the
         sale any remaining reserve balance is remitted to Lender for
         application to the Obligations.

                  Notes - each of the Revolver Note and any other promissory
         note executed by a Borrower at Lender's request to evidence any of the
         Obligations.

                  Notice of Borrowing - as defined in SECTION 4.1.1(i) of this
         Agreement.

                  Notice of Conversion/Continuation - as defined in SECTION
         3.1.2(ii) of this Agreement.

                  Obligations - in each case, whether now in existence or
         hereafter arising, (i) the principal of, and interest and premium, if
         any, on, the Loans; (ii) all LC Outstandings and

                                       23


         all other obligations of any Obligor to Lender or any Affiliate of
         Lender arising in connection with the issuance of any Letter of Credit;
         (iii) all Debt and other obligations of any Borrower to Lender or any
         Affiliate of Lender under or in connection with any Interest Rate
         Contract or Foreign Exchange Contract, including any premature
         termination or breakage costs; and (iv) all other Debts, covenants,
         duties and obligations (including Contingent Obligations) now or at any
         time or times hereafter owing by any Obligor to Lender under or
         pursuant to any of the Loan Documents or owing by any Obligor to Lender
         or any Affiliate of Lender with respect to any Banking Relationship
         Debt, whether evidenced by a note or other writing, whether arising
         from any extension of credit, opening of a letter of credit,
         acceptance, loan, guaranty, indemnification or otherwise, and whether
         direct or indirect, absolute or contingent, due or to become due,
         primary or secondary, or joint or several, including all interest,
         charges, expenses, fees or other sums (including Extraordinary
         Expenses) chargeable to any or all Obligors under any of the Loan
         Documents or any Other Agreement.

                  Obligor - each Borrower, each Guarantor and each other Person
         that is at any time liable for the payment of the whole or any part of
         the Obligations or that has granted in favor of Lender a Lien upon any
         of any of such Person's assets to secure payment of any of the
         Obligations.

                  Ordinary Course of Business - with respect to any transaction
         involving any Person, the ordinary course of such Person's business, as
         conducted by such Person in accordance with past practices and
         undertaken by such Person in good faith and not for the purpose of
         evading any covenant or restriction in any Loan Document.

                  Organization Documents - with respect to any Person, its
         charter, certificate or articles of incorporation, bylaws, articles of
         organization, operating agreement, partnership agreement or similar
         agreement or instrument governing this formation or operation of such
         Person.

                  OSHA - the Occupational Safety and Hazard Act of 1970.

                  Other Agreements - each Licensor/Lender Agreement, each
         Interest Rate Contract, the Notes, the Foreign Exchange Contracts and
         any and all other agreements, instruments and documents (other than
         this Agreement and the Security Documents), heretofore, now or
         hereafter executed by a Borrower, any other Obligor or any other Person
         and delivered to Lender in respect of the transactions contemplated by
         this Agreement.

                  Out-of-Formula Condition - as defined in SECTION 2.1.2 of this
         Agreement.

                  Out-of-Formula Loan - a Revolver Loan made when an
         Out-of-Formula Condition exists or the amount of any Revolver Loan
         which, when funded, results in an Out-of-Formula Condition.

                                       24


                  Participant - each Person who shall be granted the right by
         Lender to participate in any of the Loans described in this Agreement
         and who shall have entered into a participation agreement in form and
         substance satisfactory to Lender.

                  Patent and Trademark Security Agreement - the Patent and
         Trademark Security Agreement to be executed by Borrowers in favor of
         Lender and by which Borrowers shall assign to Lender, as security for
         the Obligations, all of their right, title and interest in and to all
         of their trademarks and patents.

                  Payment Intangibles - shall have the meaning ascribed to
         "payment intangible" in the UCC.

                  Payment Items - all checks, drafts, or other items of payment
         payable to a Borrower, including proceeds of any of the Collateral.

                  Pending Revolver Loans - at any date, the aggregate principal
         amount of all Revolver Loans which have been requested in any Notice of
         Borrowing received by Lender but which have not theretofore been
         advanced by Lender.

                  Permitted Contingent Obligations - Contingent Obligations
         arising from endorsements of Payment Items for collection or deposit in
         the Ordinary Course of Business; Contingent Obligations arising from
         Interest Rate Contracts entered into in the Ordinary Course of Business
         pursuant to this Agreement or with Lender's prior written consent;
         Contingent Obligations of a Borrower and its Subsidiaries existing as
         of the Closing Date, including extensions and renewals thereof that do
         not increase the amount of such Contingent Obligations as of the date
         of such extension or renewal; Contingent Obligations arising under
         indemnity agreements to title insurers to cause such title insurers to
         issue to Lender title insurance policies; Contingent Obligations with
         respect to customary indemnification obligations in favor of purchasers
         in connection with dispositions of Equipment permitted under SECTION
         8.4 of this Agreement; Contingent Obligations consisting of
         reimbursement obligations from time to time owing by a Borrower to
         Lender with respect to Letters of Credit (but in no event to include
         reimbursement obligations at any time owing by Borrower to any other
         Person that may issue letters of credit for the account of a Borrower);
         and other Contingent Obligations not to exceed $300,000 in the
         aggregate at any time.

                  Permitted Lien - a Lien of a kind specified in SECTION 10.2.5
         of this Agreement.

                  Permitted Purchase Money Debt - Purchase Money Debt of a
         Borrower and its Subsidiaries which is incurred after the date of this
         Agreement and that is secured by no Lien or only by a Purchase Money
         Lien, provided that the aggregate amount of Purchase Money Debt
         outstanding at any time does not exceed $3,000,000, and the incurrence
         of such Purchase Money Debt does not violate any limitation in the Loan
         Documents regarding Capital Expenditures. For the purposes of this
         definition, the principal amount

                                       25


         of any Purchase Money Debt consisting of capitalized leases shall be
         computed as a Capitalized Lease Obligation.

                  P.O.S. Devices - point of sale devices leased by Borrowers to
         their "provider" customers (i.e. physicians) for card-swipe health care
         insurance eligibility verification.

                  Person - an individual, partnership, corporation, limited
         liability company, limited liability partnership, joint stock company,
         land trust, business trust or unincorporated organization or a
         Governmental Authority.

                  Plan - an employee benefit plan now or hereafter maintained
         for employees of a Borrower that is covered by Title IV of ERISA.

                  Projections - (i) prior to December 31, 2003 and thereafter
         until Lender receives new projections pursuant to SECTION 10.1.6
         hereof, the projections of Borrowers' Consolidated financial condition,
         results of operations, cash flow and projected Availability, prepared
         on a monthly basis for the Fiscal Years ending December 31, 2003 and
         2004, and (ii) thereafter, the projections most recently received by
         Lender pursuant to and as required by SECTION 10.1.6 hereof.

                  Properly Contested - in the case of any Debt of an Obligor
         (including any Taxes) that is not paid as and when due or payable by
         reason of such Obligor's bona fide dispute concerning its liability to
         pay same or concerning the amount thereof, (i) such Debt is being
         properly contested in good faith by appropriate proceedings promptly
         instituted and diligently conducted; (ii) such Obligor has established
         appropriate reserves as shall be required in conformity with GAAP;
         (iii) the non-payment of such Debt will not have a Material Adverse
         Effect and will not result in a forfeiture of any assets of such
         Obligor; (iv) no Lien is imposed upon any of such Obligor's assets with
         respect to such Debt unless such Lien is at all times junior and
         subordinate in priority to the Liens in favor of Lender (except only
         with respect to property taxes that have priority as a matter of
         applicable state law) and enforcement of such Lien is stayed during the
         period prior to the final resolution or disposition of such dispute;
         (v) if the Debt results from, or is determined by the entry, rendition
         or issuance against an Obligor or any of its assets of a judgment,
         writ, order or decree, enforcement of such judgment, writ, order or
         decree is stayed pending a timely appeal or other judicial review; and
         (vi) if such contest is abandoned, settled or determined adversely (in
         whole or in part) to such Obligor, such Obligor forthwith pays such
         Debt and all penalties, interest and other amounts due in connection
         therewith.

                  Property - any interest in any kind of property or asset,
         whether real, personal or mixed, or tangible or intangible.

                  Purchase Money Debt - means and includes (i) Debt (other than
         the Obligations) for the payment of all or any part of the purchase
         price of any Equipment or other fixed assets of a Borrower, (ii) any
         Debt (other than the Obligations) incurred at the time of or

                                       26


         within 10 days prior to or after the acquisition of any Equipment or
         other fixed assets of a Borrower for the purpose of financing all or
         any part of the purchase price thereof, and (iii) any renewals,
         extensions or refinancings, but not any increases in the principal
         amounts thereof outstanding at the time.

                  Purchase Money Lien - a Lien upon Equipment or other fixed
         assets of a Borrower which secures Purchase Money Debt, but only if
         such Lien shall at all times be confined solely to the fixed assets
         acquired through the incurrence of the Purchase Money Debt secured by
         such Lien and such Lien constitutes a purchase money security interest
         under the UCC.

                  Rebates - quantifiable rebates for specific accounts as
         indicated on a separate line item of the invoice for the corresponding
         Account.

                  Receipts - all payments on Accounts and all payments
         constituting proceeds of Inventory and other Collateral in the form in
         which such payments are made, whether by cash, check, credit card sales
         drafts, credit card sales, charge slips or any other manner whatsoever.

                  Refinancing Conditions - the following conditions, each of
         which must be satisfied before Refinancing Debt shall be permitted
         under SECTION 10.2.3 of this Agreement: (i) the Refinancing Debt is in
         an aggregate principal amount that does not exceed the aggregate
         principal amount outstanding of the Debt being extended, renewed or
         refinanced, (ii) the Refinancing Debt has a later or equal final
         maturity and a longer or equal weighted average life than the Debt
         being extended, renewed or refinanced, (iii) the Refinancing Debt does
         not bear a rate of interest that exceeds a market rate (as determined
         in good faith by a Senior Officer) as of the date of such extension,
         renewal or refinancing, (iv) if the Debt being extended, renewed or
         refinanced is subordinate to the Obligations, the Refinancing Debt is
         subordinated to the same extent, (v) the covenants contained in any
         instrument or agreement relating to the Refinancing Debt are no less
         favorable to Borrowers than those relating to the Debt being extended,
         renewed or refinanced, and (vi) at the time of and after giving effect
         to such extension, renewal or refinancing, no Default or Event of
         Default shall exist.

                  Refinancing Debt - Debt of a Borrower for Money Borrowed that
         is permitted by SECTION 10.2.3 and that is the subject of or the result
         of an extension, renewal or refinancing.

                  Regulation D - Regulation D of the Board of Governors.

                  Reimbursement Date - as defined in SECTION 2.3.1(iii) of this
         Agreement.

                  Rentals - as defined in SECTION 10.2.14 of this Agreement.

                  Reportable Event - any of the events set forth in Section
         4043(b) of ERISA.

                                       27


                  Reporting Month - any Fiscal Month in which a Borrowing Base
         Reporting Event has occurred.

                  Restricted Investment - any acquisition of Property by a
         Borrower or any of its Subsidiaries in exchange for cash or other
         Property, whether in the form of an acquisition of Equity Interests or
         Debt, or the purchase or acquisition by a Borrower or any of its
         Subsidiaries of any other Property, or a loan, advance, capital
         contribution or subscription, except acquisitions of the following: (i)
         fixed assets to be used in the Ordinary Course of Business of a
         Borrower or any of its Subsidiaries so long as the acquisition costs
         thereof constitute Capital Expenditures permitted hereunder; (ii) goods
         held for sale or lease or to be used in the manufacture of goods or the
         provision of services by a Borrower or any of its Subsidiaries in the
         Ordinary Course of Business; (iii) Current Assets arising from the sale
         or lease of goods or the rendition of services in the Ordinary Course
         of Business of a Borrower or any of its Subsidiaries; (iv) investments
         in Subsidiaries to the extent existing on the Closing Date; (v) Cash
         Equivalents to the extent they are not subject to rights of offset in
         favor of any Person other than Lender; (vi) loans and other advances of
         money to the extent not prohibited by SECTION 10.2.2, and (vii)
         investments disclosed in writing to Lender and subject to Lender's
         consent, which consent shall not be unreasonably withheld.

                  Restrictive Agreement - an agreement (other than a Loan
         Document) that, if and for so long as an Obligor or any Subsidiary of
         such Obligor is a party thereto, would prohibit, condition or restrict
         such Obligor's or Subsidiary's right to incur or repay Debt for Money
         Borrowed (including any of the Obligations); grant Liens upon any of
         such Obligor's or Subsidiary's assets (including Liens granted in favor
         of Lender pursuant to the Loan Documents); declare or make
         Distributions; amend, modify, extend or renew any agreement evidencing
         Debt for Money Borrowed (including any of the Loan Documents); or repay
         any Debt owed to another Obligor.

                  Revolver Commitment - the commitment of Lender to make
         Revolver Loans to Borrowers in accordance with the provisions of
         SECTION 2.1 hereof, not to exceed $12,500,000.

                  Revolver Commitment Amount - $12,500,000.

                  Revolver Facility - the loan facility established by Lender
         pursuant to SECTION 2.1 of this Agreement.

                  Revolver Loan - a loan made by Lender as provided in SECTION
         2.1 of this Agreement (including any Out-of-Formula Loan).

                  Revolver Loan Balance - for any day, the amount obtained by
         adding the aggregate of the unpaid balance of Revolver Loans and LC
         Outstandings at the end of such day.

                                       28


                  Revolver Note - a Revolver Note to be executed by Borrowers in
         favor of Lender in the form of EXHIBIT A-1 attached hereto, which shall
         be in the face amount of the Revolver Commitment Amount and which shall
         evidence all Revolver Loans made by Lender to Borrowers pursuant to
         this Agreement.

                  S&P - Standard & Poor's Ratings Group, a division of
         McGraw-Hill, Inc.

                  Schedule of Accounts - as defined in SECTION 8.2.1 of the
         Agreement.

                  Secured Parties - Lender and each Affiliate of Lender.

                  Security - shall have the same meaning as in Section 2(1) of
         the Securities Act of 1933.

                  Security Documents - the Patent and Trademark Security
         Agreement, the Copyright Security Agreement, the Guarantors' Security
         Agreement and all other instruments and agreements now or at any time
         hereafter securing the whole or any part of the Obligations.

                  Senior Officer - the chairman of the board of directors, the
         president or the chief financial officer of, or in-house legal counsel
         to, a Borrower.

                  Slow-Moving Inventory - Inventory that has not been sold by a
         Borrower within the 6-month period following such Borrower's
         acquisition of such Inventory.

                  Software - shall have the meaning ascribed to "software" in
         the UCC.

                  Solvent - as to any Person, such Person (i) owns Property
         whose fair saleable value is greater than the amount required to pay
         all of such Person's Debts (including contingent Debts), (ii) is able
         to pay all of its Debts as such Debts mature, (iii) has capital
         sufficient to carry on its business and transactions and all business
         and transactions in which it is about to engage; and (iv) is not
         "insolvent" within the meaning of Section 101(32) of the Bankruptcy
         Code.

                  Statutory Reserves - on any date, the percentage (expressed as
         a decimal) established by the Board of Governors which is the then
         stated maximum rate for all reserves (including, any emergency,
         supplemental or other marginal reserve requirements) applicable to any
         member bank of the Federal Reserve System in respect to Eurocurrency
         Liabilities (or any successor category of liabilities under Regulation
         D). Such reserve percentage shall include those imposed pursuant to
         said Regulation D. The Statutory Reserve shall be adjusted
         automatically on and as of the effective date of any change in such
         percentage.

                  Subordinated Debt - unsecured Debt, including the Indenture
         Debt, incurred by a Borrower that is expressly subordinated and made
         junior to the payment and performance

                                       29


         in full of the Obligations and contains terms and conditions (including
         terms relating to interest, fees, repayment and subordination)
         satisfactory to Lender.

                  Subsidiary - any Person in which 50% or more of its
         outstanding Voting Securities or 50% or more of all Equity Interests is
         owned directly or indirectly by a Borrower or by one or more other
         Subsidiaries or by a Borrower and one or more other Subsidiaries.

                  Supporting Obligation - shall have the meaning ascribed to
         "supporting obligation" in the UCC.

                  Taxes - any present or future taxes, levies, imposts, duties,
         fees, assessments, deductions, withholdings or other charges of
         whatever nature, including income, receipts, excise, property, sales,
         transfer, license, payroll, withholding, social security and franchise
         taxes now or hereafter imposed or levied by the United States, or any
         other Governmental Authority and all interest, penalties, additions to
         tax and similar liabilities with respect thereto.

                  Term - as defined in SECTION 6.1 of this Agreement.

                  Termination Date - the date on which this Agreement is
         terminated pursuant to SECTION 6.2 of this Agreement.

                  Type - any type of a Loan determined with respect to the
         interest option applicable thereto, which shall be either a Euro-Dollar
         Loan or a Base Rate Loan.

                  UCC - the Uniform Commercial Code (or any successor statute)
         as adopted and in force in the State of Georgia or, when the laws of
         any other state govern the method or manner of the perfection or
         enforcement of any security interest in any of the Collateral, the
         Uniform Commercial Code (or any successor statute) of such state.

                  Upstream Payment - a payment or distribution of cash or other
         Property by a Subsidiary to a Borrower, whether in repayment of Debt
         owed by such Subsidiary to such Borrower, as a dividend or distribution
         on account of such Borrower's ownership of Equity Interests, or
         otherwise.

                  Value - with reference to the value of Eligible Inventory in
         Dollars, value determined on the basis of the lower of cost or market
         of such Eligible Inventory, with the cost thereof calculated on a
         first-in, first-out basis, determined in accordance with GAAP.

                  Voting Power - with respect to any Person, the power
         ordinarily (without the occurrence of a contingency) to elect the
         members of the Board of Directors (or Persons performing similar
         functions) of such Person.

                                       30


                  Voting Securities - Equity Interests of any class or classes
         of a corporation or other entity the holders of which are ordinarily,
         in the absence of contingencies, entitled to elect a majority of the
         corporate directors (or Persons performing similar functions).

         1.2. ACCOUNTING TERMS. Unless otherwise specified herein, all terms of
an accounting character used in this Agreement shall be interpreted, all
accounting determinations under this Agreement shall be made, and all financial
statements required to be delivered under this Agreement shall be prepared, in
accordance with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrowers and their Subsidiaries heretofore
delivered to Lender and using, if applicable, the same method for inventory
valuation as used in such audited financial statements, except for any change
required by GAAP; provided, however, that for purposes of determining Borrower's
compliance with financial covenants contained in SECTION 10.3 of this Agreement,
all accounting terms shall be interpreted and all accounting determinations
shall be made in accordance with GAAP as in effect on the date of this Agreement
and applied on a basis consistent with the application used in the financial
statements referred to in SECTION 9.1.9 of this Agreement unless (i) Borrowers
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) Lender shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made. In the event of any change in GAAP that
occurs after the date of this Agreement and that is material to Borrowers,
Lender shall the right to require either that conforming adjustments be made to
any financial covenants set forth in this Agreement, or the components thereof,
that are affected by such change or that Borrowers report their financial
condition based on GAAP as in effect immediately prior to the occurrence of such
change.

         1.3. OTHER TERMS. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.

         1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any agreement, instrument or
other document (including any of the Loan Documents) shall include any and all
modifications or supplements thereto and any and all restatements, extensions or
renewals thereof to the extent such modifications, supplements, restatements,
extensions or renewals of any such documents are permitted by the terms thereof;
to any Person shall mean and include the successors and permitted assigns of
such Person; to "including" and "include" shall be understood to mean
"including, without limitation" (and, for purposes of this Agreement and each
other Loan Document, the parties agree that the rule of

                                       31


ejusdem generis shall not be applicable to limit a general statement,
which is followed by or referable to an enumeration of specific matters to
matters similar to the matters specifically mentioned); or to the time of day
shall mean the time of day on the day in question in Atlanta, Georgia, unless
otherwise expressly provided in this Agreement. A Default or an Event of Default
shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default
or Event of Default is waived in writing by Lender pursuant to this Agreement
or, in the case of a Default, is cured within any period of cure expressly
provided in this Agreement; and an Event of Default shall "continue" or be
"continuing" until such Event of Default has been waived in writing by Lender.
All calculations of Value shall be in Dollars, all Loans shall be funded in
Dollars and all Obligations shall be repaid in Dollars. Whenever the phrase "to
the best of any Borrower's knowledge" or words of similar import relating to the
knowledge or the awareness of any Borrower are used in this Agreement or other
Loan Documents, such phrase shall mean and refer to (i) the actual knowledge of
a Senior Officer of any Borrower or (ii) the knowledge that a Senior Officer
would have obtained if he had engaged in good faith in the diligent performance
of his duties, including the making of such reasonably specific inquiries as may
be necessary of the officers, employees or agents of such Borrower and a good
faith attempt to ascertain the existence or accuracy of the matter to which such
phrase relates.

         1.5. SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached hereto
are by reference made a part hereof.

         1.6. ELIGIBLE ACCOUNTS AND ELIGIBLE INVENTORY DEFINITIONS. Following
the Initial Field Exam and pursuant to the results thereof, Lender shall make
any changes to the definitions of Eligible Accounts and Eligible Inventory that,
in its reasonable credit judgment, Lender deems necessary in furtherance of the
agreements of the parties contained in this Agreement.

SECTION 2. CREDIT FACILITY

         Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $12,500,000
available to Borrowers as follows:

         2.1. REVOLVER COMMITMENT.

                  2.1.1. Revolver Loans. Lender agrees, to the extent of the
Revolver Commitment and upon the terms and subject to the conditions set forth
herein, to make Revolver Loans to Borrowers on any Business Day during the
period from the date hereof through the Business Day before the last day of the
Term, which Revolver Loans may be repaid and reborrowed in accordance with the
provisions of this Agreement; provided, however, that Lender shall have no
obligation to Borrowers whatsoever to make any Revolver Loan on or after the
Commitment Termination Date or if at the time of the proposed funding thereof
the aggregate principal amount of all of the Revolver Loans then outstanding and
Pending Revolver Loans exceeds, or would exceed after the funding of such
Revolver Loan, the Borrowing Base. The Revolver Loans shall bear interest as set
forth in SECTION 3.1 hereof. Each Revolver Loan shall,

                                       32


at the option of Borrowers, be made or continued as, or converted into, part of
one or more Borrowings that, unless specifically provided herein, shall consist
entirely of Base Rate Loans or Euro-Dollar Loans.

                  2.1.2. Out-of-Formula Loans. If the unpaid balance of Revolver
Loans outstanding at any time should exceed the Borrowing Base at such time (an
"Out-of-Formula Condition"), such Revolver Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits of the Loan Documents. In the event that Lender is willing in its sole
and absolute discretion to make Out-of-Formula Loans, such Out-of-Formula Loans
shall be payable ON DEMAND and shall bear interest as provided in SECTION 3.1.5.

                  2.1.3. Use of Proceeds. The proceeds of the Revolver Loans
shall be used by Borrowers solely for one or more of the following purposes: (i)
to satisfy any Debt owing on the Effective Date to Lender; (ii) to pay the fees
and transaction expenses associated with the closing of the transactions
described herein; (iii) to pay any of the Obligations; and (iv) to make
expenditures for other lawful corporate purposes of Borrowers to the extent such
expenditures are not prohibited by this Agreement or Applicable Law. In no event
may any Revolver Loan proceeds be used by Borrowers to make a contribution to
the equity of any Subsidiary, to purchase or to carry, or to reduce, retire or
refinance any Debt incurred to purchase or carry, any Margin Stock or for any
related purpose that violates the provisions of Regulations T, U or X of the
Board of Governors.

                  2.1.4. Revolver Note. The Revolver Loans made by Lender and
interest accruing thereon shall be evidenced by the records of Lender and by the
Revolver Note, which shall be executed by Borrowers and delivered to Lender on
the Closing Date. All outstanding principal amounts and accrued interest under
the Revolver Note shall be due and payable as set forth in SECTION 5.2 hereof.

         2.2. INTENTIONALLY OMITTED.

         2.3. LC FACILITY.

                  2.3.1. Procurement of Letters of Credit. Subject to all of the
terms and conditions hereof, Lender agrees to establish the LC Facility pursuant
to which, during the period from the date hereof to (but excluding) the
thirtieth day prior to the last day of the Term, and provided no Default or
Event of Default exists, Lender shall issue one or more Letters of Credit on
Borrowers' request therefor from time to time:

                           (i) Borrowers acknowledge that Lender's willingness
         to issue any Letter of Credit is conditioned upon Lender's receipt of
         (A) an LC Application with respect to the requested Letter of Credit
         and (B) such other instruments and agreements as Lender may customarily
         require for the issuance of a letter of credit of equivalent type and
         amount as the requested Letter of Credit. Lender shall have no
         obligation to issue any Letter of Credit unless (x) Lender receives an
         LC Request from Borrowers at least 5 Business Days prior to the date on
         which Borrowers desires to submit such

                                       33


         LC Application to Lender and (y) each of the LC Conditions is satisfied
         on the date of Lender's receipt of the LC Request and at the time of
         the requested execution of the LC Application. In no event shall Lender
         have any liability or obligation to Borrowers or any Subsidiary for any
         failure or refusal by Lender to issue, for Lender's delay in issuing,
         or for any error of Lender in issuing any Letter of Credit.

                           (ii) Letters of Credit may be requested by Borrowers
         only if they are to be used (a) to support obligations of Borrowers
         incurred in the Ordinary Course of Business of Borrowers or (b) for
         such other purposes as Lender may approve from time to time in writing.

                           (iii) Borrowers shall comply with all of the terms
         and conditions imposed on Borrowers by Lender, whether such terms and
         conditions are contained in an LC Application or in any agreement with
         respect thereto. Borrowers agree to reimburse Lender for any draw under
         any Letter of Credit as hereinafter provided, and to pay Lender the
         amount of all other liabilities and obligations payable to Lender under
         or in connection with any Letter of Credit when due, irrespective of
         any claim, setoff, defense or other right that Borrowers may have at
         any time against Lender or any other Person. If Lender shall pay any
         amount under any Letter of Credit, then Borrowers shall pay to Lender,
         in Dollars on the first Business Day following the date on which
         payment was made by Lender under such Letter of Credit (the
         "Reimbursement Date"), an amount equal to the amount paid by Lender
         under such Letter of Credit together with interest from and after the
         Reimbursement Date until payment in full is made by Borrowers at the
         Default Rate for Revolver Loans constituting Base Rate Loans. Until
         Lender has received payment from Borrowers in accordance with the
         foregoing provisions of this clause (iii), Lender, in addition to all
         of its other rights and remedies under this Agreement, shall be fully
         subrogated to the rights and remedies of each beneficiary under such
         Letter of Credit whose claims against Borrowers has been discharged
         with the proceeds of such Letter of Credit. Whether or not a Borrower
         submits any Notice of Borrowing to Lender, Borrowers shall be deemed to
         have requested from Lender a Borrowing of Base Rate Loans in an amount
         necessary to pay to Lender all amounts due Lender on any Reimbursement
         Date, irrespective of whether or not any Default or Event of Default
         has occurred or exists, the Revolver Commitment has been terminated,
         the funding of the Borrowing deemed requested by Borrowers would result
         in, or increase the amount of, any Out-of-Formula Condition or any of
         the conditions set forth in SECTION 11 hereof are not satisfied.

                           (iv) Borrowers assume all risks of the acts,
         omissions or misuses of any Letter of Credit by the beneficiary
         thereof. The obligation of Borrowers to reimburse Lender for any
         payment made by Lender under the Letter of Credit shall be absolute,
         unconditional and irrevocable and shall be paid without regard to any
         lack of validity or enforceability of any Letter of Credit, the
         existence of any claim, setoff, defense or other right which Borrowers
         may have at any time against a beneficiary of any Letter of Credit, or
         improper honor by Lender of any draw request under a Letter of Credit.
         If

                                       34


         presentation of a demand, draft, certificate or other document does not
         comply with the terms of a Letter of Credit and Borrowers contend that,
         as a consequence of such noncompliance it has no obligation to
         reimburse Lender for any payment made with respect thereto, Borrowers
         shall nevertheless be obligated to reimburse Lender for any payment
         made under such Letter of Credit, but without waiving any claim
         Borrowers may have against Lender in connection therewith; provided,
         however, that the Borrowers shall not be obligated to reimburse the
         Lender for such payment if the Lender was grossly negligent in the
         making of such payment.

                           (v) No Letter of Credit shall be extended or amended
         in any respect that is not solely ministerial, unless all of the LC
         Conditions are met as though a new Letter of Credit were being
         requested and issued.

                  2.3.2. Cash Collateral Account. If any LC Outstandings
(whether or not then due or payable) shall exist (i) at any time that an Event
of Default has occurred and is continuing, (ii) on any date that Availability
would, but for the last sentence of the definition thereof set forth
hereinabove, be less than zero, or (iii) on or at any time after the Commitment
Termination Date, then Borrowers shall, on Lender's request, forthwith deposit
with Lender, in cash, an amount equal to 105% of the aggregate amount of all LC
Outstandings. If Borrowers fail to make such deposit on the first Business Day
following Lender's demand therefor, Lender may advance such amount as a Revolver
Loan (whether or not an Out-of-Formula Condition is created thereby and
irrespective of the Commitment Termination Date). Such cash (together with any
interest accrued thereon) shall be held by Lender in the Cash Collateral Account
and may be invested, in Lender's discretion, in Cash Equivalents. Each Borrower
hereby pledges to Lender and grants to Lender a security interest in the Cash
Collateral Account and in all Cash Collateral from time to time deposited
thereto, as security for the payment of all Obligations, whether or not then due
or payable. From time to time after cash is deposited in the Cash Collateral
Account, Lender may apply Cash Collateral then held in the Cash Collateral
Account to the payment of any amounts, in such order as Lender may elect, as
shall be or shall become due and payable by Borrowers to Lender or any Lender
with respect to the LC Outstandings. Neither Borrowers nor any other Person
claiming by, through or under or on behalf of Borrowers shall have any right to
withdraw any of the Cash Collateral held in the Cash Collateral Account,
including any accrued interest, provided that upon termination or expiration of
all Letters of Credit and the payment and satisfaction of all of the LC
Outstandings, any Cash Collateral remaining in the Cash Collateral Account shall
be returned to Borrowers unless an Event of Default then exists (in which event
Lender may apply such Cash Collateral to the payment of any other Obligations
outstanding, with any surplus remaining after Full Payment of the Obligations to
be turned over to Borrowers).

                  2.3.3. Indemnifications. In addition to any other indemnity
which Borrowers may have to Lender under any of the other Loan Documents and
without limiting such other indemnification provisions, Borrowers hereby agrees
to indemnify and defend each Lender Indemnitee and to hold each Lender
Indemnitee harmless from and against any and all Claims which any Lender
Indemnitee (other than as the actual result of the gross negligence or willful

                                       35


misconduct of any Lender Indemnitee) incur or be subject to as a consequence,
directly or indirectly, of (a) the issuance of, payment or failure to pay or any
performance or failure to perform under any Letter of Credit or (b) any suit,
investigation or proceeding as to which Lender is or may become a party to as a
consequence, directly or indirectly, of the issuance of any Letter of Credit or
the payment or failure to pay thereunder.

SECTION 3. INTEREST, FEES AND CHARGES

         3.1. INTEREST.

                  3.1.1. Rates of Interest.

                  Borrowers jointly and severally agree to pay interest in
respect of all unpaid principal amounts of the Revolver Loans from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration or otherwise) at a rate per annum equal to the
applicable rate indicated below:

                           (a) for Revolver Loans made or outstanding as Base
         Rate Loans, the Applicable Margin for Revolver Loans that are Base Rate
         Loans plus the Base Rate in effect from time to time; or

                           (b) for Revolver Loans made or outstanding as
         Euro-Dollar Loans, the Applicable Margin for Revolver Loans that are
         Euro-Dollar Loans plus the Adjusted Euro-Dollar Rate for the applicable
         Interest Period selected by Borrowers in conformity with this
         Agreement.

                  Upon determining the Adjusted Euro-Dollar Rate for any
Interest Period requested by Borrowers, Lender shall promptly notify Borrowers
thereof by telephone and, if so requested by Borrowers, confirm the same in
writing. Such determination shall, absent manifest error, be final, conclusive
and binding on all parties and for all purposes. The applicable rate of interest
for all Loans (or portions thereof) bearing interest based upon the Base Rate
shall be increased or decreased, as the case may be, by an amount equal to any
increase or decrease in the Base Rate, with such adjustments to be effective as
of the opening of business on the day that any such change in the Base Rate
becomes effective. Interest on each Loan shall accrue from and including the
date on which such Loan is made, converted to a Loan of another Type or
continued as a Euro-Dollar Loan to (but excluding) the date of any repayment
thereof; provided, however, that, if a Loan is repaid on the same day made, one
day's interest shall be paid on such Loan.

                  3.1.2. Conversions and Continuations.

                                       36


                           (i) Borrowers may on any Business Day, subject to the
giving of a proper Notice of Conversion/Continuation as hereinafter described,
elect (A) to continue all or any part of a Euro-Dollar Loan by selecting a new
Interest Period therefor, to commence on the last day of the immediately
preceding Interest Period, or (B) to convert all or any part of a Loan of one
Type into a Loan of another Type; provided, however, that no outstanding Loans
may be converted into or continued as Euro-Dollar Loans when any Default or
Event of Default exists unless Lender otherwise consents at such time. Any
conversion of a Euro-Dollar Loan into a Base Rate Loan shall be made on the last
day of the Interest Period for such Euro-Dollar Loan.

                           (ii) Whenever Borrowers desire to convert or continue
Loans under SECTION 3.1.2(i), Borrowers shall give Lender written notice (or
telephonic notice promptly confirmed in writing) substantially in the form of
EXHIBIT B (a "Notice of Conversion/Continuation") signed by an authorized
officer of Borrowers prior to 11:00 a.m., at least 1 Business Day before the
requested conversion date in the case of a conversion into Base Rate Loans, and
at least 3 Business Days before the requested conversion or continuation date,
in the case of a conversion into or continuation of Euro-Dollar Loans. Each such
Notice of Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Loans to be converted or continued, the date
of such conversion or continuation (which shall be a Business Day) and whether
the Loans are being converted into or continued as Euro-Dollar Loans (and, if
so, the duration of the Interest Period to be applicable thereto and, in the
absence of any specification by Borrowers of an Interest Period, an Interest
Period of one month will be deemed specified) or Base Rate Loans. If, upon the
expiration of any Interest Period in respect of any Euro-Dollar Loans, Borrowers
shall have failed to deliver the Notice of Conversion/Continuation, Borrowers
shall be deemed to have elected to convert such Euro-Dollar Loans to Base Rate
Loans.

                  3.1.3. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of Euro-Dollar Loans,
Borrowers shall select an interest period (each an "Interest Period") to be
applicable to such Euro-Dollar Loan, which interest period shall commence on the
date such Euro-Dollar Loan is made and shall end on a numerically corresponding
day in the first, second or third month thereafter; provided, however, that:

                           (i) the initial Interest Period for a Euro-Dollar
         Loan shall commence on the date of such Borrowing (including the date
         of any conversion from a Loan of another Type) and each Interest Period
         occurring thereafter in respect of such Loan shall commence on the date
         on that the next preceding Interest Period expires;

                           (ii) if any Interest Period would otherwise expire on
         a day that is not a Business Day, such Interest Period shall expire on
         the next succeeding Business Day, provided that if any Interest Period
         in respect of Euro-Dollar Loans would otherwise expire on a day that is
         not a Business Day but is a day of the month after which no further
         Business Day occurs in such month, such Interest Period shall expire on
         the next preceding Business Day;

                                       37


                           (iii) any Interest Period that begins on a day for
         which there is no numerically corresponding day in the calendar month
         at the end of such Interest Period shall expire on the last Business
         Day of such calendar month;

                           (iv) no Interest Period with respect to any portion
         of principal of a Loan shall extend beyond a date on which a Borrower
         is required to make a scheduled payment of such portion of principal;
         and

                           (v) no Interest Period shall extend beyond the last
         day of the Term.

                  3.1.4. Interest Rate Not Ascertainable. If Lender shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted Euro-Dollar Rate for any Interest Period, by reason of any changes
arising after the date of this Agreement affecting the London interbank market
or Lender's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted Euro-Dollar Rate, then, and in any such event, Lender
shall forthwith give notice (by telephone confirmed in writing) to Borrowers of
such determination. Until Lender notifies Borrowers that the circumstances
giving rise to the suspension described herein no longer exist, the obligation
of Lender to make Euro-Dollar Loans shall be suspended, and such affected Loans
then outstanding shall, at the end of the then applicable Interest Period or at
such earlier time as may be required by Applicable Law, bear the same interest
as Base Rate Loans.

                  3.1.5. Default Rate of Interest. Borrowers shall pay interest
at a rate per annum equal to the Default Rate (i) with respect to the principal
amount of any portion of the Obligations (and, to the extent permitted by
Applicable Law, all past due interest) that is not paid on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise)
until paid in full; (ii) with respect to the principal amount of all of the
Obligations (and, to the extent permitted by Applicable Law, all past due
interest) upon the earlier to occur of (x) a Borrower's receipt of notice of
Lender's election to charge the Default Rate based upon the existence of any
Event of Default, whether or not acceleration or demand for payment of the
Obligations has been made, or (y) the commencement by or against any Borrower of
an Insolvency Proceeding, whether or not under the circumstances described in
clause (i) or (ii) hereof Lender elects to accelerate the maturity or demand
payment of any of the Obligations; and (iii) with respect to the principal
amount of any Out-of-Formula Loans, whether or not demand for payment thereof
has been made by Lender. To the fullest extent permitted by Applicable Law, the
Default Rate shall apply and accrue on any judgment entered with respect to any
of the Obligations and to the unpaid principal amount of the Obligations during
any Insolvency Proceeding of a Borrower. Each Borrower acknowledges that the
cost and expense to Lender attendant upon the occurrence of an Event of Default
are difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Lender for such added cost and expense.
Interest accrued at the Default Rate shall be payable ON DEMAND.

                                       38


         3.2. FEES. In consideration of Lender's establishment of the
Commitments in favor of Borrowers, Borrowers agree to pay to Lender the
following fees:

                  3.2.1. Closing Fee. Borrowers shall pay to Lender a closing
fee of $25,000, which shall be paid concurrently with the initial Loans
hereunder.

                  3.2.2. Administrative Fee. Borrowers shall pay to Lender a fee
of $25,000 on the first annual anniversary of the Closing Date.

                  3.2.3. LC Facility Fees. Borrowers shall be jointly and
severally obligated to pay to Lender: (i) for each Letter of Credit issued under
the LC Facility, a fee per annum equal to the Applicable Margin for Revolver
Loans that are Euro-Dollar Loans in effect from time to time and that are
supported by the same type of collateral (whether Liquid Collateral or non
Liquid Collateral) as that supporting the Letter of Credit, based on the maximum
amount available to be drawn under all Letters of Credit outstanding, payable in
advance of issuance; and (ii) all normal and customary charges associated with
the issuance, amending, negotiating, processing and administration of Letters of
Credit.

                  3.2.4. Field Exam, Audit and Appraisal Fees. Borrowers shall
reimburse Lender for all reasonable costs and expenses incurred by Lender in
connection with all Field Exams, audits and appraisals of any Obligor's books
and records and such other matters pertaining to any Obligor or any Collateral
as Lender shall deem appropriate. Borrowers shall reimburse Lender for all
reasonable costs and expenses in connection with appraisals of any Collateral as
Lender shall deem appropriate and shall pay to Lender $750 per day plus
out-of-pocket expenses for each day that an employee or agent of Lender shall be
engaged in a Field Exam or any other examination or review of any Borrower's
books and records; provided, however, that, so long as no Default or Event of
Default shall exist, (a) Lender shall not conduct any Field Exams at Borrowers'
expense so long as (i) the Revolving Loan Amount does not exceed, as of any
date, an amount equal to (A) 95% of the amount of Liquid Collateral on such date
minus (B) the Availability Reserve on such date, and thereafter (b) Lender shall
not conduct more than two (2) Field Exams at Borrowers' expense so long as
Availability is equal to or greater than $2,500,000.

                  3.2.5. Revolving Credit Facility Fee. In the event that as of
any measurement date during any Fiscal Month (a) the Revolver Loan Balance is
greater than an amount equal to 95% of the average amount of Liquid Collateral
included in the Borrowing Base for such Fiscal Month, and (b) the amount of
Liquid Collateral included in the Borrowing Base for such date is greater than
zero, the Borrowers shall pay the Lender a fee of $1,000 for such Fiscal Month,
which fee is fully earned and non-refundable upon the occurrence of the events
described in (a) and (b) above, and which is payable on the first day of the
immediately succeeding Fiscal Month.

                  3.2.6. General Provisions. All fees shall be fully earned by
Lender when due and payable (and, in the case of Letters of Credit, upon each
issuance, renewal or extension of such Letter of Credit) and, except as
otherwise set forth herein or required by Applicable Law, shall not be subject
to rebate, refund or proration. All fees provided for in this SECTION 3.2 are

                                       39


and shall be deemed to be for compensation for services and are not, and shall
not be deemed to be, interest or any other charge for the use, forbearance or
detention of money.

         3.3. COMPUTATION OF INTEREST AND FEES. All fees and other charges
provided for in this Agreement that are calculated as a per annum percentage of
any amount and all interest shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days. For purposes of
computing interest and other charges hereunder, all Payment Items received by
Lender and deposited in the Collateral Reserve Account shall be deemed applied
by Lender on account of the Obligations (subject to final payment of such items)
on the Business Day that Lender receives such items in immediately available
funds in the Collateral Reserve Account, and Lender shall be deemed to have
received such Payment Item on the date specified in SECTION 5.6 hereof.

         3.4. REIMBURSEMENT OF EXPENSES.

                  3.4.1. Borrowers shall reimburse Lender for all legal,
accounting, appraisal and other fees and expenses incurred by Lender in
connection with (i) the negotiation and preparation of any of the Loan
Documents, any amendment or modification thereto, any waiver of any Default or
Event of Default thereunder, or any restructuring or forbearance with respect
thereto; (ii) the administration of the Loan Documents and the transactions
contemplated thereby, to the extent that such fees and expenses are expressly
provided for in this Agreement or any of the other Loan Documents; (iii) action
taken to perfect or maintain the perfection or priority of any of Lender's Liens
with respect to any of the Collateral; (iv) any inspection of or audits
conducted with respect to Borrowers' books and records or any of the Collateral;
(v) any effort to verify, protect, preserve, or restore any of the Collateral or
to collect, sell, liquidate or otherwise dispose of or realize upon any of the
Collateral; (vi) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by or against Lender, any Obligor or any other Person) in
any way arising out of or relating to any of the Collateral (or the validity,
perfection or priority of any of Lender's Liens thereon), any of the Loan
Documents or the validity, allowance or amount of any of the Obligations; (vii)
the protection or enforcement or any rights or remedies of Lender in any
Insolvency Proceeding; and (viii) any other action taken by Lender to enforce
any of the rights or remedies of Lender against any Obligor or any Account
Debtors to enforce collection of any of the Obligations or payments with respect
to any of the Collateral. All amounts chargeable to Borrowers under this SECTION
3.4 and SECTION 3.2.4 shall constitute Obligations that are secured by all of
the Collateral and shall be payable ON DEMAND to Lender. Notwithstanding
anything herein to the contrary, Lender acknowledges and agrees that the
aggregate amount of all legal, accounting, appraisal and other fees and expenses
incurred by Lender in connection with the closing of the Revolver Facility and
payable by Borrower to Lender pursuant to this SECTION 3.4 shall not exceed
$20,000, which amount has been received by the Lender on or prior to the date
hereof. Borrowers shall also reimburse Lender for expenses incurred by Lender in
its administration of any of the Collateral to the extent and in the manner
provided in SECTION 8 hereof or in any of the other Loan Documents. The
foregoing shall be in addition to, and shall not be construed to limit, any
other provision of any of the Loan Documents regarding the reimbursement by
Borrowers of costs, expenses or liabilities suffered or incurred by Lender.

                                       40


                  3.4.2. If at any time Lender shall agree to indemnify any
Person (including any Affiliate of Lender) against losses or damages that such
Person may suffer or incur in its dealings or transactions with a Borrower, or
shall guarantee any liability or obligation of a Borrower to such Person, or
otherwise shall provide assurances of a Borrower's payment or performance under
any agreement with such Person, including indemnities, guaranties or other
assurances of payment or performance given by Lender with respect to Banking
Relationship Debt, then the Contingent Obligation of Lender providing any such
indemnity, guaranty or other assurance of payment or performance, together with
any payment made or liability incurred by Lender in connection therewith, shall
constitute Obligations that are secured by the Collateral and Borrowers shall
repay, ON DEMAND, any amount so paid or any liability incurred by Lender in
connection with any such indemnity, guaranty or other assurance, except that
repayment with respect to any Letter of Credit shall be due on the Reimbursement
Date as provided in SECTION 2.3.1(iii). Nothing herein shall be construed to
impose upon Lender any obligation to provide any such indemnity, guaranty or
assurance except to the extent provided in SECTION 2.3 hereof. The foregoing
agreement of Borrowers shall apply whether or not such indemnity, guaranty or
assurance is in writing or oral and regardless of a Borrower's knowledge of the
existence thereof, and shall be in addition to any of the provision of the Loan
Documents regarding reimbursement by Borrowers of costs, expenses or liabilities
suffered or incurred by Lender.

         3.5. LENDER CHARGES. Borrowers shall pay to Lender, ON DEMAND, any and
all fees, costs or expenses which Lender or any Participant pays to a bank or
other similar institution (including any fees paid by Lender to any Participant)
arising out of or in connection with (i) the forwarding to a Borrower or any
other Person on behalf of a Borrower, by Lender or any Participant, of proceeds
of Loans made by Lender to Borrowers pursuant to this Agreement and (ii) the
depositing for collection, by Lender or any Participant, of any Payment Item
received or delivered to Lender or any Participant on account of the
Obligations. Each Borrower acknowledges and agrees that Lender may charge such
costs, fees and expenses to Borrowers based upon Lender's good faith estimate of
such costs, fees and expenses as they are incurred by Lender.

         3.6. ILLEGALITY. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for Lender to make or maintain a
Euro-Dollar Loan or to give effect to its obligations as contemplated hereby
with respect to a Euro-Dollar Loan or (ii) at any time Lender determines that
the making or continuance of any Euro-Dollar Loan has become impracticable as a
result of a contingency occurring after the date hereof which adversely affects
the London interbank market or the position of Lender in such market, then
Lender shall give Borrowers' Agent notice of such determination and may
thereafter (1) declare that Euro-Dollar Loans will not thereafter be made by
Lender, whereupon any request by Borrowers for a Euro-Dollar Loan shall be
deemed a request for a Base Rate Loan unless Lender's declaration shall be
subsequently withdrawn (which declaration shall be withdrawn promptly after the
cessation of the circumstances described in clause (i) or (ii) above); and (2)
require that all outstanding Euro-Dollar Loans made by Lender be converted to
Base Rate Loans, under the circumstances of

                                       41


clause (i) or (ii) of this SECTION 3.6 insofar as Lender determines the
continuance of Euro-Dollar Loans to be impracticable, in which event all such
Euro-Dollar Loans shall be converted automatically to Base Rate Loans as of the
date of Borrowers' Agent's receipt of the aforesaid notice from Lender.

         3.7. INCREASED COSTS. If, by reason of (a) the introduction of or any
change (including any change by way of imposition or increase of Statutory
Reserves or other reserve requirements) in or in the interpretation of any law
or regulation, or (b) the compliance with any guideline or request from any
central bank or other Governmental Authority or quasi-Governmental Authority
exercising control over banks or financial institutions generally (whether or
not having the force of law):

                           (i) Lender shall be subject after the date hereof to
         any Taxes, duty or other charge with respect to any Euro-Dollar Loan or
         its obligation to make Euro-Dollar Loans, or a change shall result in
         the basis of taxation of payment to Lender of the principal of or
         interest on its Euro-Dollar Loans or its obligation to make Euro-Dollar
         Loans (except for changes in the rate of tax on the overall net income
         or gross receipts of Lender imposed by the jurisdiction in which
         Lender's principal executive office is located); or

                           (ii) any reserve (including any imposed by the Board
         of Governors), special deposits or similar requirement against assets
         of, deposits with or for the account of, or credit extended by, Lender
         shall be imposed or deemed applicable or any other condition affecting
         its Euro-Dollar Loans or its obligation to make Euro-Dollar Loans shall
         be imposed on Lender or the London interbank market;

and as a result thereof there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining Euro-Dollar Loans (except to
the extent already included in the determination of the applicable Adjusted
Euro-Dollar Rate for Euro-Dollar Loans), or there shall be a reduction in the
amount received or receivable by Lender, then Lender shall, promptly after
determining the existence or amount of any such increased costs for which Lender
seeks payment hereunder, give Borrowers notice thereof and Borrowers shall from
time to time, upon written notice from and demand by Lender, pay to Lender,
within 5 Business Days after the date specified in such notice and demand, an
additional amount sufficient to indemnify Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrowers by
Lender, shall be final, conclusive and binding for all purposes, absent manifest
error.

         If at any time, because of the circumstances described hereinabove in
this SECTION 3.7 or any other circumstances arising after the date of this
Agreement affecting Lender or the London interbank market or Lender's position
in such market, the Adjusted Euro-Dollar Rate, as determined by Lender, will not
adequately and fairly reflect the cost to Lender of funding Euro-Dollar Loans,
then, and in any such event:

                                       42


                           (i) Lender shall forthwith give notice (by telephone
         confirmed in writing) to Borrowers of such event;

                           (ii) Borrowers' right to request and Lender's
         obligation to make Euro-Dollar Loans shall be immediately suspended and
         Borrowers' right to continue a Euro-Dollar Loan as such beyond the then
         applicable Interest Period shall also be suspended, until each
         condition giving rise to such suspension no longer exists; and

                           (iii) Lender shall make a Base Rate Loan as part of
         the requested Borrowing of Euro-Dollar Loans, which Base Rate Loan
         shall, for all purposes, be considered part of such Borrowing.

         For purposes of this SECTION 3.7, all references to Lender shall be
deemed to include any bank holding company or bank parent of Lender.

         3.8. CAPITAL ADEQUACY. If Lender determines that after the date hereof
(a) the adoption of any Applicable Law regarding capital requirements for banks
or bank holding companies or the subsidiaries thereof, (b) any change in the
interpretation or administration of any such Applicable Law by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or (c) compliance by Lender or its holding company with
any request or directive of any such Governmental Authority, central bank or
comparable agency regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's capital to a level below
that which Lender could have achieved (taking into consideration Lender's and
its holding company's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that Lender's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of Lender's commitment to make
the Loans pursuant hereto by any amount deemed by Lender to be material:

                           (i) Lender shall promptly give notice of its
         determination of such occurrence to Borrowers' Agent; and

                           (ii) Borrowers shall pay to Lender as an additional
         fee from time to time, ON DEMAND, such amount as Lender certifies to be
         the amount reasonably calculated to compensate Lender for such
         reduction.

         A certificate of Lender claiming entitlement to compensation as set
forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to Lender (including
the basis for Lender's determination of such amount), and the method by which
such amounts were determined. In determining such amount, Lender may use any
reasonable averaging and attribution method. For purposes of this SECTION 3.8,
all references to Lender shall be deemed to include any bank holding company or
bank parent of Lender.

                                       43


         3.9. FUNDING LOSSES. If for any reason (other than due to a default by
Lender or as a result of Lender's refusal to honor a Euro-Dollar Loan request
due to circumstances described in SECTIONS 3.6 or 3.7 hereof) a Borrowing of, or
conversion to or continuation of, Euro-Dollar Loans does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
(whether or not withdrawn), or if any repayment (including any conversions
pursuant to SECTION 3.1.2 hereof) of any of its Euro-Dollar Loans occurs on a
date that is not the last day of an Interest Period applicable thereto, or if
for any reason Borrowers default in their obligation to repay Euro-Dollar Loans
when required by the terms of this Agreement, then Borrowers shall pay to
Lender, within 10 days after Lender's demand therefor, an amount (if a positive
number) computed pursuant to the following formula:

                  L =      (R - T) x P x D
                           ---------------
                                  360

                           where
                  L =      amount payable
                  R =      interest rate applicable to the Euro-Dollar Loan
                           unborrowed or prepaid
                  T =      effective interest rate per annum at which any
                           readily marketable bond or other obligations of the
                           United States, selected at Lender's sole discretion,
                           maturing on or nearest the last day of the then
                           applicable or requested Interest Period for such
                           Euro-Dollar Loan and in approximately the same amount
                           as such Euro-Dollar Loan, can be purchased by Lender
                           on the day of such payment of principal or failure to
                           borrow
                  P =      the amount of principal paid or the amount of the
                           Euro-Dollar Loan requested or to have been continued
                           or converted
                  D =      the number of days remaining in the Interest Period
                           as of the date of such prepayment or the number of
                           days in the requested Interest Period

Borrowers shall pay such amount upon presentation by Lender of a statement
setting forth the amount and Lender's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. For purposes
of this SECTION 3.9, all references to Lender shall be deemed to include any
bank holding company or bank parent of Lender. The calculations of all amounts
payable to Lender under this SECTION 3.9 shall be made as though Lender had
actually funded or committed to fund its Euro-Dollar Loan through the purchase
of an underlying deposit in an amount equal to the amount of such Euro-Dollar
Loan and having a maturity comparable to the relevant Interest Period for such
Euro-Dollar Loan; provided, however, Lender may fund its Euro-Dollar Loans in
any manner it deems fit and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this SECTION 3.9.

         3.10. MAXIMUM INTEREST. Regardless of any provision contained in any of
the Loan Documents, in no contingency or event whatsoever shall the aggregate of
all amounts that are contracted for, charged or received by Lender pursuant to
the terms of any of the Loan Documents and that are deemed interest under
Applicable Law exceed the highest rate permissible under any Applicable Law. No
agreements, conditions, provisions or stipulations contained in any of the Loan
Documents or the exercise by Lender of the right to accelerate the

                                       44


payment or the maturity of all or any portion of the Obligations, or the
exercise of any option whatsoever contained in any of the Loan Documents, or the
prepayment by Borrowers of any of the Obligations, or the occurrence of any
contingency whatsoever, shall entitle Lender to charge or receive in any event,
interest or any charges, amounts, premiums or fees deemed interest by Applicable
Law (such interest, charges, amounts, premiums and fees referred to herein
collectively as "Interest") in excess of the Maximum Rate and in no event shall
Borrowers be obligated to pay Interest exceeding such Maximum Rate, and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrowers to pay
Interest exceeding the Maximum Rate shall be without binding force or effect, at
law or in equity, to the extent only of the excess of Interest over such Maximum
Rate. If any Interest is charged or received in excess of the Maximum Rate
("Excess"), each Borrower acknowledges and stipulates that any such charge or
receipt shall be the result of an accident and bona fide error, and such Excess,
to the extent received, shall be applied first to reduce the principal
Obligations and the balance, if any, returned to Borrowers, it being the intent
of the parties hereto not to enter into a usurious or otherwise illegal
relationship. The right to accelerate the maturity of any of the Obligations
does not include the right to accelerate any Interest that has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned Interest in the event of any such acceleration. Each Borrower
recognizes that, with fluctuations in the rates of interest set forth in SECTION
3.1.1 of this Agreement or in any Note and the Maximum Rate, such an
unintentional result could inadvertently occur. All monies paid to Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned Interest as and to the
extent required by Applicable Law. By the execution of this Agreement, each
Borrower covenants that (i) the credit or return of any Excess shall constitute
the acceptance by Borrowers of such Excess, and (ii) no Borrower shall seek or
pursue any other remedy, legal or equitable, against Lender, based in whole or
in part upon contracting for, charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Lender, all Interest at any time
contracted for, charged or received from Borrowers in connection with any of the
Loan Documents shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations. Borrowers and Lender shall, to the maximum extent permitted under
Applicable Law, (i) characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary prepayments and the
effects thereof. The provisions of this Section shall be deemed to be
incorporated into every Loan Document (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by Borrowers and all figures set forth therein
shall, for the sole purpose of computing the extent of Obligations, be
automatically recomputed by Borrowers, and by any court considering the same, to
give effect to the adjustments or credits required by this SECTION 3.10.

                                       45


SECTION 4. LOAN ADMINISTRATION

         4.1. MANNER OF BORROWING AND FUNDING REVOLVER LOANS. Borrowings under
the Revolver Commitment established pursuant to SECTION 2.1 hereof shall be made
and funded as follows:

                  4.1.1. Notice of Borrowing.

                           (i) Whenever Borrowers desire to make a Borrowing
         under SECTION 2 of this Agreement (other than a Borrowing resulting
         from a conversion or continuation pursuant to SECTION 3.1.2), Borrowers
         shall give Lender prior written notice (or telephonic notice promptly
         confirmed in writing) of such Borrowing request (a "Notice of
         Borrowing"), which shall be in the form of EXHIBIT C annexed hereto and
         signed by an authorized officer of Borrowers. Such Notice of Borrowing
         shall be given by Borrowers no later than 11:00 a.m. at the office of
         Lender designated by Lender from time to time (a) on the Business Day
         of the requested funding date of such Borrowing, in the case of Base
         Rate Loans, and (b) at least 2 Business Days prior to the requested
         funding date of such Borrowing, in the case of Euro-Dollar Loans.
         Notices received after 11:00 a.m. shall be deemed received on the next
         Business Day. Each Notice of Borrowing (or telephonic notice thereof)
         shall be irrevocable and shall specify (a) the principal amount of the
         Borrowing, (b) the date of Borrowing (which shall be a Business Day),
         (c) whether the Borrowing is to consist of Base Rate Loans or
         Euro-Dollar Loans, (d) in the case of Euro-Dollar Loans, the duration
         of the Interest Period to be applicable thereto, and (e) the account of
         Borrowers to which the proceeds of such Borrowing are to be disbursed.
         Borrowers may not request any Euro-Dollar Loans if a Default or Event
         of Default exists unless Lender otherwise consents at such time.

                           (ii) Unless payment is otherwise timely made by
         Borrowers, the becoming due of any amount required to be paid with
         respect to any of the Obligations (whether as principal, accrued
         interest, fees or other charges, including the repayment of any LC
         Outstandings and any amounts owed to any Affiliate of Lender) shall be
         deemed irrevocably to be a request (without the requirement for the
         submission of a Notice of Borrowing) for Revolver Loans on the due date
         of, and in an aggregate amount required to pay, such Obligations, and
         Lender may disburse the proceeds of such Revolver Loans by way of
         direct payment of the relevant Obligation and such Revolver Loans shall
         bear interest as Base Rate Loans. Lender shall have no obligation to
         Borrowers to honor any deemed request for a Revolver Loan on or after
         the Commitment Termination Date or when an Out-of-Formula Condition
         exists or would result therefrom or when any condition precedent set
         forth in SECTION 11 hereof is not satisfied, but may do so in its
         discretion and without regard to the existence of, and without being
         deemed to have waived, any Default or Event of Default.

                           (iii) If Borrowers elect to establish a Controlled
         Disbursement Account with Lender or any Affiliate of Lender, then the
         presentation for payment by Lender of any check or other item of
         payment drawn on the Controlled Disbursement Account at a

                                       46


         time when there are insufficient funds in such account to cover such
         items shall be deemed irrevocably to be a request (without any
         requirement for the submission of a Notice of Borrowing) for Revolver
         Loans on the date of such presentation and in an amount equal to the
         aggregate amount of the items presented for payment, and Lender may
         disburse the proceeds of such Revolver Loans by way of direct payment
         to the Controlled Disbursement Account and such Revolver Loans shall
         bear interest as Base Rate Loans. Lender shall have no obligation to
         honor any deemed request for a Revolver Loan after the Commitment
         Termination Date or when an Out-of-Formula Condition exists or would
         result therefrom or when any condition precedent in SECTION 11 hereof
         is not satisfied, but may do so in its discretion and without regard to
         the existence of, and without being deemed to have waived, any Default
         or Event of Default and regardless whether such Revolver Loan is funded
         after the Commitment Termination Date.

                           (iv) As an accommodation to Borrowers, Lender may
         permit telephonic requests for Borrowings and electronic transmittal of
         instructions, authorizations, agreements or reports to Lender by
         Borrowers; provided, however, that Borrowers shall confirm each such
         telephonic request for a Borrowing of Euro-Dollar Loans by delivery of
         the required Notice of Borrowing to Lender by facsimile transmission
         promptly, but in no event later than 4:00 p.m. on the same day as such
         telephonic request. Lender shall have no liability to Borrowers for any
         loss or damage suffered by Borrowers as a result of Lender's honoring
         of any requests, execution of any instructions, authorizations or
         agreements or reliance on any reports communicated to it telephonically
         or electronically and purporting to have been sent to Lender by a
         Borrower and Lender shall have no duty to verify the origin of any such
         communication or the identity or authority of the Person sending it.

                  4.1.2. Disbursement Authorization. Each Borrower hereby
irrevocably authorizes Lender to disburse the proceeds of each Revolver Loan
requested by any Borrower, or deemed to be requested pursuant to SECTION 4.1.1,
as follows: (i) the proceeds of each Revolver Loan requested under SECTION
4.1.1(i) shall be disbursed by Lender in accordance with the terms of the
written disbursement letter from Borrowers in the case of the initial Borrowing,
and, in the case of each subsequent Borrowing, by wire transfer to such bank
account as may be agreed upon by any Borrower and Lender from time to time; and
(ii) the proceeds of each Revolver Loan requested under SECTION 3.1.1(a)(ii)
shall be disbursed by Lender by way of direct payment of the relevant interest
or other Obligation. Any Loan proceeds received by any Borrower or in payment of
any of the Obligations shall be deemed to have been received by all Borrowers.

         4.2. SPECIAL PROVISIONS GOVERNING EURO-DOLLAR LOANS.

                  4.2.1. Number of Euro-Dollar Loans. In no event may the number
of Euro-Dollar Loans outstanding at any time exceed 6.

                  4.2.2. Minimum Amounts. Each Borrowing of Euro-Dollar Loans
pursuant to SECTION 4.1.1(i), and each continuation of or conversion to
Euro-Dollar Loans pursuant to SECTION 3.1.2 hereof, shall be in a minimum amount
of $500,000 and integral multiples of

                                       47


$100,000 in excess of that amount (or, if less, the aggregate principal amount
equal to the remaining Availability).

                  4.2.3. Euro-Dollar Lending Office. Lender's initial
Euro-Dollar Lending Office is set forth opposite its name on the signature pages
hereof. Lender shall have the right at any time and from time to time to
designate a different office of itself or of any Affiliate as Lender's
Euro-Dollar Lending Office, and to transfer any outstanding Euro-Dollar Loans to
such Euro-Dollar Lending Office. No such designation or transfer shall result in
any liability on the part of Borrowers for increased costs or expenses resulting
solely from such designation or transfer for the purpose of complying with
Applicable Law). Increased costs for expenses resulting from a change in
Applicable Law occurring subsequent to any such designation or transfer shall be
deemed not to result solely from such designation or transfer.

         4.3. BORROWERS' REPRESENTATIVE. Each Borrower hereby irrevocably
appoints ProxyMed, Inc. as, and ProxyMed, Inc. shall act under this Agreement
as, the agent and representative of itself and each other Borrower for all
purposes under this Agreement, including requesting Borrowings, selecting
whether any Loan or portion thereof is to bear interest as a Base Rate Loan or a
Euro-Dollar Loan, and receiving account statements and other notices and
communications to Borrowers (or any of them) from Lender. Lender may rely, and
shall be fully protected in relying, on any Notice of Borrowing, Notice of
Conversion/Continuation, disbursement instructions, reports, information or any
other notice or communication made or given by ProxyMed, Inc., whether in its
own name, on behalf of any Borrower or on behalf of "the Borrowers," and Lender
shall have no obligation to make any inquiry or request any confirmation from or
on behalf of any other Borrower as to the binding effect on such Borrower of any
such request, instruction, report, information, notice or communication, nor
shall the joint and several character of Borrowers' liability for the
Obligations be affected, provided that the provisions of this SECTION 4.3 shall
not be construed so as to preclude any Borrower from directly requesting
Borrowings or taking other actions permitted to be taken by "a Borrower"
hereunder. Lender may maintain a single Loan Account in the name of "ProxyMed"
hereunder, and each Borrower expressly agrees to such arrangement and confirms
that such arrangement shall have no effect on the joint and several character of
such Borrower's liability for the Obligations.

         4.4. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
one general obligation of Borrowers and (unless otherwise expressly provided in
any Security Document) shall be secured by Lender's Lien upon all of the
Collateral.

SECTION 5. PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY

         5.1. GENERAL REPAYMENT PROVISIONS. All payments (including all
prepayments) of principal of and interest on the Loans , LC Outstandings and
other Obligations shall be made to Lender in Dollars without any offset or
recoupment and free and clear of (and without deduction for) any present or
future Taxes, and, with respect to payments made other than by application of
balances in the Collateral Reserve Account, in immediately available funds not
later than 2:00

                                       48


p.m. on the due date (and payment made after such time on the due date to be
deemed to have been made on the next succeeding Business Day).

         5.2. REPAYMENT OF REVOLVER LOANS.

                  5.2.1. Payment of Principal. The outstanding principal amount
of the Revolver Loans shall be repaid as follows:

                           (i) Any portion of the Revolver Loans consisting of
         Base Rate Loans shall be paid by Borrowers to Lender, unless timely
         converted to a Euro-Dollar Loan in accordance with this Agreement,
         immediately upon (a) each receipt by Lender or a Borrower of any
         proceeds of any Collateral (subject to SECTIONS 5.3 and 8.4.2), to the
         extent of such proceeds, and (b) the Commitment Termination Date.
         Except as otherwise provided in SECTION 5.3, the Lender shall deposit
         all Payment Items received in the Lockbox and all Receipts and other
         funds on deposit in a Blocked Account in the Collateral Reserve Account
         for application to the Obligations.

                           (ii) Any portion of the Revolver Loans consisting of
         Euro-Dollar Loans shall be paid by Borrowers to Lender, unless
         converted to a Base Rate Loan or continued as a Euro-Dollar Loan in
         accordance with the terms of this Agreement, upon (a) the last day of
         the Interest Period applicable thereto and (b) the Commitment
         Termination Date. In no event shall Borrowers be authorized to make a
         voluntary prepayment with respect to any portion of the Revolver Loan
         outstanding as a Euro-Dollar Loan prior to the last day of the Interest
         Period applicable thereto unless (x) otherwise agreed in writing by
         Lender or Borrowers are otherwise authorized or required by any other
         provision of this Agreement to pay any Euro-Dollar Loan outstanding on
         a date other than the last day of the Interest Period applicable
         thereto, and (y) Borrowers pay to Lender concurrently with any
         prepayment of a Euro-Dollar Loan any amount due Lender under SECTION
         3.9 as a consequence of such prepayment. Notwithstanding the foregoing
         provisions of this SECTION 5.2.1(ii), if, on any date that Lender
         receives proceeds of any Collateral, there are no Revolver Loans
         outstanding as Base Rate Loans, Lender may hold such proceeds as Cash
         Collateral for the Obligations and apply the same to the payment of any
         Base Rate Loans thereafter made or to any Euro-Dollar Loans as the same
         become due and payable whether at the end of the applicable Interest
         Periods or on the Commitment Termination Date.

                           (iii) Notwithstanding anything to the contrary
         contained elsewhere in this Agreement, if an Out-of-Formula Condition
         shall exist, Borrowers shall, on the sooner to occur of Lender's demand
         or the first Business Day after a Borrower has obtained knowledge of
         such Out-of-Formula Condition, repay the outstanding Revolver Loans
         that are Base Rate Loans in an amount sufficient to reduce the
         aggregate unpaid principal amount of all Revolver Loans by an amount
         equal to such excess; and, if such payment of Base Rate Loans is not
         sufficient to eliminate the Out-of-Formula Condition, then Borrowers
         shall deposit with Lender for application to any outstanding Revolver
         Loans that are Euro-Dollar Loans as the same become due and payable
         (whether at the

                                       49


         end of the applicable Interest Periods or on the Commitment Termination
         Date) cash in an amount sufficient to eliminate such Out-of-Formula
         Condition, and Lender may (a) hold such deposit as Cash Collateral
         pending application to any Euro-Dollar Loans or to any Base Rate Loans
         thereafter made, or (b) if a Default or Event of Default exists, apply
         such Cash Collateral to pay the Obligations, including any Revolver
         Loans outstanding as Euro-Dollar Loans (in which event, Borrower shall
         also pay to Lender any and all amounts required by SECTION 3.9 hereof
         to be paid by reason of the prepayment of a Euro-Dollar Loan prior to
         the last day of the Interest Period applicable thereto).

                  5.2.2. Payment of Interest. Interest accrued on the Revolver
Loans shall be due and payable on (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan (whether a Base Rate Loan or
Euro-Dollar Loan) and (ii) the last day of the applicable Interest Period in the
case of a Euro-Dollar Loan. Accrued interest shall also be paid by Borrowers on
the Commitment Termination Date. With respect to any Base Rate Loan converted
into a Euro-Dollar Loan pursuant to SECTION 3.1.2 on a day when interest would
not otherwise have been payable with respect to such Base Rate Loan, accrued
interest to the date of such conversion on the amount of such Base Rate Loan so
converted shall be paid on the conversion date.

         5.3. CONDITIONAL APPLICATION EXEMPTION. Notwithstanding provisions to
the contrary set forth elsewhere herein, Payment Items representing collections
in respect of Accounts in the Lockbox and all Receipts and other funds on
deposit in a Blocked Account shall not be deposited in the Collateral Reserve
Account for application to the Obligations, but shall instead be deposited in
such bank account as the Borrowers may direct, for so long as (i) no Default or
Event of Default shall have occurred, and (ii) Availability exceeds $2,500,000
as of such date. Otherwise, the Lender will deposit any such Payment Items from
the Lockbox and all Receipts and other funds on deposit in a Blocked Account
into the Collateral Reserve Account promptly upon receipt thereof and, except as
otherwise set forth herein, apply such funds to the Revolver Loans and to the
remaining Obligations in accordance with SECTION 5.2.1 hereof. During the
existence of an Event of Default, the Lender may, at any time in its sole
discretion, (A) direct Account Debtors to make payment on the Borrowers'
Accounts, Chattel Paper, or General Intangibles, or portions thereof, directly
to the Lender, and Account Debtors are hereby authorized and directed by the
Borrowers to make such payments directly to the Lender upon its direction; any
such funds received by Lender from Account Debtors may be deposited by the
Lender in the Collateral Reserve Account for application to the Obligations; and
(B) require Borrowers to establish a lockbox (the "New Lockbox") and to direct
any Payment Items in respect of Accounts that are not already directed to the
Lockbox to the New Lockbox. Payment Items representing collection in respect of
Accounts that are currently directed to a Lockbox shall continue to be so
directed.

         5.4. PAYMENT OF OTHER OBLIGATIONS. The balance of the Obligations
requiring the payment of money, including the LC Outstandings and Extraordinary
Expenses incurred by

                                       50


Lender, shall be repaid by Borrowers to Lender as and when provided in the
relevant Loan Documents, or, if no date of payment is otherwise specified in the
Loan Documents, ON DEMAND.

         5.5. MARSHALING; PAYMENTS SET ASIDE. Lender shall be under no
obligation to marshal any assets in favor of any Borrower or any other Obligor
or against or in payment of any or all of the Obligations. To the extent that
any Borrower makes a payment or payments to Lender or Lender receives payment
from the proceeds of any Collateral or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff (or any part
thereof) are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other Person, then to the extent of any loss by Lender, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment or proceeds had not been made received and any such enforcement or
setoff had not occurred. The provisions of the immediately preceding sentence of
this SECTION 5.5 shall survive any termination of the Commitments and Full
Payment of the Obligations.

         5.6. APPLICATION OF PAYMENTS AND COLLATERAL PROCEEDS. All Payment Items
received by Lender by 2:00 p.m. on any Business Day shall be deemed received on
that Business Day. All Payment Items received after 2:00 p.m. on any Business
Day shall be deemed received on the following Business Day. Except as otherwise
expressly provided in SECTION 5.3, each Borrower irrevocably waives the right to
direct the application of any and all payments and Collateral proceeds at any
time or times hereafter received by Lender from or on behalf of such Borrower,
and each Borrower does hereby irrevocably agree that Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
Collateral proceeds received at any time or times hereafter by Lender or its
Lender against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records.

         5.7. LOAN ACCOUNT; ACCOUNT STATED.

                  5.7.1. Loan Account. Lender shall establish an account on its
books (the "Loan Account") and shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.

                  5.7.2. Statements of Account. Lender will account to Borrowers
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such accounting rendered by Lender shall be deemed final, binding
and conclusive upon Borrowers unless Lender is notified by Borrowers in writing
to the contrary within 30 days after the date each accounting is deemed to have
been sent pursuant to SECTION 13.9. Such notice shall only be deemed an
objection to those items specifically objected to therein. Failure of Lender to
render any such account shall in no way affect the rights of Lender hereunder.

                                       51


         5.8. GROSS UP FOR TAXES. If Borrowers shall be required by Applicable
Law to withhold or deduct any Taxes from or in respect of any sum payable under
this Agreement or any of the other Loan Documents, (a) the sum payable to Lender
shall be increased as may be necessary so that, after making all required
withholding or deductions, Lender receives an amount equal to the sum it would
have received had no such withholding or deductions been made, (b) Borrowers
shall make such withholding or deductions, and (c) Borrowers shall pay the full
amount withheld or deducted to the relevant taxation authority or other
authority in accordance with Applicable Law.

         5.9. NATURE AND EXTENT OF EACH BORROWER'S LIABILITY.

                  5.9.1. Joint and Several Liability. Each Borrower shall be
liable for, on a joint and several basis, and hereby guarantees the timely
payment by all other Borrowers of, all of the Loans and other Obligations,
regardless of which Borrower actually may have received the proceeds of any
Loans or other extensions of credit hereunder or the amount of such Loans
received or the manner in which Lender accounts for such Loans or other
extensions of credit on its books and records, it being acknowledged and agreed
that Loans to any Borrower inure to the mutual benefit of all Borrowers and that
Lender is relying on the joint and several liability of Borrowers in extending
the Loans and other financial accommodations hereunder. Each Borrower hereby
unconditionally and irrevocably agrees that upon default in the payment when due
(whether at stated maturity, by acceleration or otherwise) of any principal of,
or interest owed on, any of the Loans or other Obligations, such Borrower shall
forthwith pay the same, without notice or demand.

                  5.9.2. Unconditional Nature of Liability. Each Borrower's
joint and several liability hereunder with respect to, and guaranty of, the
Loans and other Obligations shall, to the fullest extent permitted by Applicable
Law, be unconditional irrespective of (i) the validity, enforceability,
avoidance or subordination of any of the Obligations or of any promissory note
or other document evidencing all or any part of the Obligations, (ii) the
absence of any attempt to collect any of the Obligations from any other Obligor
or any Collateral or other security therefor, or the absence of any other action
to enforce the same, (iii) the waiver, consent, extension, forbearance or
granting of any indulgence by Lender with respect to any of the Obligations or
any Instrument or agreement evidencing or securing the payment of any of the
Obligations, or any other agreement now or hereafter executed by any other
Borrower and delivered to Lender, (iv) the failure by Lender to take any steps
to perfect or maintain the perfected status of its security interest in or Lien
upon, or to preserve its rights to, any of the Collateral or other security for
the payment or performance of any of the Obligations, or Lender's release of any
Collateral or of its Liens upon any Collateral, (v) Lender' election, in any
proceeding instituted under the Bankruptcy Code, for the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the release or compromise, in whole or in part, of the
liability of any Obligor for the payment of any of the Obligations, (viii) any
amendment or modification of any of the Loan Documents or waiver of any Default
or Event of Default thereunder, (ix) any increase in the amount of the
Obligations beyond any limits imposed herein or in the amount of any interest,
fees or other charges payable in connection therewith, or any

                                       52


decrease in the same, (x) the disallowance of all or any portion of Lender's
claims for the repayment of any of the Obligations under Section 502 of the
Bankruptcy Code, or (xi) any other circumstance that might constitute a legal or
equitable discharge or defense of any Obligor. At any time an Event of Default
exists, Lender may proceed directly and at once, without notice to any Obligor,
against any or all of Obligors to collect and recover all or any part of the
Obligations, without first proceeding against any other Obligor or against any
Collateral or other security for the payment or performance of any of the
Obligations, and each Borrower waives any provision that might otherwise require
Lender under Applicable Law to pursue or exhaust its remedies against any
Collateral or Obligor before pursuing such Borrower or another Obligor. Each
Borrower consents and agrees that Lender shall be under no obligation to marshal
any assets in favor of any Obligor or against or in payment of any or all of the
Obligations.

                  5.9.3. No Reduction in Liability for Obligations. No payment
or payments made by an Obligor or received or collected by Lender from a
Borrower or any other Person by virtue of any action or proceeding or any setoff
or appropriation or application at any time or from time to time in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Borrower under this Agreement (except to
the extent of such reduction of the Obligations), each of which shall remain
jointly and severally liable for the payment and performance of all Loans and
other Obligations until the Obligations are paid in full and the Commitments are
terminated.

                  5.9.4. Contribution. Each Borrower is unconditionally
obligated to repay the Obligations as a joint and several obligor under this
Agreement. If, as of any date, the aggregate amount of payments made by a
Borrower on account of the Obligations and proceeds of such Borrower's
Collateral that are applied to the Obligations exceed the aggregate amount of
Loan proceeds actually used by such Borrower in its business (such excess amount
being referred to as an "Accommodation Payment"), then each of the other
Borrowers shall be obligated to make contribution to such Borrower (the "Paying
Borrower") in an amount equal to (A) the product derived by multiplying the sum
of each Accommodation Payment of each Borrower by the Allocable Percentage of
the Borrowers from whom contribution is sought less (B) the amount, if any, of
the then outstanding Accommodation Payment of such Contributing Borrower (such
last mentioned amount which is to be subtracted from the aforesaid product to be
increased by any amounts theretofore paid by such Contributing Borrower by way
of contribution hereunder, and to be decreased by any amounts theretofore
received by such Contributing Borrower by way of contribution hereunder);
provided, however, that a Paying Borrower's recovery of contribution hereunder
from the other Borrowers shall be limited to that amount paid by the Paying
Borrower in excess of its Allocable Percentage of all Accommodation Payments
then outstanding of all Borrowers. As used herein, the term "Allocable
Percentage" shall mean, on any date of determinations thereof, a fraction the
denominator of which shall be equal to the number of Borrowers who are parties
to this Agreement on such date and the numerator of which shall be 1; provided,
however, that such percentages shall be modified in the event that contribution
from a Borrower is not possible by reason of insolvency, bankruptcy or otherwise
by reducing such Borrower's Allocable Percentage equitably and by adjusting the
Allocable Percentage of the other Borrowers proportionately so that the
Allocable Percentages of all Borrowers at all times equals 100%.

                                       53


                  5.9.5. Subordination. Each Borrower hereby subordinates any
claims, including any right of payment, subrogation, contribution and indemnity,
that it may have from or against any other Obligor, and any successor or assign
of any other Obligor, including any trustee, receiver or debtor-in-possession,
howsoever arising, due or owing or whether heretofore, now or hereafter
existing, to the payment in full of all of the Obligations.

SECTION 6. TERM AND TERMINATION OF COMMITMENTS

         6.1. TERM OF COMMITMENTS. Subject to Lender's right to cease making
Loans and other extensions of credit to Borrowers when any Default or Event of
Default exists or upon termination of the Commitments as provided in SECTION 6.2
hereof, the Commitments shall be in effect from the date hereof through the
earlier of (i) the close of business on the second anniversary of the Closing
Date, or (ii) the close of business on the date that is six months prior to the
Final Maturity Date of the guaranteed indebtedness described in that certain
consent letter ("Consent Letter"), dated as of the date hereof, from Lender to
ProxyMed regarding certain Permitted Investments (the "Term"). As used herein,
the term "Final Maturity Date" shall have the meaning ascribed to such term in
the documents evidencing the aforementioned guaranteed indebtedness, as amended
pursuant to paragraph 2(c) of the Consent Letter.

         6.2. TERMINATION OR REDUCTION.

                  6.2.1. Termination by Lender. Lender may terminate the
Commitments without notice upon or after the occurrence of an Event of Default;
provided, however, that the Commitments shall automatically terminate as
provided in SECTION 12.2 hereof.

                  6.2.2. Termination or Reduction by Borrowers. Borrowers may,
at their option, terminate the Commitments upon at least 10 days prior written
notice to Lender. In addition, upon at least 10 days prior written notice to
Lender, Borrowers may, at their option, either (i) terminate the Commitments or
(ii) reduce the Commitments, in increments of $1,000,000, down to a minimum
amount of not less than $7,500,000; provided, however, that (x) no such
termination by Borrowers shall be effective without Lender's written consent
until Full Payment of the Obligations, and (y) no such reduction shall be
permitted if the reduced Commitments would be less than the aggregate amount of
outstanding and unsatisfied Obligations. Any notice of termination given by
Borrowers shall be irrevocable unless Lender otherwise agrees in writing. No
section of this Agreement or Type of Loan available hereunder may be terminated
by Borrowers singly.

                  6.2.3. Intentionally Omitted.

                  6.2.4. Effect of Termination. On the effective date of
termination of the Commitments by Lender or by Borrowers, all of the Obligations
shall be immediately due and payable and Lender shall have no obligation to make
any Loans or to procure any Letters of Credit. All undertakings, agreements,
covenants, warranties and representations of each Borrower contained in the Loan
Documents shall survive any such termination and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents

                                       54


notwithstanding such termination until Borrowers have satisfied the Obligations
and Lender's receipt from Obligors of a full release of Claims in form and
substance satisfactory to Lender. For purposes of this Agreement, Full Payment
of the Obligations shall not be deemed to have occurred until all Obligations
for the payment of money have been paid to Lender in same day funds and all
Obligations that are at the time in question contingent (including all LC
Outstandings that exist by virtue of an outstanding Letter of Credit) have been
fully cash collateralized to the satisfaction of Lender or Lender has received
as beneficiary a direct pay letter of credit in form and from an issuing bank
acceptable to Lender in its reasonable credit judgment and providing for direct
payment to Lender of all such contingent Obligations at the time they become
fixed (including reimbursement of all sums paid by Lender under any Letter of
Credit). Notwithstanding Full Payment of the Obligations, Lender shall not be
required to terminate its security interests in any of the Collateral unless,
with respect to any loss or damage Lender may incur as a result of the dishonor
or return of any Payment Item applied to the Obligations, Lender shall have
received or retained either (i) a written agreement, executed by Borrowers and
any Person whose loans or other advances to Borrowers are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) such monetary reserves and Liens on the Collateral for such
period of time as Lender, in its reasonable discretion, may deem necessary to
protect Lender from any such loss or damage. The provisions of SECTION 5.5 and
all obligations of Borrowers to indemnify Lender shall be joint and several and
pursuant to any of the Loan Documents shall in all events survive any
termination of the Commitments.

SECTION 7. COLLATERAL SECURITY

         7.1. GRANT OF SECURITY INTEREST IN COLLATERAL. To secure the prompt
payment and performance of all of the Obligations, each Borrower hereby grants
to Lender, for the benefit of itself and of the other Secured Parties, a
continuing security interest in and Lien upon all of such Borrower's assets,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:

                  (i)      all Accounts Collateral;

                  (ii)     all Goods, including all Inventory and Equipment;

                  (iii)    all Instruments;

                  (iv)     all Chattel Paper;

                  (v)      all Documents;

                  (vi)     all General Intangibles;

                  (vii)    all Deposit Accounts;

                                       55


                  (viii) all Investment Property (but excluding any portion
         thereof that constitutes Margin Stock unless otherwise expressly
         provided in any Security Document), to the extent the grant of a
         security interest and Lien thereon by Borrowers to Lender is not
         prohibited by any provision of any statute, rule, regulation or order
         issued by the Securities and Exchange Commission;

                  (ix) all Letter of Credit Rights;

                  (x) all Supporting Obligations;

                  (xi) all monies now or at any time or times hereafter in the
         possession or under the control of Lender or a bailee or Affiliate of
         Lender, including any Cash Collateral in the Cash Collateral Account;

                  (xii) all accessions to, substitutions for and all
         replacements, products and cash and non-cash proceeds of (i) through
         (xi) above, including proceeds of and unearned premiums with respect to
         insurance policies insuring any of the Collateral and claims against
         any Person for loss of, damage to, or destruction of any of the
         Collateral; and

                  (xiii) all books and records (including customer lists, files,
         correspondence, tapes, computer programs, print-outs, and other
         computer materials and records) of such Borrower pertaining to any of
         (i) through (xii) above.

         7.2. DEPOSIT ACCOUNTS/BLOCKED ACCOUNT AGREEMENTS. On or before the
December 31, 2003 and, thereafter prior to establishing any Deposit Account (the
establishment of which shall be subject to the prior written consent of the
Lender), each bank at which a Deposit Account is or will be located shall have
entered into a Blocked Account Agreement with Borrowers and Lender, satisfactory
in form and substance to Lender, which shall become operative, in the case of
Deposit Accounts existing as of the Closing Date, on the Closing Date, and with
respect to those established after the Closing Date, on the date such account is
established. Each Blocked Account Agreement shall be substantially in the form
of EXHIBIT I hereto and shall provide for, among other things, (A) that the
Receipts and any and all other funds on deposit in such Blocked Account are the
collateral of Lender and are held by such Clearing Bank as agent or
bailee-in-possession for Lender, (B) that such bank has no lien upon, or right
to setoff against, such Blocked Account, the Receipts, or any other funds from
time to time on deposit therein, other than for its service fees and other
charges relating to such account and for returned checks, credit card disputes
or other items of payment, and (C) subject to the terms of SECTION 5.3 hereof,
that such bank will wire, or otherwise transfer, in next day funds on a daily
basis, all Receipts and other funds on deposit in such accounts, into the
Collateral Reserve Account for application on account of the Obligations.
Subject to the rights of the Borrowers hereunder, Borrowers agree that all
deposits made in, and payments made to, a Blocked Account and other funds
received and collected by Lender, whether on the Accounts or as proceeds of
Inventory or other Collateral or otherwise shall be the collateral of Lender,
subject to the sole dominion and control of the Lender. If the Borrower is
unable to obtain a Blocked

                                       56


Account Agreement with respect to a Deposit Account, Lender may, at its option,
establish a reserve against the non Liquid Collateral portion of the Borrowing
Base sufficient, based upon the determination of the Lender in its sole
discretion, to insure that there will be no impairment of the Collateral.

         7.3. INTENTIONALLY OMITTED.

         7.4. OTHER COLLATERAL.

                  7.4.1. Cash Collateral. In addition to the items of Property
referred to in SECTION 7.1 above, the Obligations shall also be secured by the
Cash Collateral to the extent provided herein and all of the other items of
Property from time to time described in any of the Security Documents as
security for any of the Obligations.

                  7.4.2. Commercial Tort Claims. Borrowers shall promptly notify
Lender in writing upon any Borrower's obtaining a Commercial Tort Claim after
the Closing Date against any Person and, upon Lender's written request, promptly
enter into an amendment to this Agreement (or any of the other Loan Documents)
and do such other acts or things deemed appropriate by Lender to confer upon
Lender a security interest in each such Commercial Tort Claim.

         7.4.3. Certain After-Acquired Collateral. Borrowers shall promptly
notify Lender in writing upon any Borrower's obtaining any Collateral after the
Closing Date consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and, upon Lender's request,
shall promptly execute such documents and do such other acts or things deemed
appropriate by Lender to confer upon Lender control with respect to such
Collateral, promptly notify Lender in writing upon any Borrower's obtaining any
Collateral after the Closing Date consisting of Documents or Instruments and,
upon Lender's request, shall promptly execute such documents and do such other
acts or things deemed appropriate by Lender to deliver to it possession of such
Documents as are negotiable and Instruments, and, with respect to non-negotiable
Documents, to have such non-negotiable Documents issued in the name of Lender;
and with respect to Collateral in the possession of a third party, other than
certificated securities and Goods covered by a Document, Borrowers shall obtain
an acknowledgment from the third party that is in possession of such Collateral
that such third party holds the Collateral for the benefit of Lender.

         7.5. NO ASSUMPTION OF LIABILITY. The security interest granted pursuant
to this Agreement is granted as security only and shall not subject Lender to,
or in any way alter or modify, any obligation of liability of Borrowers with
respect to or arising out of any of the Collateral.

         7.6. LIEN PERFECTION; FURTHER ASSURANCES. Promptly after Lender's
request therefor, Borrowers shall execute or cause to be executed and deliver to
Lender such instruments, assignments, title certificates or other documents as
are necessary under the UCC or other Applicable Law to perfect (or continue the
perfection of) Lender's security interest in the

                                       57


Collateral and shall take such other action as may be requested by Lender to
give effect to or carry out the intent and purposes of this Agreement. Unless
prohibited by Applicable Law, each Borrower hereby irrevocably authorizes Lender
to execute and file in any jurisdiction any financing statement or amendment
thereto on such Borrower's behalf, including financing statements that indicate
the Collateral (i) as all assets or all personal property of Borrowers or words
to similar effect or (ii) as being of an equal or lesser scope, or with greater
or lesser detail, than as set forth in this SECTION 7. Borrowers also hereby
ratify any filing by Lender in any jurisdiction any like financing statement or
amendment thereto if filed prior to the date hereof. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof.

         7.7. EXCLUSION FOR CERTAIN CONTRACTS AND LEASES. Notwithstanding
anything to the contrary set forth in SECTION 7.1 above, the types or items of
Collateral described in such Section shall not include any rights or interests
in any contract, lease, permit, license, charter or license agreement covering
real or personal Property, as such, if under the terms of such contract, lease,
permit, license, charter or license agreement, or Applicable Law with respect
thereto, the valid grant of a security interest or Lien therein to Lender is
prohibited and such prohibition has not been or is not waived or the consent of
the other party to such contract, lease, permit, license, charter or license
agreement has not been or is not otherwise obtained or under Applicable Law such
prohibition cannot be waived, provided that the foregoing exclusion shall in no
way be construed (a) to apply if any such prohibition is unenforceable under
Section 9-318 of the UCC or other Applicable Law or (b) so as to limit, impair
or otherwise affect Lender's unconditional continuing security interests in and
Liens upon any rights or interests of Borrowers in or to monies due or to become
due under any such contract, lease, permit, license, charter or license
agreement (including any Accounts).

SECTION 8. COLLATERAL ADMINISTRATION

         8.1. GENERAL.

                  8.1.1. Location of Collateral. All tangible items of
Collateral, other than Inventory in transit, intelligent remote printing devices
used for laboratory results, P.O.S. Devices leased to customers, and equipment
used in home offices of employees, shall at all times be kept by Borrowers at
one or more of the business locations of a Borrower set forth in SCHEDULE 8.1.1
hereto and shall not be moved therefrom, without the prior written approval of
Lender, which approval shall not be unreasonably withheld, except (unless Lender
otherwise notifies Borrower at the time that an Event of Default exists), a
Borrower may (i) make sales of Inventory in the Ordinary Course of Business and
(ii) dispose of Equipment to the extent authorized by SECTION 8.4.2 hereof and
(iii) move Inventory, Equipment or any record relating to any Collateral to a
location in the United States other than those shown on SCHEDULE 8.1.1 hereto so
long as (A) with respect to any Inventory, record relating to any Collateral
other than Equipment, or, subject to subsection (B) below, Equipment or record
relating to such Equipment, such Borrowers have given Lender at least 30 days
prior written notice of such new location, or (B) with respect to any Equipment
of less than $100,000 in value during any six month period or record relating to
such Equipment, Borrowers give to the Lender written notice of such new

                                       58


location not later than 10 days following such move, and prior to moving any
Inventory or Equipment to such location where there have been filed any UCC-1
financing statements and any other appropriate documentation necessary to
perfect or continue the perfection of Lender's first priority Liens with respect
to such Inventory or Equipment. Notwithstanding anything to the contrary
contained in this Agreement, no Borrower shall be permitted to keep, store or
otherwise maintain any Collateral at any location (including any location
described in SCHEDULE 8.1.1) unless (i) such Borrower is the owner of such
location, (ii) such Borrower leases such location and the landlord has executed
in favor of Lender a Lien Waiver, or (iii) the Collateral consists of Inventory
placed with a warehouseman or processor, Lender has received from such
warehouseman, bailee or processor an acceptable Lien Waiver and an appropriate
UCC-1 financing statement has been filed with the appropriate Governmental
Authority in the jurisdiction where such warehouseman, bailee or processor is
located in order to perfect, or to maintain the uninterrupted perfection of,
Lender's security interest in such Inventory.

                  8.1.2. Insurance of Collateral; Condemnation Proceeds. Each
Borrower shall maintain and pay for insurance upon all Collateral, wherever
located, covering products liability, business interruption, casualty, hazard,
public liability, theft, embezzlement or other criminal misappropriation,
malicious mischief, and such other risks in such amounts and with such insurance
companies as are reasonably satisfactory to Lender. SCHEDULE 8.1.2 describes all
insurance of each Borrower in effect on the date hereof. All proceeds payable
under each such policy relating to coverage for loss of Collateral shall be
payable to Lender for application to the Obligations. Each Borrower shall
deliver the originals or certified copies of such policies to Lender with
satisfactory lender's loss payable endorsements reasonably satisfactory to
Lender, naming Lender as sole lender's loss payee, assignee or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than 30 days prior written notice
to Lender in the event of cancellation of the policy for any reason whatsoever
and a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of any Borrower or the owner of the Property
or by the occupation of the premises for purposes more hazardous than are
permitted by said policy. If any Borrower fails to provide and pay for such
insurance, Lender may, at its option, but shall not be required to, procure the
same and charge each Borrower therefor. Each Borrower agrees to deliver to
Lender, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies. For so long as no Event of Default exists, each
Borrower shall have the right to settle, adjust and compromise any claim with
respect to any insurance maintained by each Borrower provided that all proceeds
thereof are applied in the manner specified in this Agreement, and Lender agrees
promptly to provide any necessary endorsement to any checks or drafts issued in
payment of any such claim. At any time that an Event of Default exists and there
are borrowings outstanding in excess of Liquid Collateral, only Lender shall be
authorized, upon 5 day prior written notice to Borrowers, to settle, adjust and
compromise such claims. Lender shall have all rights and remedies with respect
to such policies of insurance as are provided for in this Agreement and the
other Loan Documents.

                  8.1.3. Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all Taxes imposed by any Applicable Law on any of the Collateral or
in respect of the sale thereof, and all other payments required to

                                       59


be made by Lender to any Person to realize upon any Collateral shall be borne
and paid by Borrowers. Lender shall not be liable or responsible in any way for
the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is in
Lender's actual possession) or for any diminution in the value thereof, or for
any act or default of any warehouseman, carrier, forwarding agency, or other
Person whomsoever, but the same shall be at Borrowers' sole risk.

                  8.1.4. Defense of Title to Collateral. Borrowers shall at all
times defend their title to the Collateral and Lender's Liens therein against
all Persons and all claims and demands whatsoever other than Permitted Liens.

         8.2. ADMINISTRATION OF ACCOUNTS.

                  8.2.1. Schedules of Accounts.

                  (a) During each Reporting Month, each Borrower shall provide
to Lender (i) within 20 days after the end of each such Reporting Month, a sales
and collection report prepared as of the last day of the immediately preceding
month, (ii) within 20 days after the end of each such Reporting Month, a listing
of ineligible Accounts and ineligible Inventory prepared as of the last day of
the immediately preceding month, and (iii) on or before the 20th day of each
such Reporting Month, a detailed aged trial balance of all of its Accounts
existing as of the last day of the preceding month, specifying the names, face
value, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed and identifying any foreign Accounts ("Schedule of Accounts").
In addition, on an annual basis, each Borrower shall provide the addresses of
each Account Debtor in conjunction with the information required in the
preceding clause (iii).

                  (b) Upon Lender's request therefor in respect of any Reporting
Month, each Borrower also shall provide to Lender copies of proof of delivery
and a copy of all documents, including repayment histories and present status
reports relating to the Accounts so scheduled in the Schedule of Accounts and
such other matters and information relating to the status of then existing
Accounts as Lender shall reasonably request. In addition, if Accounts in an
aggregate face amount in excess of $750,000 cease to be Eligible Accounts in
whole or in part, Borrowers shall notify Lender of such occurrence promptly (and
in any event within 3 Business Days) after any Borrower's having obtained
knowledge of such occurrence and the Borrowing Base shall thereupon be adjusted
to reflect such occurrence. Each Borrower shall deliver to Lender copies of
invoices or invoice registers related to all of its Accounts.

                  8.2.2. Discounts, Disputes and Returns. If any Borrower grants
any discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrowers shall report such discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts. If any amounts due and owing in excess of
$200,000 are in dispute between any Borrower and any Account Debtor, or if any
returns are made in excess of $200,000 with respect to any Accounts owing from
an Account Debtor, Borrowers shall provide Lender with written notice thereof at
the time of submission of the next

                                       60


Schedule of Accounts, explaining in detail the reason for the dispute or return,
all claims related thereto and the amount in controversy. Upon and after the
occurrence and continuance of an Event of Default, if there are borrowings
outstanding in excess of Liquid Collateral, Lender shall have the right to
settle or adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including reasonable attorneys' fees,
to Borrowers.

                  8.2.3. Taxes. If an Account of any Borrower includes a charge
for any Taxes payable to any governmental taxing authority, Lender is
authorized, in its sole discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that Lender shall not be liable for any Taxes that
may be due by any Borrower.

                  8.2.4. Account Verification. Whether or not a Default or an
Event of Default exists, Lender shall have the right, at any time or times
hereafter, in the name of Lender, any designee of Lender or any Borrower, to
verify the validity, amount or any other matter relating to any Accounts of any
Borrower by mail, telephone, telegraph or otherwise. Borrowers shall cooperate
fully with Lender in an effort to facilitate and promptly conclude any such
verification process.

                  8.2.5. Records of Accounts. Each Borrower shall keep accurate
and complete records of its Accounts and all payments and collections thereon.

         8.3. ADMINISTRATION OF INVENTORY.

                  8.3.1. Reports of Inventory. During each Reporting Month,
Borrowers shall furnish Lender Inventory reports respecting such Inventory in
form and detail reasonably satisfactory to Lender at such times as Lender may
request, but so long as no Default or Event of Default exists no more frequently
than once a month, within 20 days after the end of each month, at all other
times. Borrowers shall conduct periodic cycle counts consistent with Borrowers'
historical practices and shall provide to Lender a report based on each such
cycle count promptly thereafter, showing in reasonable detail the locations of
and values for specific items of Inventory and such other information and
supporting documents regarding Inventory that the Lender deems necessary. Lender
may participate in and observe each cycle count of inventory, which
participation shall be at Borrowers' expense.

                  8.3.2. Returns of Inventory. No Borrower shall return any of
its Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the Ordinary Course of Business of such Borrower
and such Person, (ii) no Default or Event of Default exists or would result
therefrom, (iii) the return of such Inventory will not result in an
Out-of-Formula Condition, (iv) Borrowers promptly notify Lender if the aggregate
Value of all Inventory returned in any month exceeds $250,000, and (v) any
payment received by any Borrower in connection with any

                                       61


such return is promptly turned over to Lender for application to the
Obligations, subject to the terms of SECTION 5.3.

                  8.3.3. Acquisitions of Inventory. No Borrower shall acquire or
accept any Inventory on consignment or approval and each Borrower will use its
best efforts to insure that all Inventory that is produced in the United States
of America will be produced in accordance with the FLSA.

                  8.3.2 Records of Inventory. Each Borrower shall keep accurate
and complete records of its Inventory.

         8.4. ADMINISTRATION OF EQUIPMENT.

                  8.4.1. Schedules of Equipment. Each Borrower shall furnish to
Lender a current schedule itemizing and describing the kind, type, quantity and
cost of its Equipment other than P.O.S. Devices or intelligent remote printing
devices and all dispositions made in accordance with SECTION 8.4.2 hereof if and
with such frequency as may be requested by Lender. Promptly after request
therefor by Lender, Borrowers shall deliver to Lender any and all evidence of
ownership, if any, of any of the Equipment.

                  8.4.2. Dispositions of Equipment. No Borrower will sell, lease
or otherwise dispose of or transfer any of its Equipment or any part thereof
except in the Ordinary Course of Business without the prior written consent of
Lender; provided, however, that the foregoing restriction shall not apply, for
so long as no Default or Event of Default exists, to (i) dispositions of
Equipment which, in the aggregate as to all Borrowers during any consecutive
twelve-month period, has a fair market value or book value, whichever is more,
of $500,000 or less, provided that all Net Disposition Proceeds thereof are,
subject to the terms of SECTION 5.3, remitted to Lender for application to the
Obligations, or (ii) replacements of Equipment that is substantially worn,
damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, the replacement
Equipment shall be free and clear of Liens other than Permitted Liens.

                  8.4.3. Condition of Equipment. The Equipment is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
Borrowers shall ensure that the Equipment shall be mechanically and structurally
sound, capable of performing the functions for which the Equipment was
originally designed, in accordance with the manufacturer's published and
recommended specifications. Except as set forth in SCHEDULE 8.4, no Borrower
will permit any of the Equipment to become affixed to any real Property leased
to such Borrower so that an interest arises therein under the real estate laws
of the applicable jurisdiction unless the landlord of such real Property has
executed a landlord waiver or leasehold mortgage in favor of and in form
reasonably acceptable to Lender, and no Borrower will permit any of the
Equipment to become an accession to any personal Property that is subject to a
Lien unless the Lien is a Permitted Lien.

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                  8.4.4. Records of Equipment. Each Borrower shall keep accurate
records itemizing and describing the kind, type, quality, quantity and cost of
its Equipment and all dispositions made in accordance with SECTION 8.4.2 hereof.

         8.5. BORROWING BASE CERTIFICATES. Unless otherwise agreed to by Lender
in writing, on the Closing Date Borrowers shall deliver to Lender a Borrowing
Base Certificate prepared as of the close of business on September 30, 2003. In
addition, Borrowers shall deliver to Lender a Borrowing Base Certificate (a)
with respect to any Reporting Month, (i) on or before the fifteenth day of the
following month if Availability during the applicable Reporting Month is equal
to or greater than $5,000,000, or (ii) at such times and with such frequency and
including such additional information, as Lender may request, if Availability
during the applicable Reporting Month is less than $5,000,000, and (b) if a
Default or Event of Default has occurred, at such times and with such frequency
and including such additional information, as Lender may request. Such Borrowing
Base Certificates shall be prepared as of the close of business on the last day
of the applicable Reporting Month or as otherwise indicated by Lender and shall
be in the form attached hereto as EXHIBIT H. All calculations of Availability in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by Borrowers and certified by a Senior Officer of Borrowers'
Agent to Lender, provided, that, Lender shall have the right to review and
adjust, in the exercise of its reasonable credit judgment, any such calculation
(i) to reflect its reasonable estimates of declines in value of any of the
Collateral described therein and (ii) to the extent that such calculation is not
in accordance with this Agreement or does not accurately reflect the amount of
the Availability Reserve. In no event shall the amount of the Borrowing Base be
deemed to exceed the amount of the Borrowing Base shown on the Borrowing Base
Certificate last received by Lender prior to such date, as such Borrowing Base
Certificate may be adjusted as herein authorized.

SECTION 9. REPRESENTATIONS AND WARRANTIES

         9.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to make available the Commitments hereunder, each
Borrower warrants and represents to Lender that:

                  9.1.1. Organization and Qualification. Each Borrower and each
of its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on SCHEDULE 9.1.1 hereto and in all other states and jurisdictions in
which the failure of such Borrower or any of such Subsidiaries to be so
qualified would have a Material Adverse Effect.

                  9.1.2. Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary action and do
not and will not (i) require any consent or approval of any of the holders

                                       63


of the Equity Interests of any Borrower or any of its Subsidiaries; (ii)
contravene any Borrower's or any of its Subsidiaries' Organization Documents;
(iii) violate, or cause any Borrower or any of its Subsidiaries to be in default
under, any provision of any Applicable Law, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to such Borrower
or any of its Subsidiaries; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower or any of its Subsidiaries is a party or by
which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower or any of its Subsidiaries.

                  9.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each Borrower and each of its
Subsidiaries signatories thereto enforceable against it in accordance with the
respective terms of such Loan Documents, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights.

                  9.1.4. Capital Structure. As of the date hereof, SCHEDULE
9.1.4 hereto states (i) the correct name of each Subsidiary, its jurisdiction of
organization and the percentage of its Equity Interests having voting powers
owned by each Person, (ii) the name of each Borrower's corporate or joint
venture Affiliates and the nature of the affiliation, (iii) the number, nature
and holder of all outstanding Equity Interests of each Borrower and each of its
Subsidiaries and (iv) the number of authorized and issued Equity Interests (and
treasury shares) of each Borrower and each of its Subsidiaries. Each Borrower
has good title to all of the shares it purports to own of the Equity Interests
of each of its Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such Equity Interests have been duly issued and are fully
paid and non-assessable. Except as otherwise set forth on SCHEDULE 9.1.4 hereto,
(x) there are no outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell, or any Equity
Interests or obligations convertible into, or any powers of attorney relating
to, shares of the capital stock of any Borrower or any of its Subsidiaries, and
(y) there are no outstanding agreements or instruments binding upon the holders
of any Borrower's Equity Interests relating to the ownership of its Equity
Interests.

                  9.1.5. Names. During the 5-year period preceding the date of
this Agreement, neither any Borrower nor any of its Subsidiaries has been known
as or used any name (whether a fictitious name, trade name or otherwise) except
those listed on SCHEDULE 9.1.5 hereto. Except as set forth on SCHEDULE 9.1.5, no
Borrower nor any of its Subsidiaries has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person.

                  9.1.6. Business Locations; Agent for Process. As of the date
hereof, the chief executive office and other places of business of each Borrower
and each of its Subsidiaries are as listed on SCHEDULE 8.1.1 hereto. During the
five-year period preceding the date of this Agreement, no Borrower nor any of
its Subsidiaries has had an office, place of business or agent

                                       64


for service of process other than as listed on SCHEDULE 8.1.1. Except as shown
on SCHEDULE 8.1.1 on the date hereof, no Inventory of any Borrower or any of its
Subsidiaries is stored with a bailee, warehouseman or similar Person, nor is any
Inventory consigned to any Person.

                  9.1.7. Title to Properties; Priority of Liens. Each Borrower
and each of its Subsidiaries has good and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of its personal Property, including all Property
reflected in the financial statements referred to in SECTION 9.1.9 or delivered
pursuant to SECTION 10.1.3, in each case free and clear of all Liens except
Permitted Liens. Each Borrower has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Borrower's Properties that is not a Permitted Lien.
The Liens granted to Lender pursuant to this Agreement and the Security
Documents are first priority Liens, subject only to those Permitted Liens which
are expressly permitted by the terms of this Agreement to have priority over the
Liens of Lender.

                  9.1.8. Accounts. Lender may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by a
Borrower with respect to any Account. Unless otherwise indicated in writing to
Lender, with respect to each Account, Borrower warrants that:

                           (i) It is genuine and in all respects what it
         purports to be, and it is not evidenced by a judgment;

                           (ii) It arises out of a completed, bona fide sale and
         delivery of goods or rendition of services by a Borrower in the
         Ordinary Course of Business and in accordance with the terms and
         conditions of all purchase orders, contracts or other documents
         relating thereto and forming a part of the contract between a Borrower
         and the Account Debtor;

                           (iii) It is for a sum certain maturing as stated in
         the duplicate invoice covering such sale or rendition of services, a
         copy of which has been furnished or is available to Lender on request;

                           (iv) Such Account, and Lender's security interest
         therein, is not, and will not (by voluntary act or omission of a
         Borrower) be in the future, subject to any offset, Lien, deduction,
         defense, dispute, counterclaim or any other adverse condition except
         for disputes resulting in returned goods where the amount in
         controversy is deemed by Lender to be immaterial, and each such Account
         is absolutely owing to a Borrower and is not contingent in any respect
         or for any reason;

                           (v) The contract under which such Account arose does
         not condition or restrict any Borrower's right to assign to Lender the
         right to payment thereunder unless Borrowers have obtained the Account
         Debtor's consent to such collateral assignment or complied with any
         conditions to such assignment (regardless of whether under the UCC

                                       65


         or other Applicable Law any such restrictions are ineffective to
         prevent the grant of a Lien upon such Account in favor of Lender);

                           (vi) Such Borrower has made no agreement with any
         Account Debtor for any extension, compromise, settlement or
         modification of any such Account or any deduction therefrom, except
         discounts or allowances which are granted by a Borrower in the ordinary
         course of its business for prompt payment and which are reflected in
         the calculation of the net amount of each respective invoice related
         thereto and are reflected in the Schedules of Accounts submitted to
         Lender pursuant to SECTION 8.2.1 hereof;

                           (vii) To the best of such Borrower's knowledge, there
         are no facts, events or occurrences which are reasonably likely to
         impair the validity or enforceability of any of its Accounts or reduce
         the amount payable thereunder from the face amount of the invoice and
         statements delivered to Lender with respect thereto;

                           (viii) To the best of such Borrower's knowledge, the
         Account Debtor thereunder (1) had the capacity to contract at the time
         any contract or other document giving rise to the Account was executed
         and (2) such Account Debtor is Solvent;

                           (ix) To the best of such Borrower's knowledge, there
         are no proceedings or actions which are threatened or pending against
         any Account Debtor which might result in any material adverse change in
         such Account Debtor's financial condition or the collectibility of such
         Account; and

                           (x) There are no restrictions on such Borrower's
         right to assign to Lender the right to payment represented by the
         Account or any Lien upon the Account.

                  9.1.9. Financial Statements; Fiscal Year. The balance sheets
of Borrowers and such other Persons described therein (including the accounts of
all Subsidiaries of Borrowers for the respective periods during which a
Subsidiary relationship existed) as of December 31, 2002, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly the financial positions of Borrowers and such
Persons at such dates and the results of Borrowers' operations for such periods.
Since July 31, 2003, there has been no material change in the condition,
financial or otherwise, of any Borrower or such other Persons as shown on the
balance sheet as of such date and no change in the aggregate value of Equipment
and real Property owned by any Borrower or such other Persons.

                  9.1.10. Full Disclosure. The financial statements referred to
in SECTION 9.1.9 hereof do not contain any untrue statement of a material fact
and neither this Agreement nor any other written statement contains or omits any
material fact necessary to make the statements contained herein or therein not
materially misleading. There is no fact or circumstances in existence on the
date hereof which any Borrower has failed to disclose to Lender in writing that
may reasonably be expected to have a Material Adverse Effect.

                                       66


                  9.1.11. Solvent Financial Condition. Each Borrower and each of
its Subsidiaries is now Solvent and, after giving effect to the Loans to be made
hereunder, the Letters of Credit to be issued in connection herewith and the
consummation of the other transactions described in the Loan Documents, each
Borrower and each of its Subsidiaries will be Solvent.

                  9.1.12. Surety Obligations. Except as set forth on SCHEDULE
9.1.12 hereto, no Borrower nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.

                  9.1.13. Taxes. The FEIN of each Borrower and each of its
Subsidiaries is as shown on SCHEDULE 9.1.13 hereto. Each Borrower and each of
its Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all Taxes upon it, its income and Properties as and when such Taxes
are due and payable, except to the extent being Properly Contested. The
provision for Taxes on the books of Borrowers and their Subsidiaries are
adequate for all years not closed by applicable statutes, and for their current
Fiscal Year.

                  9.1.14. Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement or any of the other Loan Documents.

                  9.1.15. Intellectual Property. Each Borrower and each of its
Subsidiaries owns or has the lawful right to use all Intellectual Property
necessary for the present and planned future conduct of its business without any
conflict with the rights of others; there is no objection to or pending or, to
the knowledge of any Borrower, threatened Intellectual Property Claim with
respect to any Borrower's right to use any such Intellectual Property and no
Borrower is aware of any grounds for challenge or objection thereto; and, except
as may be described on SCHEDULE 9.1.15, no Borrower pays any royalty or other
compensation to any Person for the right to use any Intellectual Property. All
such patents, trademarks, service marks, trade names, copyrights, licenses and
other similar rights are listed on SCHEDULE 9.1.15 hereto, to the extent they
are registered under any Applicable Law or are otherwise material to any
Obligor's business.

                  9.1.16. Governmental Approvals. To the best of Borrowers'
knowledge, each Borrower and each of its Subsidiaries has, and is in good
standing with respect to all Governmental Approvals necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.

                  9.1.17. Compliance with Laws. To the best of Borrowers'
knowledge, each Borrower and each of its Subsidiaries has duly complied with,
and its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all Applicable Law (except to the
extent that any such noncompliance with Applicable Law could not reasonably be
expected to have a Material Adverse Effect) and there have been no citations,
notices or orders of noncompliance issued to any Borrower or any of its
Subsidiaries under any such law, rule or regulation. No Inventory has been
produced in violation of the FLSA.

                                       67


                  9.1.18. Burdensome Contracts. No Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. No Borrower nor any of its Subsidiaries is a party or
subject to any Restrictive Agreement.

                  9.1.19. Litigation; Commercial Tort Claims. Except as set
forth on SCHEDULE 9.1.19 hereto, there are no actions, suits, proceedings or
investigations pending, or to the knowledge of any Borrower, threatened, against
or affecting any Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of any Borrower or any
of its Subsidiaries, (i) which relate to any of the Loan Documents or any of the
transactions contemplated thereby or (ii) which, if determined adversely to
Borrower or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect. To the knowledge of Borrowers and their Subsidiaries, no
Borrower or any of its Subsidiaries is in default on the date hereof with
respect to any order, writ, injunction, judgment, decree or rule of any court,
Governmental Authority or arbitration board or tribunal. Except as set forth on
SCHEDULE 9.1.19 hereto, no Borrower has any Commercial Tort Claims.

                  9.1.20. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrowers' performance hereunder, constitute a Default or an Event of
Default. No Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes or which with the passage of
time or the giving of notice or both would constitute a default, under any
Material Contract or in the payment of any Debt to any Person for Money
Borrowed.

                  9.1.21. Leases. SCHEDULE 9.1.21 hereto is a complete listing
of each capitalized and operating lease of each Borrower and each of its
Subsidiaries on the date hereof that constitutes a Material Contract. Each
Borrower and each of its Subsidiaries is in substantial compliance with all of
the terms of each of its respective capitalized and operating leases and, to the
knowledge of Borrowers, there is no basis upon which the lessors under any such
leases could terminate same or declare any Borrower or any of its Subsidiaries
in default thereunder.

                  9.1.22. Pension Plans. Except as disclosed on SCHEDULE 9.1.22
hereto, no Borrower nor any of its Subsidiaries has any Plan on the date hereof.
Each Borrower and each of its Subsidiaries are in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that is reasonably likely to result in a
material adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. No Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.

                  9.1.23. Trade Relations. To the best of Borrowers' knowledge,
except as otherwise set forth on SCHEDULE 9.1.23, there exists no actual or
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship between any Borrower or any of its
Subsidiaries and any Person or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower or
any of its Subsidiaries, or with any material supplier, and there exists no
condition or state of facts or

                                       68


circumstances which would have a Material Adverse Effect or prevent any Borrower
or any of its Subsidiaries from conducting such business after the consummation
of the transactions contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.

                  9.1.24. Labor Relations. Except as described on SCHEDULE
9.1.24 hereto, no Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of any Borrower's or any of its Subsidiaries' employees, or,
to any Borrower's knowledge, threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.

                  9.1.25. Not a Regulated Entity. No Obligor is (i) an
"investment company" or a "person directly or indirectly controlled by or acting
on behalf of an investment company" within the meaning of the Investment Company
Act of 1940; or (ii) a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935; or (iii) subject to regulation under the Federal
Power Act, the Interstate Commerce Act, any public utilities code or any other
Applicable Law regarding its authority to incur Debt.

                  9.1.26. Margin Stock. No Borrower nor any Subsidiary of a
Borrower is engaged, principally or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock.

                  9.1.27. Designated Senior Debt. The Loan and all other
Obligations of Borrowers hereunder shall be deemed "Designated Senior Debt"
under that certain Indenture between ProxyMed and LaSalle Bank, N.A., as trustee
dated December 31, 2002 (the "Indenture").

                  9.1.28. Hazardous Materials.

                  Except as set forth in SCHEDULE 9.1.28, as of the Closing
Date, (a) each real property location owned, leased or occupied by each Borrower
(the "Real Property") is maintained free of contamination from any Hazardous
Material, (b) no Borrower is subject to any Environmental Liabilities or, to any
Borrower's knowledge, potential Environmental Liabilities, in excess of $50,000
in the aggregate, (c) no notice has been received by any Borrower identifying it
as a "potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Borrower, there are no
facts, circumstances or conditions that may result in any Borrower being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (d) each Borrower has provided to Lender copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Borrower.

                                       69


         9.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be reaffirmed by each Borrower on each day that any
Obligations are outstanding or that Borrowers request or are deemed to have
requested an extension of credit hereunder, except for changes in the nature of
a Borrower's or, if applicable, any of its Subsidiaries' business or operations
that may occur after the date hereof in the Ordinary Course of Business so long
as Lender has consented to such changes (which consent shall not be unreasonably
withheld) or such changes are not violative of any provision of this Agreement.
Notwithstanding the foregoing, representations and warranties which by their
terms are applicable only to a specific date shall be deemed made only at and as
of such date.

         9.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

         10.1. AFFIRMATIVE COVENANTS. For so long as there are any Commitments
outstanding and thereafter until payment in full of the Obligations, each
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall and shall cause each Subsidiary to:

                  10.1.1. Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested (and in no
event more than twice per year unless (i) an Event of Default has occurred and
is continuing, or (ii) Availability falls below $2,500,000), but only during
normal business hours and (except when a Default or Event of Default exists)
upon 3 days prior notice to such Borrowers, to visit and inspect its Properties
and the Properties of each Subsidiary, inspect, audit and make extracts from
such Borrower's and Subsidiary's books and records, and discuss with such
Borrower's and Subsidiary's officers, employees and independent accountants,
such Borrower's and each of its Subsidiary's business, financial condition,
business prospects and results of operations. Lender shall not have any duty to
make any such inspection and shall not incur any liability by reason of its
failure to conduct or delay in conducting any such inspection. Borrowers
acknowledge and agree that any one inspection or audit may last for several
days.

                  10.1.2. Notices. Notify Lender in writing promptly after any
Borrower's obtaining knowledge thereof (i) of the commencement of any litigation
affecting any Obligor or any of its Properties, whether or not the claims
asserted in such litigation are considered by such Borrower to be covered by
insurance, and of the institution of any administrative proceeding, to the
extent that such litigation or proceeding, if determined adversely to such
Obligor, could reasonably be expected to have a Material Adverse Effect; (ii) of
any pending or threatened strike, work stoppage, unfair labor practice claim or
any other labor dispute affecting any Obligor or any Subsidiary in a manner that
could reasonably be expected to have a Material Adverse Effect, and the
expiration of any labor contract to which any Obligor or a Subsidiary is a party
or by which it is bound; (iii) of any material default by any Obligor under, or
termination

                                       70


of, any Material Contract or any note, indenture, loan agreement, mortgage,
lease, deed, guaranty or other similar agreement relating to any Debt of such
Obligor exceeding $500,000; (iv) of the existence of any Default or Event of
Default; (v) of any default by any Person under any note or other evidence of
Debt payable to an Obligor in an amount exceeding $500,000; (vi) of any judgment
against any Obligor in an amount exceeding $500,000; (vii) of the assertion by
any Person of any Intellectual Property Claim, the adverse resolution of which
could reasonably be expected to have a Material Adverse Effect; (viii) of any
violation or asserted violation by any Obligor of any Applicable Law (including
ERISA, OSHA, FLSA or any Environmental Laws), the adverse resolution of which
could reasonably be expected to have a Material Adverse Effect; (ix) of any
Environmental Release by an Obligor or on any Property owned or occupied by an
Obligor; and (x) of the discharge of Borrowers' independent accountants or any
withdrawal or resignation by such independent accountants from their acting in
such capacity. In addition, Borrowers shall give Lender at least 30 Business
Days' prior written notice of any Obligor's opening of any new office or place
of business (but excluding field representative and home sales offices).

                  10.1.3. Financial and Other Information. Keep adequate records
and books of account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all of its financial
transactions; and cause to be prepared and furnished to Lender the following
(all to be prepared in accordance with GAAP applied on a consistent basis,
unless Borrowers' certified public accountants concur in any change therein and
such change is disclosed to Lender and is consistent with GAAP and, if required
by Lender, the financial covenants set forth in SECTION 10.3 are amended in a
manner requested by Lender to take into account the effects of such change):

                           (i) as soon as available, and in any event within 90
         days after the close of each Fiscal Year of Borrowers, audited balance
         sheets of each Borrower and its Subsidiaries as of the end of such
         Fiscal Year and the related statements of income, shareholders' equity
         and cash flow, on a Consolidated and Consolidating basis, certified by
         a firm of independent certified public accountants of recognized
         standing selected by Borrowers but reasonably acceptable to Lender and
         unqualified (except for a qualification for a change in accounting
         principles with which the accountant concurs), and setting forth in
         each case in comparative form the corresponding Consolidated and
         Consolidating figures for the preceding Fiscal Year;

                           (ii) as soon as available, and in any event within 30
         days after the end of each month hereafter, including the last month of
         Borrowers' Fiscal Year, unaudited balance sheets of each Borrower and
         its Subsidiaries as of the end of such month and the related statements
         of income for such month and for the portion of such Borrower's Fiscal
         Year then elapsed, on a Consolidated and Consolidating basis, setting
         forth in each case in comparative form (i) the corresponding
         Consolidated and Consolidating figures for the preceding Fiscal Year
         and (ii) a variance analysis compared to the relevant Projections, and
         certified by the principal financial officer of such Borrower as
         prepared in accordance with GAAP and fairly presenting the Consolidated
         financial position and results of operations of such Borrower and its
         Subsidiaries for such month and period

                                       71


         subject only to changes from audit and year-end adjustments and except
         that such statements need not contain notes;

                           (iii) as soon as available, and in any event within
         45 days after the end of each quarter hereafter, including the last
         quarter of Borrowers' Fiscal Year, unaudited balance sheets of each
         Borrower and its Subsidiaries as of the end of such quarter and the
         related statements of income, shareholders' equity and cash flow for
         such quarter and for the portion of such Borrower's Fiscal Year then
         elapsed, on a Consolidated and Consolidating basis, setting forth in
         each case in comparative form (i) the corresponding Consolidated and
         Consolidating figures for the preceding Fiscal Year and (ii) a variance
         analysis compared to the relevant Projections, and certified by the
         principal financial officer of such Borrower as prepared in accordance
         with GAAP and fairly presenting the Consolidated financial position and
         results of operations of such Borrower and its Subsidiaries for such
         quarter and period subject only to changes from audit and year-end
         adjustments and except that such statements need not contain notes;

                           (iv) after the occurrence of the Borrowing Base
         Reporting Event, not later than 20 days after each calendar month, a
         listing of all of Borrowers' trade payables as of the last Business Day
         of such month or week, as applicable, specifying the name of and
         balance due each trade creditor, and, a monthly detailed trade payable
         agings in form acceptable to Lender;

                           (v) promptly after the sending or filing thereof, as
         the case may be, copies of any proxy statements, financial statements
         or reports which any Borrower has made available to its shareholders
         and copies of any regular, periodic and special reports or registration
         statements which any Borrower files with the Securities and Exchange
         Commission or any Governmental Authority which may be substituted
         therefor, or any national securities exchange;

                           (vi) promptly after the filing thereof, copies of any
         annual report to be filed in accordance with ERISA in connection with
         each Plan; and

                           (vii) such other data and information (financial and
         otherwise) as Lender, from time to time, may reasonably request,
         bearing upon or related to the Collateral or any Borrower's and any of
         its Subsidiaries' financial condition or results of operations.

                  Concurrently with the delivery of the financial statements
described in clause (i) of this SECTION 10.1.3, Borrowers shall deliver to
Lender a copy of the accountants' letter to Borrowers' management that is
prepared in connection with such financial statements and shall cause to be
prepared and shall deliver to Lender a certificate of the aforesaid certified
public accountants stating to Lender that, based upon their examination of the
financial statements of Borrowers and their Subsidiaries performed in connection
with their examination of said financial statements, nothing came to their
attention that caused them to believe that Borrowers

                                       72


were not in compliance with SECTIONS 10.2.2, 10.2.3, 10.2.4, 10.2.6, 10.2.7,
10.2.8, 10.2.14, 10.2.15, 10.2.16 OR 10.3 hereof, or, if they are aware of such
noncompliance, specifying the nature thereof, and acknowledging, in a manner
satisfactory to Lender, that they are aware that Lender is relying on such
financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this SECTION 10.1.3, or more frequently if requested by Lender
during any period that a Default or an Event of Default exists, Borrowers shall
cause to be prepared and furnished to Lender a Compliance Certificate executed
by the chief financial officer of Borrowers.

                  10.1.4. Landlord and Storage Agreements. Provide Lender with
copies of all existing agreements, and promptly after execution thereof provide
Lender with copies of all future agreements, between any Borrower or any of its
Subsidiaries and any landlord, warehouseman or bailee which owns any premises at
which any Collateral may, from time to time, be kept.

                  10.1.5. Intentionally Omitted.

                  10.1.6. Projections. No later than (i) December 31, 2003,
deliver to Lender month by month Projections from the Closing Date through
December 31, 2004, giving effect to Borrowers' projected Borrowings under this
Agreement, and (ii) 30 days prior to the end of each Fiscal Year of Borrowers,
deliver to Lender the Projections of Borrowers for the forthcoming Fiscal Year,
month by month.

                  10.1.7. Taxes. Pay and discharge all Taxes prior to the date
on which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.

                  10.1.8. Compliance with Laws. Comply with all Applicable Law,
including ERISA, all Environmental Laws, FLSA, OSHA and all laws, statutes,
regulations and ordinances regarding the collection, payment and deposit of
Taxes, and obtain and keep in force any and all Governmental Approvals necessary
to the ownership of its Properties or to the conduct of its business, to the
extent that any such failure to comply, obtain or keep in force could be
reasonably expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any Environmental Release shall occur at or on
any of the Properties of any Borrower or any of its Subsidiaries, Borrowers
shall, or shall cause the applicable Subsidiary to, act promptly and diligently
to investigate and report to Lender and all appropriate Governmental Authorities
the extent of, and to make appropriate remedial action to eliminate, such
Environmental Release, whether or not ordered or otherwise directed to do so by
any Governmental Authority.

                  10.1.9. Insurance. In addition to the insurance required
herein with respect to the Collateral, maintain with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, business interruption, workers' compensation, or larceny,
embezzlement or other

                                       73


criminal misappropriation insurance) and in such amounts and with such
coverages, limits and deductibles as is customary in the business of such
Borrower or such Subsidiary.

                  10.1.10. Intellectual Property. Promptly after applying for or
otherwise acquiring any Intellectual Property, deliver to Lender, in form and
substance acceptable to Lender and in recordable form, all documents necessary
for Lender to perfect its Lien on such Intellectual Property.

                  10.1.11. License Agreements. Keep each License Agreement in
full force and effect for so long as a Borrower has any Inventory the
manufacture, sale or distribution of which is in any manner governed by or
subject to such License Agreement.

         10.2. NEGATIVE COVENANTS. For so long the Commitments are outstanding
and thereafter until payment in full of the Obligations, each Borrower covenants
that, unless Lender has otherwise consented in writing, it shall not and shall
not permit any Subsidiary to:

                  10.2.1. Fundamental Changes. Except as otherwise disclosed in
writing to Lender and subject to Lender's consent, which consent shall not be
unreasonably withheld, merge, reorganize, consolidate or amalgamate with any
Person, or liquidate, wind up its affairs or dissolve itself, in each case
whether in a single transaction or in a series of related transactions, except
for mergers or consolidations of any Subsidiary with another Subsidiary; or
change its name or conduct business under any new fictitious name; change its
FEIN, organizational identification number or state of organization; or fail to
remain in good standing and qualified to transact business as a foreign entity
in any state or other jurisdiction in which it is required to be qualified to
transact business as a foreign entity and in which the failure to be so
qualified could reasonably be expected to have a Material Adverse Effect.

                  10.2.2. Loans. Following the Closing Date, make any loans or
other advances of money to any Person other than to an officer or employee of
Borrowers for salary, travel advances, advances against commissions and other
similar advances in the Ordinary Course of Business, not to exceed $150,000 in
the aggregate at any time.

                  10.2.3. Permitted Debt. Create, incur, assume, guarantee or
suffer to exist any Debt, except:

                           (i) the Obligations;

                           (ii) the Indenture Debt;

                           (iii) accounts payable by such Borrower or any of its
         Subsidiaries to trade creditors and current operating expenses (other
         than for Money Borrowed) that are not aged more than 90 days from
         billing date or more than 60 days from the due date, in each case
         incurred in the Ordinary Course of Business and paid within such time
         period, unless the same are being Properly Contested;

                                       74


                           (iv) obligations to pay Rentals permitted by SECTION
         10.2.14;

                           (v) Permitted Purchase Money Debt;

                           (vi) Debt for accrued payroll and related taxes
         incurred in the Ordinary Course of Business of such Borrower or such
         Subsidiary, including obligations under Cash Management Agreements, in
         each case so long as payment thereof is not past due and payable
         unless, in the case of Taxes, such Taxes are being Properly Contested;

                           (vii) Debt for Money Borrowed by such Borrower (other
         than the Obligations, Permitted Purchase Money Debt and Subordinated
         Debt permitted herein), but only to the extent that such Debt is
         outstanding on the date of this Agreement and is not to be satisfied on
         or about the Closing Date;

                           (viii) Permitted Contingent Obligations;

                           (ix) Debt not included in the preceding paragraphs of
         this SECTION 10.2.3 which is not secured by a Lien (unless such Lien is
         a Permitted Lien) and does not exceed at any time, in the aggregate,
         the sum of $250,000 as to Borrowers and all of their Subsidiaries;

                           (x) Refinancing Debt so long as each of the
         Refinancing Conditions is met; and

                           (xi) the obligations set forth on SCHEDULE 10.2.3.

                  10.2.4. Affiliate Transactions. Enter into, or be a party to
any transaction with any Affiliate or stockholder, except: (i) the transactions
contemplated by the Loan Documents; (ii) transactions with Affiliates that were
consummated prior to the date hereof and have been disclosed to Lender prior to
the Closing Date; (iii) transactions with Affiliates in the Ordinary Course of
Business and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to such Borrower or such
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of such Borrower or such Subsidiary, and
(iv) transactions for raising capital from investing Affiliates.

                  10.2.5. Limitation on Liens. Create or suffer to exist any
Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:

                           (i) Liens at any time granted in favor of Lender;

                           (ii) Liens for Taxes (excluding any Lien imposed
         pursuant to any of the provisions of ERISA) not yet due or being
         Properly Contested;

                                       75


                           (iii) statutory Liens (excluding any Lien imposed
         pursuant to any of the provisions of ERISA) arising in the Ordinary
         Course of Business of a Borrower or a Subsidiary, but only if and for
         so long as (x) payment in respect of any such Lien is not at the time
         required or the Debt secured by any such Liens is being Properly
         Contested and (y) such Liens do not materially detract from the value
         of the Property of such Borrower or such Subsidiary and do not
         materially impair the use thereof in the operation of such Borrower's
         or such Subsidiary's business;

                           (iv) Purchase Money Liens securing Permitted Purchase
         Money Debt;

                           (v) Liens arising by virtue of the rendition, entry
         or issuance against such Borrower or any of its Subsidiaries, or any
         Property of such Borrower or any of its Subsidiaries, of any judgment,
         writ, order, or decree for so long as each such Lien (a) is in
         existence for less than 25 consecutive days after it first arises or is
         being Properly Contested and (b) is at all times junior in priority to
         the Liens in favor of Lender;

                           (vi) Liens incurred or deposits made in the Ordinary
         Course of Business to secure the performance of tenders, bids, leases,
         contracts (other than for the repayment of Money Borrowed), statutory
         obligations and other similar obligations or arising as a result of
         progress payments under government contracts; provided that, to the
         extent any such Liens attach to any of the Collateral, such Liens are
         at all times subordinate and junior to the Liens upon the Collateral in
         favor of Lender.

                           (vii) easements, rights-of-way, restrictions,
         covenants or other agreements of record or other similar charges or
         encumbrances on real Property of a Borrower or a Subsidiary that do not
         secure any monetary obligation and do not interfere with the ordinary
         conduct of the business of such Borrower or such Subsidiary;

                           (viii) normal and customary rights of setoff upon
         deposits of cash in favor of banks and other depository institutions
         and Liens of a collection bank arising under the UCC on Payment Items
         in the course of collection;

                           (ix) Liens in existence immediately prior to the
         Closing Date that are satisfied in full and released on the Closing
         Date as a result of the application of Borrowers' cash on hand as of
         the Closing Date;

                           (x) such other Liens as appear on SCHEDULE 10.2.5
         hereto, to the extent provided therein; and

                           (xi) such other Liens as Lender in its sole
         discretion may hereafter approve in writing.

The foregoing negative pledge shall not apply to any Margin Stock to the extent
that the application of such negative pledge to such Margin Stock would require
filings or other actions

                                       76


by Lender under Regulation U of the Board of Governors or under any similar
regulation or otherwise result in a violation of any such regulations.

                  10.2.6. Subordinated Debt. Make any payment of all or any part
of any Subordinated Debt or take any other action or omit to take any other
action in respect of any Subordinated Debt, except in accordance with the
subordination agreement relating thereto; or amend or modify the terms of any
agreement applicable to any Subordinated Debt, other than to extend the time of
payment thereof or to reduce the rate of interest payable in connection
therewith. To the extent that any payment is permitted to be made with respect
to any Subordinated Debt pursuant to the provisions of the subordination
agreement relating thereto, as a condition precedent to Borrowers' authorization
to make any such payment, Borrowers shall provide to Lender, not less than 5
Business Days prior to the scheduled payment, a certificate from a Senior
Officer of Borrowers' Agent stating that no Default or Event of Default is in
existence as of the date of the certificate or will be in existence as of the
date of such payment (both with and without giving effect to the making of such
payment), and specifying the amount of principal and interest to be paid.

                  10.2.7. Distributions. Declare or make any Distributions,
except for Upstream Payments.

                  10.2.8. Upstream Payments. Create or suffer to exist any
encumbrance or restriction on the ability of a Subsidiary to make any Upstream
Payment, except for encumbrances or restrictions (i) pursuant to the Loan
Documents, or (ii) existing under Applicable Law.

                  10.2.9. Transfers to Subsidiaries. From the Closing Date up to
and including the Termination Date, make any payments or contributions of cash
or other Property, or any other advances of money in an aggregate amount of more
than $100,000 to its Subsidiaries; provided, however, this limitation shall not
apply to payments or contributions of cash or other Property, or any other
advances of money between Borrowers.

                  10.2.10. Disposition of Assets. Sell, lease or otherwise
dispose of any of its Properties, including any disposition of Property as part
of a sale and leaseback transaction, to or in favor of any Person, except (i)
sales of Inventory in the Ordinary Course of Business, (ii) dispositions of
Equipment to the extent authorized by SECTION 8.4.2 hereof, (iii) a transfer of
Property to such Borrower by its Subsidiary,(iv) non-exclusive licenses of
technology and other Intellectual Property by and among Borrower and any of its
Subsidiaries, and (v) other dispositions expressly authorized by other
provisions of the Loan Documents or by the Lender, in writing, which
authorization shall not be unreasonably withheld or delayed.

                  10.2.11. Subsidiaries. Form any Subsidiary after the Closing
Date, unless such Subsidiary immediately upon formation enters into a joinder
agreement in respect of this Agreement which is, in form and substance,
satisfactory to Lender in its sole discretion, or acquire any Subsidiary after
the Closing Date or permit any existing Subsidiary to issue any additional
Equity Interests except director's qualifying shares.

                                       77


                  10.2.12. Intentionally Omitted.

                  10.2.13. Restricted Investments. Make or have any Restricted
Investment.

                  10.2.14. Leases. After the Closing Date, become a lessee under
any operating lease (other than a lease under which a Borrower or any of its
Subsidiaries is lessor and other than a renewal of an existing lease) of
Property if the aggregate Rentals payable during any current or future period of
12 consecutive months under the lease in question and all other leases under
which Borrowers or any of their Subsidiaries is then lessee would exceed
$500,000. The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of any lease.

                  10.2.15. Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than a Borrower or a
Subsidiary of a Borrower.

                  10.2.16. Accounting Changes. Make any significant change in
accounting treatment or reporting practices, except as may be required by GAAP,
or establish a fiscal year different from the Fiscal Year.

                  10.2.17. Organization Documents. Amend, modify or otherwise
change any of the terms or provisions and any of its Organization Documents as
in effect on the date hereof, except for changes that do not affect in any way
such Borrower's or such Subsidiary's rights and obligations to enter into and to
perform the Loan Documents to which it is a party and to pay all of the
Obligations and that do not otherwise have a Material Adverse Effect.

                  10.2.18. Restrictive Agreements. Enter into or become a party
to any Restrictive Agreement; provided that (i) the foregoing shall not apply to
restrictions or conditions imposed by any Restrictive Agreement relating to
secured Debt permitted by this Agreement if such restrictions or conditions
apply only to the Properties securing such Debt and (ii) the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.

                  10.2.19. Interest Rate Contracts. Enter into any Interest Rate
Contract other than Interest Rate Contracts entered into in the Ordinary Course
of Business to hedge or mitigate risks to which such Borrower or any Subsidiary
is exposed in the conduct of its business or the management of its liabilities
and not for any speculative purpose.

                  10.2.20. Conduct of Business. Engage in any business other
than the business engaged in by it on the Closing Date and any business or
activities which are substantially similar, related or incidental thereto.

         10.3. SPECIFIC FINANCIAL COVENANT.

                  10.3.1. Fixed Charge Coverage Ratio. Commencing with the first
Fiscal Month in which the Revolver Loan Balance first exceeds an amount equal to
(a) 95% of the amount of Liquid Collateral on such date minus (b) the
Availability Reserve on such date (such Fiscal

                                       78


Month being referred to as the "Initial Covenant Month", and such Fiscal Month
and each Fiscal Month thereafter being sometimes hereinafter referred to as a
"Covenant Month"), and for so long as there are any Commitments outstanding and
thereafter until payment in full of the Obligations, Borrowers covenant that,
unless otherwise consented to by Lender in writing, they shall, on a
consolidated basis, maintain a Fixed Charge Coverage Ratio of 1.00 to 1,
calculated as of each Covenant Month-end as follows:

         (a)      With respect to the Initial Covenant Month, the Fixed Charge
                  Coverage Ratio shall be calculated by using annualized amounts
                  of each and all of Consolidated EBITDA, Capital Expenditures,
                  cash income taxes, cash Distributions, and cash interest
                  expense (collectively the "Relevant Performance Measurements")
                  for the three-Fiscal Month period ended as of the last day of
                  the Initial Covenant Month (the first Fiscal Month of such
                  three-Fiscal Month period is referred to hereinafter as the
                  "First Covenant Measurement Month" and, as used in this clause
                  (a), the term "annualized" shall mean multiplied by 4), and

         (b)      for each Covenant Month thereafter (the "Current Covenant
                  Month"), through and including the eleventh Fiscal Month after
                  the First Covenant Measurement Month, the Fixed Charge
                  Coverage Ratio shall be calculated by using annualized amounts
                  of each and all of the Relevant Performance Measurements for
                  the period beginning with the initial Covenant Month and
                  ending with the last day of such Covenant Month (as used in
                  this clause (b), the term "annualized" shall mean the
                  respective amounts calculated under the following formula,
                  which shall be computed separately as to each Relevant
                  Performance Measurement: AA= [RPM/NM] x 12, where "AA" means
                  the annualized amount, "RPM" means one of the Relevant
                  Performance Measurements, and "NM" means the number of
                  Covenant Months in the period), and

         (c)      With respect to all Covenant Months other than those falling
                  within subsections (a) or (b) hereinabove, the Relevant
                  Performance Measurements in respect of the Fixed Charge
                  Coverage Ratio shall be determined with reference to the
                  twelve-Fiscal Month period ended on the last day of such
                  Covenant Month.

SECTION 11. CONDITIONS PRECEDENT

         11.1. CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS. Lender shall
not be required to fund any Loan requested by Borrowers, procure any Letter of
Credit or otherwise extend credit to Borrowers unless, on or before December 31,
2003, each of the following conditions (except those conditions described in
SECTIONS 11.1.16, 11.1.18, AND 11.1.22, which conditions may be satisfied after
December 31, 2003 but must be satisfied on or prior to the date that the initial
Loans are made under this Agreement) has been and continues to be satisfied:

                  11.1.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered to Lender by each of the signatories thereto in
form and substance

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satisfactory to Lender and shall have been accepted by Lender, and each Obligor
shall be in compliance with all of the terms thereof.

                  11.1.2. Opinion Letters. Lender shall have received favorable,
written opinions of Holland & Knight LLP, counsel to Borrowers, as to the
transactions contemplated by this Agreement and the matters set forth in EXHIBIT
E attached hereto.

                  11.1.3. Evidence of Perfection and Priority of Liens in
Collateral. Lender shall have received copies of all filing receipts or
acknowledgments issued by any Governmental Authority to evidence any filing or
recordation necessary to perfect the Liens of Lender in the Collateral and
evidence in form satisfactory to Lender that such Liens constitute valid and
perfected security interests and Liens, and that there are no other Liens upon
any Collateral except for Permitted Liens.

                  11.1.4. Organization Documents. Lender shall have received
copies of the Organization Documents of each Obligor, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
the jurisdiction of such Obligor's organization.

                  11.1.5. Good Standing Certificates. Lender shall have received
good standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor's jurisdiction of organization and
each jurisdiction where the conduct of such Obligor's business activities or
ownership of its Property necessitates qualification.

                  11.1.6. [Intentionally Reserved].

                  11.1.7. Insurance. Lender shall have received certified copies
of the casualty insurance policies of Obligors, together with loss payable
endorsements on Lender's standard form of loss payee endorsement naming Lender
as lender's loss payee and copies of each Obligor's liability insurance
policies, including product liability policies, together with endorsements
naming Lender as an additional insured, all as required by the Loan Documents.

                  11.1.8. Lockbox; Blocked Account Agreements. Lender shall have
received the duly executed agreements establishing the Lockbox and the
Collateral Reserve Account for the collection or servicing of the Accounts and a
Blocked Account Agreement between Lender and the Borrowers sufficient to give
"control" (within the meaning of the UCC) to Lender over the Collateral Reserve
Account and any other Deposit Account of any Borrower existing as of the Closing
Date, all in form and substance satisfactory to Lender.

                  11.1.9. Lien Waivers. Lender shall have received Lien Waivers
with respect to all premises at which any Collateral may be located.

                  11.1.10. [Intentionally Omitted].

                  11.1.11 Intentionally Omitted No Material Adverse Change. No
material adverse change in the financial condition of any Obligor or in the
quality, quantity or value of any Collateral shall have occurred since the
Closing Date.

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                  11.1.13. License Agreements. Lender shall have received,
reviewed and found reasonably satisfactory in all material respects all License
Agreements pursuant to which any Borrower manufacturers, markets, distributes or
sells any of its Inventory and shall have received a duly executed
Licensor/Lender Agreement from each Licensor.

                  11.1.14. [Intentionally Reserved].

                  11.1.15. [Intentionally Reserved].

                  11.1.16. Disbursement Letter. Lender shall have received
written instructions from Borrowers directing application of proceeds of the
Loans, if any, to be made pursuant to this Agreement as of the Effective Date,
and an initial Borrowing Base Certificate from Borrowers in form satisfactory to
Lender.

                  11.1.17. Intentionally Omitted.

                  11.1.18. Solvency Certificate. Lender shall have received
certificates satisfactory to it from one or more knowledgeable Senior Officers
of each Borrower that, after giving effect to the financing under this Agreement
and the issuance of the Letters of Credit, such Borrower is Solvent.

                  11.1.19. Intentionally Omitted.

                  11.1.20. Intentionally Omitted.

                  11.1.21. Intentionally Omitted.

                  11.1.22. LC Conditions. With respect to the procurement of any
Letter of Credit on the Effective Date, each of the LC Conditions is satisfied.

                  11.1.23. Intentionally Omitted.

                  11.1.24. Material Contracts. Lender shall have reviewed and
found acceptable in its reasonable credit judgment all Material Contracts.

         11.2. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Notwithstanding
any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Lender under the other sections of
this Agreement, Lender shall not be required to make any Loan or otherwise
extend any credit or other financial accommodations to or for the benefit of any
Borrower, unless and until each of the following conditions has been and
continues to be satisfied:

                  11.2.1. No Default. No Default or Event of Default exists at
the time of, or would result from, the funding of any Loan or other extension of
credit.

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                  11.2.2. Satisfaction of Conditions in Other Loan Documents.
Each of the conditions precedent set forth in any other Loan Document shall be
satisfied.

                  11.2.3. No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Agreement or any of the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby.

                  11.2.4. No Material Adverse Effect. No event shall have
occurred and no condition shall exist which has or could be reasonably expected
to have a Material Adverse Effect.

                  11.2.5. Borrowing Base Certificate; Notice of Borrowing.
Lender shall have received each Borrowing Base Certificate and all supporting
documentation required by the terms of this Agreement or otherwise requested by
Lender and a Notice of Borrowing for each requested loan, if any.

                  11.2.6. LC Conditions. With respect to the procurement of any
Letter of Credit each of the LC Conditions is satisfied.

                  11.2.7 Representations and Warranties. Each representation and
warranty made or deemed to be made in this Agreement and in each of the Loan
Documents is true and correct in all material respects on and as of the date of
(except to the extent that any such representation or warranty relates to a
prior specific date or period) the requested loan.

         11.3. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lender shall make any
Loans, procure any Letter of Credit or otherwise extend any credit to Borrowers
under this Agreement at a time when any of the foregoing conditions precedent
are not satisfied (regardless of whether the failure of satisfaction of any such
conditions precedent was known or unknown to Lender), the funding of such Loans
or the extension of such credit shall not operate as a waiver of the right of
Lender to insist upon the satisfaction of all condition precedent with respect
to each subsequent Borrowing requested by Borrowers or a waiver of any default
or Event of Default as a consequence of the failure of any such conditions to be
satisfied, unless Lender, in writing waives the satisfaction of any condition
precedent in which event such waiver shall only be applicable for the specific
instance given and only to the extent and for the period of time expressly
stated in such written waiver.

         11.4. CONDITIONS PRECEDENT TO CLOSING. The parties hereby agree that
each of the following conditions must be satisfied on or prior to the Closing
Date:

                  11.4.1. Loan Documents. Except for the Interest Rate
Contracts, Licensor/Lender Agreements, and Foreign Exchange Contracts, if any,
and except as otherwise specifically set forth in SECTION 11.1 with respect to
Loan Documents to be delivered on or prior to December 31, 2003, each of the
Loan Documents, including the Guaranty Agreements and the Guarantors'

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Security Agreement, shall have been duly executed and delivered to Lender by
each of the signatories thereto in form and substance satisfactory to Lender and
shall have been accepted by Lender, and each Obligor shall be in compliance with
all of the terms thereof.

                  11.4.2. Secretary's Certificate. Lender shall have received
duly executed certificate of the Secretary or Assistant Secretary of each
Borrower and each Guarantor substantially in the form attached hereto as EXHIBIT
O, which shall include Board of Director resolutions, approving and authorizing
the transactions to be consummated in connection herewith. The parties hereto
acknowledge and agree that this Agreement and all transactions contemplated
herein shall not be deemed effective until such Board of Director resolutions,
have been duly executed and a copy thereof has been delivered to the Lender.

                  11.4.3. Compliance with Laws and Other Agreements. Lender
shall have determined or received assurances reasonably satisfactory to it that
none of the Loan Documents entered into as of the Closing Date or any of the
transactions contemplated thereby violate any Applicable Law, court order or
agreement binding upon any Obligor.

                  11.4.4. No Material Adverse Change. No material adverse change
in the financial condition of any Obligor or in the quality, quantity or value
of any Collateral shall have occurred since July 31, 2003

                  11.4.5. Solvency Certificate. Lender shall have received
certificates satisfactory to it from one or more knowledgeable Senior Officers
of each Borrower that, as of the Closing Date, such Borrower is Solvent.

                  11.4.6. Audited Financial Statements. Lender shall have
received from Borrowers audited financial statements of Borrowers for Borrowers'
Fiscal Year ending December 31, 2002, in form and substance reasonably
satisfactory to Lender in all material respects.

                  11.4.7. Payment of Fees. Borrowers shall have paid, or made
provision for the payment on the Closing Date of, all fees and expenses to be
paid hereunder to Lender on the Closing Date.

SECTION 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

         12.1. EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events or conditions shall constitute an "Event of Default":

                  12.1.1. Payment of Obligations. Borrowers shall fail to pay
any of the Obligations on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise).

                  12.1.2. Misrepresentations. Any representation, warranty or
other written statement to Lender by or on behalf of any Obligor, whether made
in or furnished in compliance with or in reference to any of the Loan Documents,
proves to have been false or misleading in any material respect when made or
furnished or when reaffirmed pursuant to SECTION 9.2 hereof.

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                  12.1.3. Breach of Specific Covenants. Any Obligor shall fail
or neglect to perform, keep or observe any covenant contained in SECTIONS 7.4,
7.6, 8.1.1,8.2.4, 8.2.5, 8.4.2, 8.5, 10.1.1, 10.1.3, 10.1.6, 10.1.8, 10.1.9,
10.1.10, 10.1.11, 10.2 OR 10.3 hereof on the date that such Borrower is required
to perform, keep or observe such covenant.

                  12.1.4. Breach of Other Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in SECTION
12.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 20 days after the sooner to occur of such Borrower's receipt
of notice of such breach from Lender or the date on which such failure or
neglect first becomes known to any Senior Officer of such Borrower; provided,
however, that such notice and opportunity to cure shall not apply in the case of
any failure to perform, keep or observe any covenant which is not capable of
being cured within such 20-day period or which results from a willful and
knowing breach by a Borrower.

                  12.1.5. Default Under Security Documents/Other Agreements. Any
Borrower or any other Obligor shall default in the due and punctual observance
or performance of any term, covenant, condition or agreement contained in any of
the Security Documents or any of the Other Agreements.

                  12.1.6. Other Defaults. There shall occur any default or event
of default on the part of any Borrower or any Subsidiary under any material
agreement, document or instrument to which a Borrower or any Subsidiary is a
party or by which a Borrower or any Subsidiary or any of their respective
Properties are bound, creating or relating to any Debt (other than the
Obligations) if the payment or maturity of such Debt may be, with the giving of
notice or lapse of time, accelerated in consequence of such event of default or
demand for payment of such Debt may be made.

                  12.1.7. Uninsured Losses. Any loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance if the amount not
covered by insurance exceeds $250,000.

                  12.1.8. Material Adverse Effect. There shall occur any event
or condition that has a Material Adverse Effect.

                  12.1.9. Solvency. Any Obligor shall cease to be Solvent.

                  12.1.10. Insolvency Proceeding. Any Insolvency Proceeding
shall be commenced by any Obligor, an Insolvency Proceeding is commenced against
any Obligor and any of the following events occur: such Obligor consents to the
institution of the Insolvency Proceeding against it, the petition commencing the
Insolvency Proceeding is not timely controverted by such Obligor, the petition
commencing the Insolvency Proceeding is not dismissed within 60 days after the
date of the filing thereof (provided that, in any event, during the pendency of
any such period, Lender shall be relieved from their obligation to make Loans or
otherwise extend credit to or for the benefit of Borrowers hereunder), an
interim trustee is

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appointed to take possession of all or a substantial portion of the Properties
of such Obligor or to operate all or any substantial portion of the business of
such Obligor, or an order for relief shall have been issued or entered in
connection with such Insolvency Proceeding; or any Obligor shall make an offer
of settlement, extension or composition to its unsecured creditors generally.

                  12.1.11. Business Disruption; Condemnation. There shall occur
a cessation of a substantial part of the business of any Obligor for a period
that may be reasonably expected to have a Material Adverse Effect; or any
Obligor shall suffer the loss or revocation of any license or permit now held or
hereafter acquired by such Obligor which is necessary to the continued or lawful
operation of its business; or any Obligor shall be enjoined, restrained or in
any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material lease or
agreement pursuant to which any Obligor leases or occupies any premises on which
any Collateral is located shall be canceled or terminated prior to the
expiration of its stated term and such cancellation or termination has a
Material Adverse Effect or results in an Out-of-Formula Condition; or any
material part of the Collateral shall be taken through condemnation or the value
of such Property shall be materially impaired through condemnation.

                  12.1.12. ERISA. A Reportable Event shall occur which Lender,
in its reasonable discretion, shall determine constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Obligor is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Obligor's complete or partial withdrawal from such Plan.

                  12.1.13. Intentionally Omitted.

                  12.1.14. Judgment. One or more judgments or orders for the
payment of money in an amount that exceeds $250,000, individually, or in the
aggregate, $500,000 shall be entered against any Obligor and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order, or (ii) there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect or (iii) results in the
creation or imposition of a Lien upon any of the Collateral that is not a
Permitted Lien.

                  12.1.15. Intentionally Omitted.

                  12.1.16. Intentionally Omitted.

                  12.1.17. Change of Control. A Change of Control shall have
occurred.

                  12.1.18. Change of Management. Michael Hoover shall cease to
be the Chief Executive Officer of ProxyMed, Inc. for any reason; or Nancy Ham
shall cease to be the Chief Operating Officer and President of ProxyMed, Inc.
for any reason, and, in each such case, such

                                       85


individual is not replaced as such officer by an individual satisfactory to
Lender within 150 days after the date on which such individual ceases to be such
officer.

         12.2. ACCELERATION OF OBLIGATIONS; TERMINATION OF COMMITMENTS. Without
in any way limiting the right of Lender to demand payment of any portion of the
Obligations payable on demand in accordance with this Agreement:

                  12.2.1. Upon or at any time after the occurrence of an Event
of Default (other than pursuant to SECTION 12.1.10 hereof) and for so long as
such Event of Default shall exist, Lender may in its discretion (a) declare the
principal of and any accrued interest on the Loans and all other Obligations
owing under any of the Loan Documents to be, whereupon the same shall become
without further notice or demand (all of which notice and demand each Borrower
expressly waives), forthwith due and payable and Borrowers shall forthwith pay
to Lender the entire principal of and accrued and unpaid interest on the Loans
and other Obligations plus reasonable attorneys' fees and expenses if such
principal and interest are collected by or through an attorney-at-law and (b)
terminate the Commitments.

                  12.2.2. Upon the occurrence of an Event of Default specified
in SECTION 12.1.10 hereof, all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Lender to or upon Borrower
and the Commitments shall automatically terminate as if terminated by Lender
pursuant to SECTION 6.2.1 hereof and with the effects specified in SECTION 6.2.4
hereof; provided, however, that, if Lender shall continue to make Loans or
otherwise extend credit to Borrowers pursuant to this Agreement after an
automatic termination of the Commitments by reason of the commencement of an
Insolvency Proceeding by or against any Borrower, such Loans and other credit
shall nevertheless be governed by this Agreement and enforceable against and
recoverable from each Obligor as if such Insolvency Proceeding had never been
instituted.

         12.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, and for so long as such Event of Default shall exist, Lender may in its
discretion exercise from time to time the following rights and remedies:

                  12.3.1. All of the rights and remedies of a secured party
under the UCC or under other Applicable Law, and all other legal and equitable
rights to which Lender may be entitled under any of the Loan Documents, all of
which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.

                  12.3.2. The right to collect all amounts at any time payable
to a Borrower from any Account Debtor or other Person at any time indebted to
such Borrower, including the right to settle or adjust all disputes and claims
directly with the Account Debtor and to compromise the amount or extend the time
for payment of any Accounts or other rights to payment comprising a part of the
Collateral upon such terms and conditions as Lender may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorneys' fees,
to Borrowers.

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                  12.3.3. The right to take immediate possession of all Goods or
other tangible items of the Collateral, and to (i) require Borrowers to assemble
any and all of such Collateral, at Borrowers' expense, and make it available to
Lender at a place designated by Lender which is reasonably convenient to both
parties, and (ii) enter any premises where any of the Collateral shall be
located and to keep and store the Collateral on said premises until sold (and if
said premises be the Property of a Borrower, then such Borrower agrees not to
charge Lender for storage thereof).

                  12.3.4. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Lender, in its sole discretion, may deem advisable. Borrowers agree that any
requirement of notice to Borrowers or any other Obligor of any proposed public
or private sale or other disposition of Collateral by Lender shall be deemed
reasonable notice thereof if given at least 10 days prior thereto, and such sale
may be at such locations as Lender may designate in said notice. Lender shall
have the right to conduct such sales on any Borrower's or any other Obligor's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with Applicable Law. Lender shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by Applicable Law, private sale and,
in lieu of actual payment of such purchase price, may set off the amount of such
price against the Obligations. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing 2 Business Days for
collection, first to any Extraordinary Expenses incurred by Lender, second to
interest accrued with respect to any of the Obligations, third, to the principal
of the Obligations, and fourth, if any excess remains, to the Borrower. If any
deficiency shall arise, Obligors shall remain jointly and severally liable to
Lender therefor.

                  12.3.5. The right to the appointment of a receiver, without
notice of any kind whatsoever, to take possession of all or any portion of the
Collateral and to exercise such rights and powers as the court appointing such
receiver shall confer upon such receiver.

                  12.3.6. Intentionally Omitted.

                  12.3.7. The right to require Borrowers to deposit with Lender
funds equal to 105% of the LC Outstandings and, if Borrowers fail promptly to
make such deposit, Lender may advance such amount as a Revolver Loan (whether or
not an Out-of-Formula Condition exists or is created thereby). Any such deposit
or advance shall be held by Lender as a reserve to fund future payments on any
Letter of Credit. At such time as all Letters of Credit have been drawn upon or
expired, any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if Full Payment of all Obligations has occurred,
returned to Borrowers.

Lender is hereby granted an irrevocable, non-exclusive license or other right to
use, license or sub-license (exercisable without payment of royalty or other
compensation to any Obligor or any other Person) each Borrower's Intellectual
Property and all of each Borrower's computer

                                       87


hardware and software, trade secrets, brochures, customer lists, promotional and
advertising materials, labels, and packaging materials, and any Property of a
similar nature, in advertising for sale, marketing, selling and collecting and
in completing the manufacturing of any Collateral, and each Borrower's rights
under all licenses and all franchise agreements shall inure to Lender's benefit,
provided that such license or other right to use, license or sublicense shall be
limited to be used for the purposes set forth in this SECTION 12.3 and for the
purpose of enabling the Lender to realize on the Collateral and to permit any
purchaser of any portion of the Collateral through a foreclosure sale or any
other exercise of the Lender's rights and remedies under the Loan Documents to
use, sell or otherwise dispose of the Collateral. Lender shall be liable to
Borrower for any misuse by Lender of Borrower's Intellectual Property.

         12.4. SETOFF. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Lender
(and each of its Affiliates) is hereby authorized by Borrowers at any time that
an Event of Default exists, without notice to Borrowers or any other Person (any
such notice being hereby expressly waived) to set off and to appropriate and to
apply any and all deposits, general or special (including Debt evidenced by
certificates of deposit whether matured or unmatured (but not including trust
accounts)) and any other Debt at any time held or owing by Lender or its
Affiliates to or for the credit or the account of any Borrower against and on
account of the Obligations of Borrowers arising under the Loan Documents to
Lender or any of its Affiliates, including all Loans and LC Outstandings all
claims of any nature or description arising out of or in connection with this
Agreement, irrespective of whether or not (i) Lender shall have made any demand
hereunder, (ii) Lender shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by this
Agreement and even though such Obligations may be contingent or unmatured or
(iii) the Collateral for the Obligations is adequate.

         12.5. REMEDIES CUMULATIVE; NO WAIVER.

                  12.5.1. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrowers contained in this
Agreement and the other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule or in any
guaranty agreement given to Lender or contained in any other agreement between
Lender and any or all Borrowers, heretofore, concurrently, or hereafter entered
into, shall be deemed cumulative to and not in derogation or substitution of any
of the terms, covenants, conditions, or agreements of Borrowers herein
contained. The rights and remedies of Lender under this Agreement and the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
that Lender would otherwise have.

                  12.5.2. The failure or delay of Lender to require strict
performance by Borrowers of any provision of any of the Loan Documents or to
exercise or enforce any rights, Liens, powers, or remedies under any of the Loan
Documents with respect to any Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrowers to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and

                                       88


representations of Borrowers contained in this Agreement or any of the other
Loan Documents and no Default or Event of Default by any Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrowers.

                  12.5.3. If at any time that a Default or an Event of Default
exists Lender shall accept performance by a Borrower, in whole or in part, of
any obligation that a Borrower is required by any of the Loan Documents to
perform, or if Lender shall exercise any right or remedy under any of the Loan
Documents that may not be exercised other than when a Default or Event of
Default exists, Lender's acceptance of such performance by a Borrower or
Lender's exercise of any such right or remedy shall not operate to waive any
such Event of Default or to preclude the exercise by Lender of any other right
or remedy, unless otherwise expressly agreed in writing by Lender, as the case
may be.

SECTION 13. MISCELLANEOUS

         13.1. POWER OF ATTORNEY. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
such Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's designee, may, without notice to such Borrower and in either any
Borrower's or Lender's name, but at the cost and expense of Borrowers:

                  13.1.1. At such time or times as Lender or said designee, in
its sole discretion, may determine, endorse such Borrower's name on any Payment
Item or proceeds of the Collateral which come into the possession of Lender or
under Lender's control.

                  13.1.2. At any time that an Event of Default exists: (i)
demand payment of the Accounts and other rights to payment from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of such Borrower's rights and remedies with respect to
the collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign such Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to such
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (vii) endorse the name of such
Borrower upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of Lender on account of the Obligations;
(viii) endorse the name of such Borrower upon any Chattel Paper, Document,
Instrument, invoice, freight bill, bill of lading or similar document or
agreement relating to any Accounts, Inventory or other Collateral; (ix) use such
Borrower's stationery and sign the name of such Borrower to verifications of the

                                       89


Accounts, Payment Intangibles and Chattel Paper and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; (xii) sign the name of a Borrower on any proof of claim
in bankruptcy against Account Debtors and on notices of Liens, claims of
mechanic's Liens or assignments or releases of mechanic's Liens securing any
Accounts; (xiii) take all action as may be necessary to obtain the payment of
any letter of credit or banker's acceptance of which a Borrower is a
beneficiary; and (xiv) do all other acts and things necessary, in Lender's
determination, to fulfill Borrowers' obligations under this Agreement.

         13.2. GENERAL INDEMNITY. Borrowers hereby agree to indemnify and defend
the Lender Indemnitees against and to hold the Lender Indemnitees harmless from
any Claim ever suffered or incurred by any of the Lender Indemnitees that arises
out of or relates to this Agreement or any of the other Loan Documents, any
transactions entered into pursuant to any of the Loan Documents, Lender's Lien
upon any of the Collateral, or the performance by Lender of its duties or the
exercise of any of its rights or remedies under this Agreement or any of the
other Loan Documents, or that results from Borrowers' failure to observe,
perform or discharge any of Borrowers' duties hereunder. Without limiting the
generality of the foregoing, this indemnity shall extend to any Claims asserted
against or incurred by any of the Lender Indemnitees by any Person under any
Environmental Laws or similar laws by reason of Borrowers' or any other Person's
(except a Lender Indemnitee or its agents) failure to comply with laws
applicable to solid or hazardous waste materials or other toxic substances.
Additionally, if any Taxes (excluding Taxes imposed upon or measured solely by
the net income of Lender, but including any intangibles tax, stamp tax,
recording tax or franchise tax) shall be payable by Lender or any Obligor on
account of the execution or delivery of this Agreement, or the execution,
delivery, issuance or recording of any of the other Loan Documents, or the
creation or repayment of any of the Obligations, by reason of any Applicable Law
now or hereafter in effect, Borrowers will pay (or will promptly reimburse
Lender for the payment of) all such Taxes, including any interest and penalties
thereon, and will indemnify and hold Lender Indemnitees harmless from and
against all liability in connection therewith. The foregoing indemnities shall
not apply to Claims incurred by any of the Lender Indemnitees as a direct and
proximate result of any Lender Indemnitee's own gross negligence or willful
misconduct.

         13.3. SURVIVAL OF ALL INDEMNITIES. Notwithstanding anything to the
contrary in this Agreement or any of the other Loan Documents, the obligation of
each Borrower with respect to each indemnity given by it in this Agreement, or
shall survive the Full Payment of the Obligations and termination of the
Commitments.

         13.4. MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender. No Borrower may sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, any of the Obligations,
including such Borrower's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement, or assign, transfer or otherwise dispose, at any time or times
hereafter, of the Obligations, this

                                       90


Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including Lender's rights, title, interests, remedies, powers, and
duties hereunder or thereunder. Lender shall provide Borrowers with 10 days
prior notice of any such sales of participations, assignments, transfers or
other dispositions. In the case of an assignment, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as it
would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignment. Each Borrower further agrees
that Lender may disclose (i) any publicly available information regarding such
Borrower and its Subsidiaries to any potential participant or assignee, and,
(ii) subject to the prior written consent of such Borrower, any other credit
information regarding such Borrower and its Subsidiaries, provided that, prior
to any such disclosure under subsection (ii), each such-assignee, proposed
assignee, participant or proposed participant shall agree with such Borrower or
Lender (which in the case of an agreement with only Lender, such Borrower shall
be recognized as a third party beneficiary thereof) to preserve the
confidentiality of any confidential information relating to such Borrower
received from Lender.

         13.5. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

         13.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the other
Loan Documents are hereby made cumulative with the provisions of this Agreement.
Without limiting the generality of the foregoing, the parties acknowledge that
this Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters and
that such limitations, tests and measures are cumulative and each must be
performed, except as may be expressly stated to the contrary in this Agreement.
Except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.

         13.7. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.

         13.8. LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a condition
to any action, inaction, condition or event, Lender shall be authorized to give
or withhold its consent in its sole and absolute discretion and to condition its
consent upon the giving of additional collateral security for the Obligations,
the payment of money or any other matter.

         13.9. NOTICE. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal

                                       91


delivery against receipt or by telecopier or other facsimile transmission and
shall be deemed to have been validly served, given or delivered when delivered
against receipt, 3 Business Days after mailing, or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt) at the office where
the noticed party's telecopier is located, in each case, addressed as follows:

          If to Lender:             Wachovia Bank, National Association
                                    191 Peachtree Street, N.E.
                                    30th Floor, Mail Code GA 8056
                                    Atlanta, Georgia 30303
                                    Attention: Asset Based Lending
                                    Facsimile No.: 404-332-6920

          With a courtesy copy to:  Hunton & Williams, LLP
                                    Bank of America Plaza, Suite 4100
                                    600 Peachtree Street, N.E.
                                    Atlanta, Georgia 30308
                                    Attention:  Bruce W. Moorhead, Jr., Esq.
                                    Facsimile No.: (404) 602-8668

          If to Borrowers:          ProxyMed, Inc.
                                    2555 Davie Road, Suite 110
                                    Ft. Lauderdale, FL 33317
                                    Attention:  Judson E. Schmid, Executive
                                                   Vice President and CFO
                                    Facsimile No.: (954) 473-0620

          With a courtesy copy to:  ProxyMed, Inc. - Legal Department
                                    2555 Davie Road, Suite 110
                                    Ft. Lauderdale, FL 33317
                                    Attention: Rafael G. Rodriguez, General
                                                Counsel
                                    Facsimile No.: (954) 473-0620

or to such other address as each party may designate for itself by notice given
in accordance with this Section; provided, however, that no notice, request or
demand to or upon Lender pursuant to SECTIONS 2.3, 3.1.2, 4.1. OR 6.2.2 hereof
shall be effective until received by Lender. Any written notice, request or
demand that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice, request or demand is
actually received by the Person to whose attention at the noticed party such
notice, request or demand is required to be sent.

         13.10. PERFORMANCE OF BORROWERS' OBLIGATIONS. If any Borrower shall
fail to discharge any covenant, duty or obligation hereunder or under any of the
other Loan Documents, Lender may, in its sole discretion at any time or from
time to time, for Borrowers' account and at

                                       92


Borrowers' expense, pay any amount or do any act required of Borrowers hereunder
or under any of the other Loan Documents or otherwise lawfully requested by
Lender to (i) enforce any of the Loan Documents or collect any of the
Obligations, (ii) preserve, protect, insure, maintain or realize upon any of the
Collateral, or (iii) preserve, defend, protect or maintain the validity or
priority of Lender's Liens in any of the Collateral, including the payment of
any judgment against any Borrower, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord claim, any other Lien upon or
with respect to any of the Collateral (whether or not a Permitted Lien). All
payments that Lender may make under this Section and all out-of-pocket costs and
expenses (including Extraordinary Expenses) that Lender pays or incurs in
connection with any action taken by it hereunder shall be reimbursed to Lender
by Borrowers ON DEMAND with interest from the date such payment is made or such
costs or expenses are incurred to the date of payment thereof at the Default
Rate applicable for Revolver Loans that are Base Rate Loans. Any payment made or
other action taken by Lender under this Section shall be without prejudice to
any right to assert, and without waiver of, an Event of Default hereunder and
without prejudice to Lender's right to proceed thereafter as provided herein or
in any of the other Loan Documents.

         13.11. CREDIT INQUIRIES. Each Borrower hereby authorizes and permits
Lender (but Lender shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning such Borrower or any of its
Subsidiaries by providing any information about such Borrower and its
Subsidiaries or Borrowers' performance hereunder.

         13.12. TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.

         13.13. INDULGENCES NOT WAIVERS. Lender's failure at any time or times
hereafter, to require strict performance by Borrowers of any provision of this
Agreement shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith.

         13.14. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Each of the Exhibits and Schedules attached hereto
is incorporated into this Agreement and by this reference made a part hereof.
This Agreement shall be binding upon the parties hereto and their respective
successors and assigns, provided that, as provided in SECTION 13.4 hereof, no
Borrower shall be authorized to assign any interest in any of the Loan
Documents.

         13.15. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.

                                       93


         13.16. ADVERTISING AND PUBLICITY. With the prior consent of Borrowers'
Agent (which shall not be unreasonably withheld or delayed), Lender may issue
and disseminate to the public (by advertisement or otherwise) information
describing the credit accommodations made available by Lender pursuant to this
Agreement, including the names and addresses of Borrowers, the amount and
security for the credit accommodations and the general nature of Borrowers'
business, provided that detail regarding terms (such as interest rate) may be
provided only to industry publications, such as the "LPC Gold Sheets."

         13.17. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA: PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
GEORGIA. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF A BORROWER OR
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF COBB
COUNTY, GEORGIA, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS AND LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

         13.18. WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH
LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY

                                       94


LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE; (iii) NOTICE PRIOR TO
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; (v) ANY CLAIM AGAINST LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY OF THE LOAN
DOCUMENTS, ANY TRANSACTION THEREUNDER OR THE USE OF THE PROCEEDS OF ANY LOANS;
AND (VI) NOTICE OF ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

         [Signature Pages Follow]

                                       95


         IN WITNESS WHEREOF, this Agreement has been duly executed under seal in
Atlanta, Georgia, on the day and year specified at the beginning of this
Agreement.

                                        BORROWERS:

                                        PROXYMED, INC.

                                        By:    /s/ Nancy J. Ham
                                               -----------------------------
                                        Name:  Nancy J. Ham
                                               -----------------------------
                                        Title: President and Chief Operating
                                                 Officer
                                               -----------------------------

                                        [CORPORATE SEAL]

                                        KEY COMMUNICATIONS SERVICES, INC.

                                        By:    /s/ Nancy J. Ham
                                               -----------------------------
                                        Name:  Nancy J. Ham
                                               -----------------------------
                                        Title: Chief Executive Officer
                                               -----------------------------

                                        [CORPORATE SEAL]

                                        MEDUNITE INC.

                                        By:    /s/ Nancy J. Ham
                                               -----------------------------
                                        Name:  Nancy J. Ham
                                               -----------------------------
                                        Title: President
                                               -----------------------------

                                        [CORPORATE SEAL]

                     [Signatures continue on following page]

                                       96


                                        Accepted in Atlanta, Georgia:

                                        WACHOVIA BANK, NATIONAL
                                        ASSOCIATION
                                        ("Lender")

                                        By:    /s/ Joe Lee
                                               -----------------------------
                                        Name:  Joe Lee
                                               -----------------------------
                                        Title: Associate
                                               -----------------------------

EX-10.35

                                                                   EXHIBIT 10.35

                                  REVOLVER NOTE


$12,500,000                                                     December 4, 2003


         FOR VALUE RECEIVED, the undersigned, PROXYMED, INC., a Florida
corporation, KEY COMMUNICATIONS SERVICE, INC., an Indiana corporation, and
MEDUNITE, INC., a Delaware corporation (each of the foregoing herein a
"Borrower" and collectively, the "BORROWERS"), HEREBY JOINTLY AND SEVERALLY
PROMISE TO PAY to the order of WACHOVIA BANK, NATIONAL ASSOCIATION a national
banking association ("LENDER") or its assigns, at its offices at 191 Peachtree
Street, N.E., 30th Floor, Atlanta, Georgia 30303, or at such other place as the
holder of this Revolver Note (this "REVOLVER NOTE") may designate from time to
time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of TWELVE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($12,500,000) or, if less, the aggregate unpaid principal amount of all
advances made pursuant to SECTION 2.1 of the "Loan Agreement" (as hereinafter
defined). All capitalized terms, unless otherwise defined herein, shall have the
respective meanings assigned to such terms in the Loan Agreement.

         This Revolver Note is issued pursuant to that certain Loan and Security
Agreement of even date herewith, among Borrowers and Lender (as amended,
restated, supplemented or otherwise modified from time to time, the "LOAN
AGREEMENT"), and is entitled to the benefit and security of the Loan Agreement
and all of the other Loan Documents referred to therein. Reference is hereby
made to the Loan Agreement for a statement of all of the terms and conditions
under which the loans evidenced hereby were and are to be made.

         Each Borrower jointly and severally promises to pay the principal
amount of the indebtedness evidenced hereby in the amount and on the dates
specified in the Loan Agreement. Each Borrower jointly and severally promises to
pay interest on the unpaid principal amount of this Revolver Note outstanding
from the date hereof until such principal amount is paid in full at such
interest rates and at such times as are specified in the Loan Agreement.

         If any payment on this Revolver Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.

         Upon and after the occurrence of an Event of Default, this Revolver
Note may, as provided in the Loan Agreement, and without any demand, notice
(other than that required under the Loan Agreement) or legal process of any
kind, be declared, and immediately shall become, due and payable.

         Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by each of the Borrowers.



                                       1


         No delay or failure on the part of Lender in the exercise of any right
or remedy hereunder, under the Loan Agreement or any other Loan Document or at
law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by Lender of any right or remedy hereunder, under the Loan Agreement or
any other Loan Document or at law or in equity shall preclude or estop another
or further exercise thereof or the exercise of any other right or remedy.

         Time is of the essence of this Revolver Note. In case this Revolver
Note is collected by law or through an attorney at law, or under advice
therefrom, each Borrower, jointly and severally, agrees to pay or reimburse on
demand all reasonable costs and expenses paid or incurred by or on behalf of
Lender in connection with such collection, including, without limitation,
reasonable fees and disbursements of counsel and the reasonably allocated costs
and expenses of internal legal services.

THIS REVOLVER NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT ATLANTA,
GEORGIA, AND SHALL BE INTERPRETED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
GEORGIA.


                                 **************

                            [SIGNATURE PAGE FOLLOWS]





                                       2

         IN WITNESS WHEREOF, this Revolver Note has been executed by an
authorized representative of each Borrower as of the date first written above.

                                   BORROWERS:

                                   PROXYMED, INC.



                                   By: /s/ Nancy J. Ham
                                       -----------------------------------------
                                   Name:   Nancy J. Ham
                                   Title:  President and Chief Operating Officer




                                   KEY COMMUNICATIONS SERVICES, INC.



                                   By: /s/ NANCY J. HAM
                                       -----------------------------------------
                                   Name:   Nancy J. Ham
                                   Title: Chief Executive Officer



                                   MEDUNITE, INC.



                                   By: /s/ Nancy J. Ham
                                       -----------------------------------------
                                   Name:   Nancy J. Ham
                                   Title:  President





                                       3

EX-10.36

                                                                   EXHIBIT 10.36

                                   PATENT AND
                          TRADEMARK SECURITY AGREEMENT

         THIS PATENT AND TRADEMARK SECURITY AGREEMENT, effective as of December
4, 2003, by and between PROXYMED, INC., a Florida corporation, ("PROXYMED"), KEY
COMMUNICATIONS SERVICE, INC., an Indiana corporation ("KEY COMMUNICATIONS"), and
MEDUNITE, INC., a Delaware corporation ("MEDUNITE"; and together with Proxymed
and Key Communications, collectively, the "GRANTORS" and each individually, a
"GRANTOR"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association ("LENDER").

                              W I T N E S S E T H:

         WHEREAS, pursuant to that certain Loan and Security Agreement, dated as
of December 4, 2003 by and among Grantors, as the Borrowers and Lender
(including all annexes, exhibits or schedules thereto, and as from time to time
amended, restated, supplemented or otherwise modified, the "LOAN AGREEMENT"),
Lender has agreed to make certain loans and other financial accommodations for
the benefit of Grantors;

         WHEREAS, pursuant to the Loan Agreement, Grantors are required to
execute and deliver to Lender, this Patent and Trademark Security Agreement;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

         1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Loan Agreement.

         2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
grants to Lender a continuing first priority security interest in all of such
Grantor's right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the "PATENT
COLLATERAL"):

         (a)      all of its patents, patent applications and patent licenses
                  (and income and royalties with respect thereto) to which it is
                  a party including those referred to on SCHEDULE 1 hereto;

         (b)      all reissues, divisions, continuations, continuations-in-part,
                  renewals or extensions of the foregoing; and

         (c)      all products and proceeds of the foregoing, including, without
                  limitation, any claim by such Grantor against third parties
                  for past, present or future infringement or dilution of any
                  patent or any patent licensed under any patent license.



                                       1


         3. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor
hereby grants to Lender, a continuing first priority security interest in all of
such Grantor's right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the
"TRADEMARK COLLATERAL"):

         (a)      all trademarks, service marks and trade names (collectively,
                  the "TRADEMARKS") whether registered or unregistered and
                  wherever registered (and any applications therefor) and
                  trademark licenses (the "TRADEMARK LICENSES") to which it is a
                  party including those referred to on SCHEDULE 2 hereto;

         (b)      all reissues, renewals, continuations or extensions of the
                  foregoing;

         (c)      all goodwill of the business connected with the use of, and
                  symbolized by, each Trademark and each Trademark License; and

         (d)      all products and proceeds of the foregoing, including, without
                  limitation, any claim by such Grantor against third parties
                  for past, present or future (i) infringement or dilution of
                  any Trademark or Trademark licensed under any Trademark
                  License or (ii) injury to the goodwill associated with any
                  Trademark or any Trademark licensed under any Trademark
                  license.

         4. RIGHTS AND REMEDIES.

         (a)      The security interests granted pursuant to this Patent and
                  Trademark Security Agreement are granted in conjunction with
                  the security interests granted to Lender, pursuant to the Loan
                  Agreement. Each Grantor hereby acknowledges and affirms that
                  the rights and remedies of Lender with respect to the security
                  interest in the Patent Collateral and Trademark Collateral
                  made and granted hereby are more fully set forth in the Loan
                  Agreement, the terms and provisions of which are incorporated
                  by reference herein as if fully set forth herein.

         (b)      Notwithstanding anything to the contrary herein or in any of
                  the other Loan Documents, if any Default or Event of Default
                  under the Loan Agreement or any other Loan Document shall have
                  occurred, or if any Grantor fails to perform any agreement or
                  to meet any of the obligations to the Lender hereunder, in
                  addition to any and all other rights and remedies that Lender
                  may have in the Loan Agreement, in any other Loan Document or
                  at law, all of the right, title and interest of Grantors in
                  and to the Patent Collateral and the Trademark Collateral
                  shall be automatically granted, assigned, conveyed and
                  delivered to the Lender or its designee, and Grantors hereby
                  irrevocably constitute and appoint Lender and any officer,
                  agent or employee thereof, with full power of substitution, as
                  their true and lawful attorney-in-fact, with full irrevocable
                  power and authority in the place and stead of Grantors and in
                  the name of Grantors or in Lender's own name or the name of
                  Lender's designee, all acts of said



                                       2


                  attorney being hereby ratified and confirmed, except to the
                  extent any of the same constitute gross negligence or willful
                  misconduct, such power being coupled with an interest is
                  irrevocable, upon the occurrence of a Default or an Event of
                  Default: (i) to complete, date, execute and file or cause to
                  be filed the Assignment attached hereto as EXHIBIT A and
                  incorporated hereby by reference (the "ASSIGNMENT") in the
                  United States Patent and Trademark Office and in all other
                  applicable offices, and to execute and deliver any and all
                  documents and instruments which may be necessary or desirable
                  to accomplish the purpose of the Assignment; (ii) to collect
                  proceeds from the Patent Collateral and the Trademark
                  Collateral (including, by way of example, license royalties
                  and proceeds of infringement suits); (iii) to convey in any
                  transaction authorized by the Loan Agreement, any goods
                  covered by the registrations listed on SCHEDULE 1 and SCHEDULE
                  2 to any purchaser thereof; (iv) to make payment or discharge
                  taxes or liens levied or placed upon or threatened against any
                  goods covered by the registrations listed on SCHEDULE 1 and
                  SCHEDULE 2, the legality or validity thereof and the amounts
                  necessary to discharge the same to be determined by Lender, in
                  its sole discretion, and such payments made by Lender to
                  become the obligations of Grantors to Lender, due and payable
                  immediately, without demand.

                            [SIGNATURE PAGES FOLLOW]




                                       3


         IN WITNESS WHEREOF, Each Grantor has caused this Patent and Trademark
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.


                                   GRANTORS

                                   PROXYMED, INC.


                                   By: /s/ Nancy J. Ham
                                       -----------------------------------------
                                   Name: Nancy J. Ham
                                   Title: President and Chief Operating Officer

                                   KEY COMMUNICATIONS SERVICE, INC.


                                   By: /s/ Nancy J. Ham
                                       -----------------------------------------
                                   Name: Nancy J. Ham
                                   Name: NANCY J. HAM
                                   Title: Chief Executive Officer

                                   MEDUNITE, INC.


                                   By: /s/ Nancy J. Ham
                                       -----------------------------------------
                                   Name: Nancy J. Ham
                                   Title: President



ACCEPTED AND ACKNOWLEDGED BY:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender


By: /s/ Joe Lee
    ---------------------------------
Name: Joe Lee
Title: Associate





                                       4

EX-21

                                                                      EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT



REGISTRANT: Name:                    ProxyMed, Inc.
            State of Incorporation:  Florida

            Name:                    Key Communications Service, Inc.
            State of Incorporation:  Indiana

            Name:                    MedUnite, Inc.
            State of Incorporation:  Delaware

            Name:                    PlanVista Corporation
            State of Incorporation:  Delaware

            Name:                    WPJ, Inc. d/b/a Integrated Medical Systems
            State of Incorporation:  California

EX-23

                                                                      EXHIBIT 23


               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-58311, 333-34645, 333-77793, 333-88671,
333-95883, 333-36982, 333-51856, 333-60500 and 333-81128), and in the
Registration Statements on Form S-8 (Nos. 333-113436, 333-04717, 333-34711,
333-50391, 333-92905 and 333-89764), of ProxyMed, Inc. of our report dated March
25, 2004 relating to the financial statements and financial statement schedule,
which appears in this Annual Report on Form 10-K.



/s/ PricewaterhouseCoopers LLP

Fort Lauderdale, Florida
March 30, 2004

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Michael K. Hoover, Chief Executive Officer of ProxyMed, Inc., certify that:

     1. I have reviewed this annual report on Form 10-K of ProxyMed, Inc;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

          a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2004

/s/ MICHAEL K. HOOVER

Michael K. Hoover
Chairman of the Board and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Gregory J. Eisenhauer, Chief Financial Officer of ProxyMed, Inc., certify that:

     1. I have reviewed this annual report on Form 10-K of ProxyMed, Inc;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

          a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2004

/s/ GREGORY J. EISENHAUER, CFA

Gregory J. Eisenhauer, CFA
Executive Vice President, and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of ProxyMed, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael K. Hoover, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ MICHAEL K. HOOVER

Michael K. Hoover
Chairman of the Board and Chief Executive Officer
March 30, 2004

A signed original of this written statement required by Section 906 has been provided to ProxyMed, Inc. and will be retained by ProxyMed, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of ProxyMed, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory J. Eisenhauer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ GREGORY J. EISENHAUER, CFA

Gregory J. Eisenhauer, CFA
Executive Vice President and Chief Financial Officer
March 30, 2004

A signed original of this written statement required by Section 906 has been provided to ProxyMed, Inc. and will be retained by ProxyMed, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----