-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lcu16NTvL+y+0sFWXsF9ImuUAw4niB9LpehezQi1RS5T7o1Ok9lGmKHKNoQlSv/6 eGvAQL6i6W8jC3vbVoU7Yw== 0000950170-00-000701.txt : 20000509 0000950170-00-000701.hdr.sgml : 20000509 ACCESSION NUMBER: 0000950170-00-000701 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000504 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROXYMED INC /FT LAUDERDALE/ CENTRAL INDEX KEY: 0000906337 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 650202059 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22052 FILM NUMBER: 622277 BUSINESS ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FORT LAUDERDALE STATE: FL ZIP: 33317-7424 BUSINESS PHONE: 9544731001 FORMER COMPANY: FORMER CONFORMED NAME: HMO PHARMACY INC DATE OF NAME CHANGE: 19930601 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 4, 2000 PROXYMED, INC (Exact name of registrant as specified in its charter) FLORIDA 000-22052 65-0202059 ------- --------- ---------- (State or other (Commission File No.) (IRS Employer jurisdiction of Identification No.) incorporation) 2555 DAVIE ROAD SUITE 110 FT. LAUDERDALE, FLORIDA 33317 (Address of principal executive offices) 954-473-1001 (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS. Effective May 4, 2000, ProxyMed, Inc. (the "Company") entered into a Redemption and Exchange Agreement (the "Redemption Agreement") with holders of $13,000,000 of its $15,000,000 Series B Convertible Preferred Stock (the "Preferred Stock"). Under the terms of the Redemption Agreement, the Company is required to immediately redeem $4,000,000 of the Preferred Stock, and is required to redeem an additional $2,500,000 of the Preferred Stock on each of June 19, 2000, August 1, 2000, and August 31, 2000, and an additional $1,500,000 of the Preferred Stock on September 29, 2000. The Redemption Agreement provides that the redemption of the Preferred Stock will be made at 116.5% of the Conversion Amount (as defined in the Articles of Incorporation of the Company, as amended) of such Preferred Stock on the date of such redemption. The Redemption Agreement also provides that certain warrants issued to the holders of the Preferred Stock subject to the Redemption Agreement are being exchanged for new warrants (the "Exchanged Warrants") with an exercise price of $1.50 per share. In addition, such holders are receiving, in the aggregate, 650,000 additional warrants (the "New Warrants") at an exercise price of $1.50 per share. Under the terms of the Redemption Agreement, the Company has agreed to pay the holders of Preferred Stock subject to such agreement the aggregate amount of $4,333,333 if there is a change of control of the Company on or before December 23, 2002. The redemptions of the Preferred Stock in accordance with the Redemption Agreement are subject to certain closing conditions on each date of redemption. So long as the Company remains in compliance with the terms of the Redemption Agreement, such holders are prohibited from converting their shares of Preferred Stock into shares of the Company's common stock, par value $0.001 per share (the "Common Stock"). Among other things, the Redemption Agreement requires that the Company secure shareholder approval of the issuance of the Preferred Stock and the transactions related thereto, on or before the earlier of i) July 17, 2000 and ii) the date which is 40 days after the Company learns that no review of its Proxy Statement for the shareholder meeting will be made by the staff of the Securities and Exchange Commission (the "SEC") or that the staff of the SEC has no further comments on the Proxy Statement. The Company has not entered into an agreement to redeem the shares of Preferred Stock held by the holder of $2,000,000 of the Preferred Stock. As of May 8, 2000, this holder had given the Company notice of its intention to convert 1,690 shares of the Preferred Stock into an aggregate of 1,401,516 shares of the Company's Common Stock. Following such conversions, such holder will continue to hold 310 shares of Preferred Stock. In order for the Company to comply with the terms of the Redemption Agreement and continue to fund its operating requirements, the Company will be required to raise significant amounts of additional capital. The Redemption Agreement provides that the Company must raise at least $4,000,000 of additional funds by June 17, 2000, an aggregate of $9,000,000 of additional funds by July 31, 2000, and an aggregate of $13,000,000 of additional funds by August 30, 2000. The Company, however, may need or elect to raise additional funds in excess of such amounts prior to or after such dates. The Company's capital requirements will depend on many factors, including the Company's ability to meet the conditions under the Redemption Agreement, the problems, delays, expenses and complications frequently encountered by other eHealth companies; the costs associated with developing improved products and services in response to technological changes; the costs associated with any marketing or other arrangements; changes in economic, regulatory, or competitive conditions on the Company's business; and the cost of retaining management personnel. To satisfy its capital requirements, the Company may seek to raise funds in the public or private capital markets. The Company's ability to raise additional funds may be adversely affected if, among other things, the Company is unable to meet the terms and conditions set 2 forth in the Redemption Agreement or if the Company does not continue to improve its operating performance and achieve increased market acceptance of its products and services. There can be no assurance that any additional funding will be available to the Company, or if available, that it will be available on acceptable terms. If adequate funds are not available, the Company will not be able to meet the conditions set forth in the Redemption Agreement and the holders of the Preferred Stock would be entitled to exercise their conversion and other rights under the terms of the designations for the Preferred Stock and the Redemption Agreement. If the Company is 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 Common Stock. The foregoing summary of certain aspects of the Redemption Agreement, the Exchanged Warrants and the New Warrants is not intended to be complete and is qualified by such documents, which are attached as exhibits to this Report on Form 8-K, and by the documentation entered into in connection with the original issuance of the Preferred Stock on December 23, 1999, which are attached as exhibits to the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 28, 1999. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits EXHIBIT NO. DESCRIPTION 4.1 Form of Exchanged Warrant to Purchase Common Stock of ProxyMed, Inc., dated May 4, 2000, issued to certain holders of the ProxyMed Series B Convertible Preferred Stock. 4.2 Form of New Warrant to Purchase Common Stock of ProxyMed, Inc., dated May 4, 2000, issued to certain holders of the ProxyMed Series B Convertible Preferred Stock. 4.3 Registration Rights Agreement dated as of May 4, 2000 between ProxyMed, Inc. and certain holders of the ProxyMed Series B Convertible Preferred Stock. 10.27 Redemption and Exchange Agreement dated as of May 4, 2000 between ProxyMed, Inc. and certain holders of ProxyMed's Series B Convertible Preferred Stock. 99.1 Press Release issued on May 2, 2000. 99.2 Press Release issued on May 5, 2000. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PROXYMED, INC. By: /s/ Bennett Marks ---------------------------------------- Name: Bennett Marks Title: Executive Vice President - Finance, Chief Financial Officer Dated: May 8, 2000 4 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- ----------- 4.1 Form of Exchanged Warrant to Purchase Common Stock of ProxyMed, Inc., dated May 4, 2000, issued to certain holders of the ProxyMed Series B Convertible Preferred Stock. 4.2 Form of New Warrant to Purchase Common Stock of ProxyMed, Inc., dated May 4, 2000, issued to certain holders of the ProxyMed Series B Convertible Preferred Stock. 4.3 Registration Rights Agreement dated as of May 4, 2000 between ProxyMed, Inc. and certain holders of the ProxyMed Series B Convertible Preferred Stock. 10.27 Redemption and Exchange Agreement dated as of May 4, 2000 between ProxyMed, Inc. and certain holders of ProxyMed's Series B Convertible Preferred Stock. 99.1 Press Release issued on May 2, 2000. 99.2 Press Release issued on May 5, 2000. EX-4.1 2 EXHIBIT 4.1 EXHIBIT A FORM OF EXCHANGED WARRANT THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT. PROXYMED, INC. WARRANT TO PURCHASE COMMON STOCK Warrant No.: Number of Shares: ______ Date of Issuance: May __, 2000 ProxyMed, Inc., a Florida corporation (the "COMPANY"), hereby certifies that, for Ten United States Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ____________________, the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) a number of fully paid nonassessable shares of Common Stock (as defined herein) of the Company equal to the Warrant Shares (as defined below) at the purchase price per share provided in Section 1(b) below; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-Q, Form 10-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than one (1) Business Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of Preferred Shares and exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. Section 1. (a) REDEMPTION AND EXCHANGE AGREEMENT. This Warrant is one of the Warrants (the "REDEMPTION WARRANTS") issued pursuant to Section 1 of that certain Redemption and Exchange Agreement dated as of May 4, 2000, among the Company and the Investors referred to therein (the "REDEMPTION AND EXCHANGE AGREEMENT"). (b) DEFINITIONS. The following words and terms as used in this Warrant shall have the following meanings: (i) "APPROVED STOCK PLAN" shall mean any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant for services provided to the Company. (ii) "ARTICLES OF AMENDMENT" means the Company's Articles of Amendment to its Articles of Incorporation for the Company's Series B Convertible Preferred Stock. (iii) "BUSINESS DAY" means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed. (iv) "CLOSING SALE PRICE" means, for any security as of any date, the last closing trade price for such security on the Principal Market (as defined below) as reported by Bloomberg Financial Markets ("BLOOMBERG"), or if the Principal Market begins to operate on an extended hours basis, and does not designate the closing trade price, then the last trade price at 4:00 p.m. Eastern Time as reported by Bloomberg, or, if the foregoing do not apply, the last closing trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the last closing ask price of such security as reported by Bloomberg, or, if no last closing ask price is reported for such security by Bloomberg, the average of the lowest ask price and lowest bid price of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the holder of this Warrant. If the Company and the holder of this Warrant are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) below with the term "Closing Sale Price" being substituted for the term "Market Price." All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period. (v) "COMMON STOCK" means (i) the Company's common stock, par value $0.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock. (vi) "CONVERTIBLE SECURITIES" means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock. (vii) "EXPIRATION DATE" means December 23, 2002 (viii) "ISSUANCE DATE" means, with respect to each Warrant, the date of issuance of the applicable Warrant. (ix) "MARKET PRICE" means, with respect to any security for any date of determination, that price which shall be computed as the arithmetic average of the Closing Sale Prices for such security on each of the 10 consecutive trading days immediately preceding such date of determination (all such determinations to be appropriately adjusted for any stock dividend, stock split or similar transaction during the pricing period). (x) "OLD EXERCISE PRICE" means, $6.2194, subject to adjustment as provided in Section 8(g) and Section 8(h) and subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions. (xi) "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. (xii) "OTHER SECURITIES" means (i) those options and warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) the shares of Common Stock issued upon exercise of such options and warrants, provided such options and warrants are not amended in any material way after the issuance date of this Warrant, (iii) the shares of Common Stock issued upon conversion of the Preferred Shares or the Redemption Warrants, and (iv) options to purchase shares of Common Stock, provided (a) such options are issued after the date of this Warrant to employees or consultants of the Company within 30 days of such employee or consultant starting their employment or consultation with the Company, (b) such options are approved by the board of directors of the Company or an appropriately designated committee thereof and (c) the exercise price of such options is not less than the market price of the Common Stock on the date of issuance of such options. (xiii) "PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (xiv) "PREFERRED SHARES" means the shares of the Company's Series B Convertible Preferred Shares issued pursuant to the securities purchase agreement, dated December 23, 1999, among the Company and the buyers named therein. (xv) "PRINCIPAL MARKET" means the Nasdaq National Market or if the Common Stock is not traded on the Nasdaq National Market, then the principal securities exchange or trading market for the Common Stock. (xvi) "REGISTRATION RIGHTS AGREEMENT" means that Agreement dated May 4, 2000 by and among the Company and the Investors referred to therein. (xvii) "SECURITIES ACT" means the Securities Act of 1933, as amended. (xviii) "WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement hereof. (xix) "WARRANT EXERCISE PRICE" shall be equal to, with respect to any Warrant Share, $1.50, subject to adjustment as hereinafter provided. (xx) "WARRANT SHARES" shall mean a number of fully paid and nonassessable shares of Common Stock equal to _______ [INSERT - NUMBER OF SHARES PER SECTION 1(A) OF THE REDEMPTION AND EXCHANGE AGREEMENT], subject to adjustment as provided herein. (xxi) "WEIGHTED AVERAGE PRICE" means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (as reported by Bloomberg through its "VOLUME AT PRICE" function), or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no dollar volume- weighted average price is reported for such security by Bloomberg, the average of the bid prices of each of the market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of the Redemption Warrants. If the Company and the holders of the Redemption Warrants are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) below. All such determinations shall be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period. (c) OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time. (ii) When used in this Warrant, the words "HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified. (iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa. Section 2. EXERCISE OF WARRANT. (a) Subject to the terms and conditions hereof and the restrictions on exercises set forth in Section 4(j) of the Redemption and Exchange Agreement, this Warrant may be exercised by the holder hereof then registered on the books of the Company, in whole or in part, at any time on any Business Day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by (i) delivery of a written notice, in the form of the subscription notice attached as EXHIBIT A hereto (the "EXERCISE NOTICE"), of such holder's election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) (A) payment to the Company of an amount equal to the applicable Warrant Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 2(f)) and (iii) the surrender to a common carrier for overnight delivery to the Company, as soon as practicable following such date, of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction). In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), the Company shall on the second Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price (or notice of a Cashless Exercise) and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) (the "EXERCISE DELIVERY DOCUMENTS"), credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder's or its designee's balance account with The Depository Trust Company; provided, however, if the holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, then the Company shall, on or before the second Business Day following receipt of the Exercise Delivery Documents issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or notification to the Company of a Cashless Exercise referred to in Section 2(f), the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of this Warrant as required by clause (iii) above or the certificates evidencing such Warrant Shares. In the case of a dispute as to the determination of the Warrant Exercise Price or the Market Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of shares of Common Stock that is not disputed and shall transmit an explanation of the disputed determinations or arithmetic calculations to the holder via facsimile within one Business Day of receipt of the holder's subscription notice. If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or the Market Price or arithmetic calculation of the Warrant Shares within two (2) Business Days of such disputed determination or arithmetic calculation being transmitted to the holder, then the Company shall within one (1) Business Day transmit via facsimile (i) the disputed determination of the Warrant Exercise Price or the Market Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error. (b) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which such Warrant is exercised. (c) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number. (d) If the Company shall fail for any reason or for no reason to issue to the holder within five (5) Business Days of receipt of the Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the holder is entitled or to credit the holder's balance account with The Depository Trust Company for such number of shares of Common Stock to which the holder is entitled upon the holder's exercise of this Warrant, the Company shall, in addition to any other remedies under this Warrant or the Redemption and Exchange Agreement or otherwise available to such holder, including any indemnification under Section 8 of the Redemption and Exchange Agreement, pay as additional damages in cash to such holder on each day the issuance of such Common Stock certificate is not timely effected an amount equal to 0.5% of the product of (A) the sum of the number of shares of Common Stock not issued to the holder on a timely basis and to which the holder is entitled, and (B) the average of the Closing Sale Price of the Common Stock for the three consecutive trading days immediately preceding the last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2. (e) If within seven (7) Business Days after the Company's receipt of the Exercise Delivery Documents, the Company fails to deliver a new Warrant to the holder for the number of shares of Common Stock to which such holder is entitled pursuant to Section 2(b) hereof, then, in addition to any other available remedies under this Warrant or the Redemption and Exchange Agreement including indemnification pursuant to Section 8 thereof or otherwise available to such holder, the Company shall pay as additional damages in cash to such holder on each day after such seventh (7th) Business Day that such delivery of such new Warrant is not timely effected an amount equal to 0.5% of the product of (A) the number of shares of Common Stock represented by the portion of this Warrant which is not being exercised and (B) the average of the Closing Sale Prices of the Common Stock for the three consecutive trading days immediately preceding the last possible date which the Company could have issued such Warrant to the holder without violating this Section 2. (f) If, despite the Company's obligations under the Redemption and Exchange Agreement and the Registration Rights Agreement, the Warrant Shares to be issued are not registered and available for resale pursuant to a registration statement (including during an Allowable Grace Period (as defined in the Registration Rights Agreement)) in accordance with the Registration Rights Agreement, then notwithstanding anything contained herein to the contrary, the holder of this Warrant may, at its election exercised in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the "Net Number" of shares of Common Stock determined according to the following formula (a "CASHLESS EXERCISE"): Net Number = (A X B) - (A X C) ----------------- B For purposes of the foregoing formula: A= the total number of shares with respect to which this Warrant is then being exercised. B= the Closing Sale Price of the Common Stock on the date immediately preceding the date of the subscription notice. C= the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. Section 3. COVENANTS AS TO COMMON STOCK. The Company hereby covenants and agrees as follows: (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price. (d) The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. No impairment of the designations, preferences and rights of the Preferred Shares contained in the Company's Articles of Amendment or any waiver thereof which has an adverse effect on the rights granted hereunder shall be given effect until the Company has taken appropriate action (satisfactory to the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock issuable upon the exercise of such Redemption Warrants then outstanding) to avoid such adverse effect with respect to this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant. Section 4. TAXES. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. Section 6. REPRESENTATIONS OF HOLDER. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, other than pursuant to a Cashless Exercise, the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder's exercise of this Warrant, other than pursuant to a Cashless Exercise, that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws. The Company shall not be penalized or disadvantaged by a holder's inability to exercise this Warrant due to such holder's inability to make the required representations in connection with the exercise of this Warrant, other than pursuant to a Cashless Exercise. Section 7. OWNERSHIP AND TRANSFER. (a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant. (b) This Warrant and the rights granted hereunder shall be assignable by the holder hereof without the consent of the Company. (c) The Company is obligated to register the Warrant Shares for resale under the Securities Act pursuant to the Registration Rights Agreement and the initial holder of this Warrant (and certain assignees thereof) is entitled to the registration rights in respect of the Warrant Shares as set forth in the Registration Rights Agreement. Section 8. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES. The Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows: (a) ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE OF COMMON STOCK. If and whenever on or after the date which is 183 days after the Issuance Date of this Warrant, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than shares of Common Stock which are issued or deemed to have been issued by the Company in connection with an Approved Stock Plan or upon the issuance, exercise or conversion of the Other Securities) for a consideration per share less than a price (the "APPLICABLE PRICE") equal to the Warrant Exercise Price in effect immediately prior to such issuance or sale, then immediately after such issue or sale the Warrant Exercise Price then in effect shall be reduced to an amount equal to such consideration per share. Upon each such adjustment of the Warrant Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment. (b) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable: (i) ISSUANCE OF OPTIONS. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the "lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. (ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 8(b)(ii), the "lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion or exchange of such Convertible Security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or is to be made pursuant to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue or sale. (iii) CHANGE IN OPTION PRICE OR RATE OF CONVERSION. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of shares of Common Stock acquirable hereunder shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment pursuant to this Section 8(b) shall be made if such adjustment would result in an increase of the Warrant Exercise Price then in effect. (c) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b), the following shall be applicable: (i) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Market Price of such securities on the date of receipt of such securities. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "VALUATION EVENT"), the fair value of such consideration will be determined within five Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding. The determination of such appraiser shall be final and binding upon all parties and the fees and expenses of such appraiser shall be borne jointly by the Company and the holders of Redemption Warrants. (ii) INTEGRATED TRANSACTIONS. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed within three (3) Business Days of receiving a request that the Company's Board of Directors allocate the consideration received in such integrated transaction to have been issued for a consideration of $0.01 unless, within such three (3) Business Day period, the Company's Board of Directors has provided written notice to each holder of the Redemption Warrants that the Company has allocated such consideration. (iii) TREASURY SHARES. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock unless such shares are cancelled. (iv) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (d) ADJUSTMENT OF WARRANT EXERCISE PRICE UPON SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(d) shall become effective at the close of business on the date the subdivision or combination becomes effective. (e) DISTRIBUTION OF ASSETS. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a "DISTRIBUTION"), at any time after the issuance of this Warrant, then, in each such case: (i) any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company's Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and (ii) either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i). (f) CERTAIN EVENTS. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Redemption Warrants; provided that no such adjustment pursuant to this Section 8(f) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8. (g) ONE YEAR ADJUSTMENT OF OLD EXERCISE PRICE AND WARRANT EXERCISE PRICE. If on the first day after the thirtieth trading day after December 23, 2000 (the "ONE YEAR ADJUSTMENT DATE") the arithmetic average of the Weighted Average Prices of the Common Stock on the 30 consecutive trading days immediately preceding such date (appropriately adjusted for any stock dividend, stock split or similar transaction during the pricing period) (the "ONE YEAR ADJUSTED PRICE") is less than the Old Exercise Price in effect on the date immediately preceding the One Year Adjustment Date, then from and after the One Year Adjustment Date the Old Exercise Price shall be equal to the One Year Adjusted Price of the Common Stock on the One Year Adjustment Date, subject to further adjustment as provided in this Warrant. Upon such adjustment of the Old Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Old Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Old Exercise Price resulting from such adjustment. If on the One Year Adjustment Date, the One Year Adjustment Price is less than the Warrant Exercise Price in effect immediately preceding the One Year Adjustment Date, then from and after the One Year Adjustment Date the Warrant Exercise Price shall be equal to the One Year Adjustment Price of the Common Stock on the One Year Adjustment Date, subject to further adjustment as provided in this Warrant. (h) ADJUSTMENT TO WARRANT SHARES. If and whenever on or after the date which is 183 days after the Issuance Date of this Warrant, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than shares of Common Stock which are issued or deemed to have been issued by the Company in connection with an Approved Stock Plan or upon the issuance, exercise or conversion of the Other Securities) for a consideration per share less than a price equal to the Old Exercise Price in effect immediately prior to such issuance or sale, then immediately after such issue or sale the Old Exercise Price then in effect shall be reduced to an amount equal to such consideration per share. Upon each such adjustment of the Old Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Old Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Old Exercise Price resulting from such adjustment; provided that the maximum number of shares by which the number of Warrant Shares shall be increased solely by this Section 8(h) shall be equal to the product of (i) the number of Warrant Shares as of the Issuance Date of this Warrant (subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions), multiplied by (ii) the quotient of (A) the Old Exercise Price in effect on the Issuance Date of this Warrant (subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions), divided by (B) the Warrant Exercise Price in effect on the Issuance Date of this Warrant (subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions). For purposes of determining the adjusted Old Exercise Price and the adjustment to the number of Warrant Shares pursuant to this Section 8(h) the principles and provisions of Sections 8(b) and 8(c) with respect to the Warrant Exercise Price adjustments shall be similarly applied to the Old Exercise Price adjustments under this Section 8(h). (i) NOTICES. (i) Immediately upon any adjustment of a Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment. (ii) The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. (iii) The Company will also give written notice to the holder of this Warrant at least ten (10) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. Section 9. PURCHASE RIGHTS; REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. (a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. (b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to the consummation of any (i) sale of all or substantially all of the Company's assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the "ACQUIRING ENTITY") a written agreement (in form and substance reasonably satisfactory to the holders of Redemption Warrants representing at least two- thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding) to deliver to each holder of Redemption Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and reasonably satisfactory to the holders of two- thirds (2/3) of the Redemption Warrants then outstanding (including, an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Redemption Warrants (without regard to any limitations or exercise), if the value so reflected is less than any Warrant Exercise Price in effect immediately prior to such consolidation, merger or sale). Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding) to insure that each of the holders of the Redemption Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such holder's Redemption Warrants (without regard to any limitations or exercise), such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the exercise of such holder's Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exerciseability of this Warrant). Section 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Section 11. NOTICE. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, Florida 33317 Telephone: (954) 473-1001 Facsimile: (954) 473-0620 Attention: Chief Executive Officer and Chief Legal Officer With a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, Florida 33131 Telephone: 305-374-8500 Facsimile: 305-789-7799 Attention: Steven Sonberg, Esq. If to a holder of this Warrant, to it at the address and facsimile number set forth on the Schedule of Investors to the Redemption and Exchange Agreement, with copies to such holder's representatives as set forth on such Schedule of Investors, or at such other address and facsimile as shall be delivered to the Company upon the issuance or transfer of this Warrant. Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Section 12. DATE. The date of this Warrant is May __, 2000. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 7(c) shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant. Section 13. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of the Redemption Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding; provided that no such action may increase the Warrant Exercise Price of the Redemption Warrants or decrease the number of shares or class of stock obtainable upon exercise of any Redemption Warrants without the written consent of the holder of such Redemption Warrant. Section 14. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of Florida shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York, or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by ___________________, its ____________________________, as of the ___ day of May, 2000. PROXYMED, INC. By: _____________________________ Name: ___________________________ Title: __________________________ EXHIBIT A TO WARRANT SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT PROXYMED, INC. The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("WARRANT SHARES") of ProxyMed, Inc., a Florida corporation (the "COMPANY"), evidenced by the attached Warrant (the "WARRANT"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant. 1. Form of Warrant Exercise Price. The Holder intends that payment of the Warrant Exercise Price shall be made as: ____________ a "CASH EXERCISE" with respect to _________________ Warrant Shares; and/or ____________ a "CASHLESS EXERCISE" with respect to _______________ Warrant Shares (to the extent permitted by the terms of the Warrant). 2. Payment of Warrant Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the sum of $___________________ to the Company in accordance with the terms of the Warrant. 3. Delivery of Warrant Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant. Date: _______________ __, ______ Name of Registered Holder By: _____________________________ Name: ___________________________ Title: __________________________ EXHIBIT B TO WARRANT FORM OF WARRANT POWER FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________, a warrant to purchase ____________ shares of the capital stock of ProxyMed, Inc., a Florida corporation, represented by warrant certificate no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ______________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises. Dated: _________, ____ ______________________________________ By: __________________________________ Its: _________________________________ EX-4.2 3 EXHIBIT 4.2 EXHIBIT B FORM OF NEW WARRANT THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT. PROXYMED, INC. WARRANT TO PURCHASE COMMON STOCK Warrant No.: Number of Shares:_______ Date of Issuance: May __, 2000 ProxyMed, Inc., a Florida corporation (the "COMPANY"), hereby certifies that, for Ten United States Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ____________________, the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) a number of fully paid nonassessable shares of Common Stock (as defined herein) of the Company equal to the Warrant Shares (as defined below) at the purchase price per share provided in Section 1(b) below; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-Q, Form 10-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than one (1) Business Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of Preferred Shares and exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. Section 1. (a) REDEMPTION AND EXCHANGE AGREEMENT. This Warrant is one of the Warrants (the "REDEMPTION WARRANTS") issued pursuant to Section 1 of that certain Redemption and Exchange Agreement dated as of May 4, 2000, among the Company and the Investors referred to therein (the "REDEMPTION AND EXCHANGE AGREEMENT"). (b) DEFINITIONS. The following words and terms as used in this Warrant shall have the following meanings: (i) "APPROVED STOCK PLAN" shall mean any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant for services provided to the Company. (ii) "ARTICLES OF AMENDMENT" means the Company's Articles of Amendment to its Articles of Incorporation for the Company's Series B Convertible Preferred Stock. (iii) "BUSINESS DAY" means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed. (iv) "CLOSING SALE PRICE" means, for any security as of any date, the last closing trade price for such security on the Principal Market (as defined below) as reported by Bloomberg Financial Markets ("BLOOMBERG"), or if the Principal Market begins to operate on an extended hours basis, and does not designate the closing trade price, then the last trade price at 4:00 p.m. Eastern Time as reported by Bloomberg, or, if the foregoing do not apply, the last closing trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the last closing ask price of such security as reported by Bloomberg, or, if no last closing ask price is reported for such security by Bloomberg, the average of the lowest ask price and lowest bid price of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the holder of this Warrant. If the Company and the holder of this Warrant are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) below with the term "Closing Sale Price" being substituted for the term "Market Price." All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period. (v) "COMMON STOCK" means (i) the Company's common stock, par value $0.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock. (vi) "CONVERTIBLE SECURITIES" means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock. (vii) "EXPIRATION DATE" means May 5, 2003 (viii) "ISSUANCE DATE" means, with respect to each Warrant, the date of issuance of the applicable Warrant. (ix) "MARKET PRICE" means, with respect to any security for any date of determination, that price which shall be computed as the arithmetic average of the Closing Sale Prices for such security on each of the 10 consecutive trading days immediately preceding such date of determination (all such determinations to be appropriately adjusted for any stock dividend, stock split or similar transaction during the pricing period). (x) "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. (xi) "OTHER SECURITIES" means (i) those options and warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) the shares of Common Stock issued upon exercise of such options and warrants, provided such options and warrants are not amended in any material way after the issuance date of this Warrant, (iii) the shares of Common Stock issued upon conversion of the Preferred Shares or the Redemption Warrants, and (iv) options to purchase shares of Common Stock, provided (a) such options are issued after the date of this Warrant to employees or consultants of the Company within 30 days of such employee or consultant starting their employment or consultation with the Company, (b) such options are approved by the board of directors of the Company or an appropriately designated committee thereof and (c) the exercise price of such options is not less than the market price of the Common Stock on the date of issuance of such options. (xii) "PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (xiii) "PREFERRED SHARES" means the shares of the Company's Series B Convertible Preferred Shares issued pursuant to the securities purchase agreement, dated December 23, 1999, among the Company and the buyers named therein. (xiv) "PRINCIPAL MARKET" means the Nasdaq National Market or if the Common Stock is not traded on the Nasdaq National Market, then the principal securities exchange or trading market for the Common Stock. (xv) "REGISTRATION RIGHTS AGREEMENT" means that Agreement dated May 4, 2000 by and among the Company and the Investors referred to therein. (xvi) "SECURITIES ACT" means the Securities Act of 1933, as amended. (xvii) "WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement hereof. (xviii) "WARRANT EXERCISE PRICE" shall be equal to, with respect to any Warrant Share, $1.50, subject to adjustment as hereinafter provided. (xix) "WARRANT SHARES" shall mean a number of fully paid and nonassessable shares of Common Stock equal to _______ [INSERT - NUMBER OF SHARES PER SECTION 1(A) OF THE REDEMPTION AND EXCHANGE AGREEMENT], subject to adjustment as provided herein. (xx) "WEIGHTED AVERAGE PRICE" means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (as reported by Bloomberg through its "VOLUME AT PRICE" function), or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no dollar volume- weighted average price is reported for such security by Bloomberg, the average of the bid prices of each of the market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the holders of the Redemption Warrants. If the Company and the holders of the Redemption Warrants are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) below. All such determinations shall be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period. (c) OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time. (ii) When used in this Warrant, the words "HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified. (iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa. Section 2. EXERCISE OF WARRANT. (a) Subject to the terms and conditions hereof and the restrictions on exercises set forth in Section 4(j) of the Redemption and Exchange Agreement, this Warrant may be exercised by the holder hereof then registered on the books of the Company, in whole or in part, at any time on any Business Day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by (i) delivery of a written notice, in the form of the subscription notice attached as EXHIBIT A hereto (the "EXERCISE NOTICE"), of such holder's election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) (A) payment to the Company of an amount equal to the applicable Warrant Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 2(f)) and (iii) the surrender to a common carrier for overnight delivery to the Company, as soon as practicable following such date, of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction). In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), the Company shall on the second Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price (or notice of a Cashless Exercise) and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) (the "EXERCISE DELIVERY DOCUMENTS"), credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder's or its designee's balance account with The Depository Trust Company; provided, however, if the holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, then the Company shall, on or before the second Business Day following receipt of the Exercise Delivery Documents issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or notification to the Company of a Cashless Exercise referred to in Section 2(f), the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of this Warrant as required by clause (iii) above or the certificates evidencing such Warrant Shares. In the case of a dispute as to the determination of the Warrant Exercise Price or the Market Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of shares of Common Stock that is not disputed and shall transmit an explanation of the disputed determinations or arithmetic calculations to the holder via facsimile within one Business Day of receipt of the holder's subscription notice. If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or the Market Price or arithmetic calculation of the Warrant Shares within two (2) Business Days of such disputed determination or arithmetic calculation being transmitted to the holder, then the Company shall within one (1) Business Day transmit via facsimile (i) the disputed determination of the Warrant Exercise Price or the Market Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error. (b) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which such Warrant is exercised. (c) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number. (d) If the Company shall fail for any reason or for no reason to issue to the holder within five (5) Business Days of receipt of the Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the holder is entitled or to credit the holder's balance account with The Depository Trust Company for such number of shares of Common Stock to which the holder is entitled upon the holder's exercise of this Warrant, the Company shall, in addition to any other remedies under this Warrant or the Redemption and Exchange Agreement or otherwise available to such holder, including any indemnification under Section 8 of the Redemption and Exchange Agreement, pay as additional damages in cash to such holder on each day the issuance of such Common Stock certificate is not timely effected an amount equal to 0.5% of the product of (A) the sum of the number of shares of Common Stock not issued to the holder on a timely basis and to which the holder is entitled, and (B) the average of the Closing Sale Price of the Common Stock for the three consecutive trading days immediately preceding the last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2. (e) If within seven (7) Business Days after the Company's receipt of the Exercise Delivery Documents, the Company fails to deliver a new Warrant to the holder for the number of shares of Common Stock to which such holder is entitled pursuant to Section 2(b) hereof, then, in addition to any other available remedies under this Warrant or the Redemption and Exchange Agreement including indemnification pursuant to Section 8 thereof or otherwise available to such holder, the Company shall pay as additional damages in cash to such holder on each day after such seventh (7th) Business Day that such delivery of such new Warrant is not timely effected an amount equal to 0.5% of the product of (A) the number of shares of Common Stock represented by the portion of this Warrant which is not being exercised and (B) the average of the Closing Sale Prices of the Common Stock for the three consecutive trading days immediately preceding the last possible date which the Company could have issued such Warrant to the holder without violating this Section 2. (f) If, despite the Company's obligations under the Redemption and Exchange Agreement and the Registration Rights Agreement, the Warrant Shares to be issued are not registered and available for resale pursuant to a registration statement (including during an Allowable Grace Period (as defined in the Registration Rights Agreement)) in accordance with the Registration Rights Agreement, then notwithstanding anything contained herein to the contrary, the holder of this Warrant may, at its election exercised in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the "Net Number" of shares of Common Stock determined according to the following formula (a "CASHLESS EXERCISE"): Net Number = (A X B) - (A X C) ----------------- B For purposes of the foregoing formula: A= the total number of shares with respect to which this Warrant is then being exercised. B= the Closing Sale Price of the Common Stock on the date immediately preceding the date of the subscription notice. C= the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. Section 3. COVENANTS AS TO COMMON STOCK. The Company hereby covenants and agrees as follows: (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price. (d) The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. No impairment of the designations, preferences and rights of the Preferred Shares contained in the Company's Articles of Amendment or any waiver thereof which has an adverse effect on the rights granted hereunder shall be given effect until the Company has taken appropriate action (satisfactory to the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock issuable upon the exercise of such Redemption Warrants then outstanding) to avoid such adverse effect with respect to this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant. Section 4. TAXES. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. Section 6. REPRESENTATIONS OF HOLDER. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, other than pursuant to a Cashless Exercise, the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder's exercise of this Warrant, other than pursuant to a Cashless Exercise, that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws. The Company shall not be penalized or disadvantaged by a holder's inability to exercise this Warrant due to such holder's inability to make the required representations in connection with the exercise of this Warrant, other than pursuant to a Cashless Exercise. Section 7. OWNERSHIP AND TRANSFER. (a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant. (b) This Warrant and the rights granted hereunder shall be assignable by the holder hereof without the consent of the Company. (c) The Company is obligated to register the Warrant Shares for resale under the Securities Act pursuant to the Registration Rights Agreement and the initial holder of this Warrant (and certain assignees thereof) is entitled to the registration rights in respect of the Warrant Shares as set forth in the Registration Rights Agreement. Section 8. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES. The Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows: (a) ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE OF COMMON STOCK. If and whenever on or after the date which is 183 days after the Issuance Date of this Warrant, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than shares of Common Stock which are issued or deemed to have been issued by the Company in connection with an Approved Stock Plan or upon the issuance, exercise or conversion of the Other Securities) for a consideration per share less than a price (the "APPLICABLE PRICE") equal to the Warrant Exercise Price in effect immediately prior to such issuance or sale, then immediately after such issue or sale the Warrant Exercise Price then in effect shall be reduced to an amount equal to such consideration per share. Upon each such adjustment of the Warrant Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment. (b) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable: (i) ISSUANCE OF OPTIONS. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the "lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. (ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 8(b)(ii), the "lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion or exchange of such Convertible Security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or is to be made pursuant to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue or sale. (iii) CHANGE IN OPTION PRICE OR RATE OF CONVERSION. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of shares of Common Stock acquirable hereunder shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment pursuant to this Section 8(b) shall be made if such adjustment would result in an increase of the Warrant Exercise Price then in effect. (c) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN EVENTS. For purposes of determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b), the following shall be applicable: (i) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Market Price of such securities on the date of receipt of such securities. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "VALUATION EVENT"), the fair value of such consideration will be determined within five Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding. The determination of such appraiser shall be final and binding upon all parties and the fees and expenses of such appraiser shall be borne jointly by the Company and the holders of Redemption Warrants. (ii) INTEGRATED TRANSACTIONS. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed within three (3) Business Days of receiving a request that the Company's Board of Directors allocate the consideration received in such integrated transaction to have been issued for a consideration of $0.01 unless, within such three (3) Business Day period, the Company's Board of Directors has provided written notice to each holder of the Redemption Warrants that the Company has allocated such consideration. (iii) TREASURY SHARES. The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock unless such shares are cancelled. (iv) RECORD DATE. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (d) ADJUSTMENT OF WARRANT EXERCISE PRICE UPON SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(d) shall become effective at the close of business on the date the subdivision or combination becomes effective. (e) DISTRIBUTION OF ASSETS. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a "DISTRIBUTION"), at any time after the issuance of this Warrant, then, in each such case: (i) any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company's Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and (ii) either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i). (f) CERTAIN EVENTS. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Redemption Warrants; provided that no such adjustment pursuant to this Section 8(f) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8. (g) ONE YEAR ADJUSTMENT OF WARRANT EXERCISE PRICE. If on the first day after the thirtieth trading day after the date which is one (1) year after the Issuance Date (the "ONE YEAR ADJUSTMENT DATE") the arithmetic average of the Weighted Average Prices of the Common Stock on the 30 consecutive trading days immediately preceding such date (appropriately adjusted for any stock dividend, stock split or similar transaction during the pricing period) (the "ONE YEAR ADJUSTED PRICE") is less than the Warrant Exercise Price in effect on the date immediately preceding the One Year Adjustment Date, then from and after the One Year Adjustment Date the Warrant Exercise Price shall be equal to the One Year Adjusted Price of the Common Stock on the One Year Adjustment Date, subject to further adjustment as provided in this Warrant. Upon such adjustment of the Warrant Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment. (h) NOTICES. (i) Immediately upon any adjustment of a Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment. (ii) The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. (iii) The Company will also give written notice to the holder of this Warrant at least ten (10) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. Section 9. PURCHASE RIGHTS; REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. (a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. (b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." Prior to the consummation of any (i) sale of all or substantially all of the Company's assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the "ACQUIRING ENTITY") a written agreement (in form and substance reasonably satisfactory to the holders of Redemption Warrants representing at least two- thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding) to deliver to each holder of Redemption Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and reasonably satisfactory to the holders of two- thirds (2/3) of the Redemption Warrants then outstanding (including, an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Redemption Warrants (without regard to any limitations or exercise), if the value so reflected is less than any Warrant Exercise Price in effect immediately prior to such consolidation, merger or sale). Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding) to insure that each of the holders of the Redemption Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such holder's Redemption Warrants (without regard to any limitations or exercise), such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the exercise of such holder's Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exerciseability of this Warrant). Section 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Section 11. NOTICE. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, Florida 33317 Telephone: (954) 473-1001 Facsimile: (954) 473-0620 Attention: Chief Executive Officer and Chief Legal Officer With a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, Florida 33131 Telephone: 305-374-8500 Facsimile: 305-789-7799 Attention: Steven Sonberg, Esq. If to a holder of this Warrant, to it at the address and facsimile number set forth on the Schedule of Investors to the Redemption and Exchange Agreement, with copies to such holder's representatives as set forth on such Schedule of Investors, or at such other address and facsimile as shall be delivered to the Company upon the issuance or transfer of this Warrant. Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Section 12. DATE. The date of this Warrant is May __, 2000. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 7(c) shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant. Section 13. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of the Redemption Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the holders of Redemption Warrants representing at least two-thirds (2/3) of the shares of Common Stock obtainable upon exercise of the Redemption Warrants then outstanding; provided that no such action may increase the Warrant Exercise Price of the Redemption Warrants or decrease the number of shares or class of stock obtainable upon exercise of any Redemption Warrants without the written consent of the holder of such Redemption Warrant. Section 14. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of Florida shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York, or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by ___________________, its ____________________________, as of the ___ day of May, 2000. PROXYMED, INC. By: ______________________________ Name: ____________________________ Title: ___________________________ EXHIBIT A TO WARRANT SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT PROXYMED, INC. The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("WARRANT SHARES") of ProxyMed, Inc., a Florida corporation (the "COMPANY"), evidenced by the attached Warrant (the "WARRANT"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant. 1. Form of Warrant Exercise Price. The Holder intends that payment of the Warrant Exercise Price shall be made as: ____________ a "CASH EXERCISE" with respect to _________________ Warrant Shares; and/or ____________ a "CASHLESS EXERCISE" with respect to _______________ Warrant Shares (to the extent permitted by the terms of the Warrant). 2. Payment of Warrant Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the sum of $___________________ to the Company in accordance with the terms of the Warrant. 3. Delivery of Warrant Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant. Date: _______________ __, ______ Name of Registered Holder By: _______________________________ Name: _____________________________ Title: ____________________________ EXHIBIT B TO WARRANT FORM OF WARRANT POWER FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________, a warrant to purchase ____________ shares of the capital stock of ProxyMed, Inc., a Florida corporation, represented by warrant certificate no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ______________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises. Dated: _________, ____ ____________________________________ By: ________________________________ Its: _______________________________ EX-4.3 4 EXHIBIT 4.3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of May 4, 2000, by and among ProxyMed, Inc., a Florida corporation, with headquarters located at 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317 (the "COMPANY"), and the undersigned investors (individually an "INVESTOR" and collectively the "INVESTORS"). WHEREAS: A. In connection with the Redemption and Exchange Agreement of even date herewith by and among the parties hereto (the "REDEMPTION AND EXCHANGE AGREEMENT"), the Company has agreed, upon the terms and subject to the conditions of the Redemption and Exchange Agreement, to issue to the Investors (i) warrants (the "EXCHANGED WARRANTS") to purchase shares (the "EXCHANGED WARRANT SHARES") of the Company's common stock, par value $0.001 pershare (the "COMMON STOCK"), which Exchanged Warrants are to be issued to the Investors in exchange for other warrants held by the Investors, and (ii) warrants (the "NEW WARRANTS" and, collectively with the Exchanged Warrants, the "WARRANTS") to purchase shares of Common Stock (the "NEW WARRANT SHARES" and, collectively with the Exchanged Warrant Shares, the "WARRANT SHARES"). B. To induce the Investors to execute and deliver the Redemption and Exchange Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 ACT"), and applicable state securities laws. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Investors hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: a. "HOLDER" means an Investor and any transferee or assignee thereof to whom an Investor assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9. b. "PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof. c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for the offering for resale of securities on a continuous or delayed basis ("RULE 415"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC"). d. "REGISTRABLE SECURITIES" means (i) the Warrant Shares issued or issuable upon exercise of the Warrants, and (ii) any shares of capital stock issued or issuable with respect to the Warrant Shares or the Warrants as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on exercises of Warrants. e. "REGISTRATION STATEMENT" means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities. 2. REGISTRATION. a. MANDATORY REGISTRATION. The Company shall prepare, and, as soon as practicable, but in no event later than the date which is 15 days after the Initial Closing Date (as defined in the Redemption and Exchange Agreement) (the "FILING DEADLINE"), file with the SEC a Registration Statement or Registration Statements (as necessary) on Form S-3 covering the resale of all of the Registrable Securities. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration, subject to the provisions of Section 2(d). Any first Registration Statement prepared pursuant hereto shall register for resale at least that number of shares of Common Stock equal to 100% of the number of Warrant Shares issuable upon exercise of the Warrants (without regard to any limitations on exercise) as of the date immediately preceding the date the Registration Statement is initially filed with the SEC, subject to adjustment as provided in Section 3(b). The Company shall cause such Registration Statement to be declared effective by the SEC as soon as possible, but in no event later than the date which is 75 days after the Initial Closing Date (the "EFFECTIVENESS DEADLINE"). b. ALLOCATION OF REGISTRABLE SECURITIES. The initial number of Registrable Securities included in any Registration Statement and each increase in the number of Registrable Securities included therein shall be allocated pro rata among the Holders based on the number of Registrable Securities held by each Holder at the time the Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Holder sells or otherwise transfers any of such Holder's Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Holders, pro rata based on the number of Registrable Securities then held by such Holders which are covered by such Registration Statement. c. LEGAL COUNSEL. Subject to Section 5 hereof, the Investors holding a majority of the Registrable Securities shall have the right to select one legal counsel to review and oversee any offering pursuant to this Section 2 ("LEGAL COUNSEL"), which shall be Katten Muchin & Zavis or such other counsel as thereafter designated by the holders of a majority of Registrable Securities. The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations under this Agreement. d. INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the resale of the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC. e. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. If (i) a Registration Statement covering all the Registrable Securities and required to be filed by the Company pursuant to this Agreement is not (A) filed with the SEC on or before the applicable Filing Deadline or (B) declared effective by the SEC on or before the applicable Effectiveness Deadline or (ii) on any day after the Registration Statement has been declared effective by the SEC, sales of all the Registrable Securities required to be included on such Registration Statement cannot be made pursuant to the Registration Statement (including, without limitation, because of a failure to keep the Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to the Registration Statement, to register sufficient shares of Common Stock), then, as partial relief for the damages to any holder by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each holder of Preferred Shares an amount in cash per Registrable Security or Warrant held by such Holder equal to the product of (i) the number of Warrant Shares held by such holder plus the number of Warrant Shares issuable upon exercise of Warrants (without regard to any limitations on exercise) held by such Holder, multiplied by (ii) the greater of the Warrant Exercise Price (as defined in the Warrants) and the Closing Sale Price (as defined in the Warrants) of the Common Stock on the applicable date on which the Company incurred the payment obligation provided in this Section 2(e), multiplied by (iii) the sum of (A) .02, if the Registration Statement is not filed by the Filing Deadline, plus (B) .02, if the Registration Statement is not declared effective by the Effectiveness Deadline, plus, (C) the product of (I) .00067 multiplied by (II) the sum of (x) the number of days after the Filing Deadline that such Registration Statement is not filed with the SEC, plus (y) the number of days after the Effectiveness Deadline that the Registration Statement is not declared effective by the SEC, plus (z) the number of days after the Registration Statement has been declared effective by the SEC that such Registration Statement is not available for the sale of at least all the Registrable Securities required to be included on such Registration Statement. The payments to which a holder shall be entitled pursuant to this Section 2(e) are referred to herein as "REGISTRATION DELAY PAYMENTS." Registration Delay Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Registration Delay Payments are incurred and (II) the third business day after the event or failure giving rise to the Registration Delayed Payments is cured. In the event the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of 2.0% per month (prorated for partial months) until paid in full. f. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event the number of shares available under a Registration Statement filed pursuant to Section 2(a) is insufficient to cover all of the Registrable Securities which such Registration Statement is required to cover or an Holder's allocated portion of the Registrable Securities pursuant to Section 2(b), the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least 100% of the Registrable Securities (based on the market price of the Common Stock on the trading day immediately preceding the date of filing of such amendment or new Registration Statement), in each case, as soon as practicable, but in any event not later than fifteen (15) business days after the necessity therefor arises. The Company shall cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if the number of Registrable Securities issued or issuable upon exercise of the Warrants covered by such Registration Statement is greater than the number of shares of Common Stock available for resale under the Registration Statement to cover shares issued or issuable upon exercise of the Warrants. For purposes of the calculation set forth in the foregoing sentence, any restrictions on the exercise of the Warrants shall be disregarded and such calculation shall assume that the Warrants are then exercisable for shares of Common Stock at the then prevailing Warrant Exercise Price (as defined in the Warrants). 3. RELATED OBLIGATIONS. At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(f), the Company will effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: a. The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the applicable Registrable Securities (but in no event later than the Filing Deadline) and cause such Registration Statement relating to the Registrable Securities to become effective as soon as practicable after such filing (but in no event later than the applicable Effectiveness Deadline). The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Holders may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which the Holders shall have sold all the Registrable Securities covered by such Registration Statement (the "REGISTRATION PERIOD"), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall submit to the SEC, within three business days after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff has no further comments on the Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than 48 hours after the submission of such request. b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, asmay be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), the Company shall have incorporated such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement. c. The Company shall (a) permit Legal Counsel to review and comment upon those sections of (i) the Registration Statement at least five (5) business days prior to its filing with the SEC, and (ii) all other Registration Statements and all amendments and supplements to all Registration Statements, which are applicable to the Investors (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any similar or successor report and registration statements on Form S-8) at least four (4) business days prior to the their filing with the SEC and (b) not file any document in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall furnish to Legal Counsel, without charge, (i) any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules and all exhibits and (iii) upon the effectiveness of any Registration Statement, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations pursuant to this Section 3. d. The Company shall furnish to each Holder whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, and all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Holder may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as such Holder may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Holder. e. The Company shall (i) register and qualify, unless an exemption from registration and qualification applies, the Registrable Securities covered by a Registration Statement under all jurisdiction's securities or "blue sky" laws in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change in the Company's Certificate of Incorporation or by-laws that the Company's board of directors determines in good faith to be contrary to the best interests of the Company and its shareholders, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and each Holder who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. f. As promptly as practicable after becoming aware of such event or development, the Company shall notify Legal Counsel and each Holder in writing of the happening of any event as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to Legal Counsel and each Holder (or such other number of copies as Legal Counsel or such Holder may reasonably request). The Company shall also promptly notify Legal Counsel and each Holder in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Holder by facsimile on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. g. The Company shall prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, however, if such an order or suspension is issued, the Company shall obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and each Holder who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. h. At the reasonable request of any Holder and at the expense of such Holder, the Company shall furnish to such Holder, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as an Holder may reasonably request (i) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, and (ii) an opinion, dated as of such date,of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Holders. i. The Company shall make available for inspection, at the expense of the Holder acting pursuant to this Section 3(i), by (i) any Holder, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by the Holders (collectively, the "INSPECTORS") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "RECORDS"), as shall be reasonably deemed necessary by each Inspector, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree, and each Holder hereby agrees, to hold in strict confidence and shall not make any disclosure (except to an Holder) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement of which the Inspector has knowledge. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector shall have entered into confidentiality agreements with the Company with respect thereto, substantially in the form of this Section 3(i). Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. j. The Company shall hold in confidence and not make any disclosure of information concerning an Holder provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement, or (v) such Holder consents to the form and content of any such disclosure. The Company agrees that it shall, upon learning that disclosure of such information concerning an Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Holder and allow such Holder, at the Holder's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. k. The Company shall either (i) cause all the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities covered by the Registration Statement on the Nasdaq National Market or The New York Stock Exchange, Inc., or, if the Company is unsuccessful in satisfying the preceding clause (i) or (ii), the Company shall secure the inclusion for quotation on The American Stock Exchange, Inc., or The Nasdaq SmallCap Market, for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(k). l. The Company shall cooperate with the Holders who hold Registrable Securities being offered, and to the extent applicable, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Holders may reasonably request and registered in such names as the Holders may request. m. The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement. n. If requested by an Holder, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as an Holder requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by an Holder of such Registrable Securities. o. The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. p. The Company shall make generally available to its security holders as soon as practical, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement,provided that the Company shall be deemed to satisfy its obligations under this Section 3(p) if it timely makes all required filings under the 1934 Act and does not change its fiscal year. q. The Company shall otherwise comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. r. Within two (2) business days after a Registration Statement which covers applicable Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as EXHIBIT A. s. The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of Registrable Securities pursuant to a Registration Statement. t. Notwithstanding anything to the contrary in Section 3(f), at any time after the applicable Registration Statement has been declared effective by the SEC, the Company may delay the disclosure of material non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a "GRACE PERIOD"); provided, that the Company shall promptly (i) notify the Holders in writing of the existence of material non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material non-public information to the Holders) and the date on which the Grace Period will begin, and (ii) notify the Holders in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed 15 consecutive days and during any 365 day period such Grace Periods shall not exceed an aggregate of 30 days (an "ALLOWABLE GRACE PERIOD"). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the holders receive the notice referred to in clause (i) and shall end on and include the later of the date the holders receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material non-public information is no longer applicable. 4. OBLIGATIONS OF THE HOLDERS. a. At least three (3) business days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Holder in writing of the information the Company reasonably requires from each such Holder if such Holder elects to have any of such Holder's Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. Each Holder shall use its best efforts to respond tothe Company's written request for information within seven (7) business days of such Holder's receipt of such request. If any delay in the filing of the Registration Statement results solely from an Holder's failure to respond within such period, then solely with respect to such Holder such delay shall not constitute a default under or breach of this Agreement by the Company and no penalties shall accrue under this Agreement, the Redemption and Exchange Agreement or the Articles of Amendment for the number of days caused by such delay. b. Each Holder by such Holder's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Holder has notified the Company in writing of such Holder's election to exclude all of such Holder's Registrable Securities from such Registration Statement. c. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g), Section 3(t) or the first sentence of Section 3(f), such Holder will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required or that a Grace Period has ended. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Holder in accordance with the terms of the Redemption and Exchange Agreement in connection with any sale of Registrable Securities with respect to which an Holder has entered into a contract for sale prior to the Holder's receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g), Section 3(t) or the first sentence of Section 3(f) and for which the Holder has not yet settled. 5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees shall be paid by the Company. In addition, the Company shall reimburse the Holders for the reasonable fees and disbursements of Legal Counsel in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000. 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Holder, the directors, officers, partners, employees, agents, representatives of, and each Person, if any, who controls any Holder within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 ACT") (each, an "INDEMNIFIED PERSON"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "CLAIMS") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to Section 6(c), the Company shall reimburse the Holders and each such controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or disbursements or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on a failure of the Holder to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(d); and (iii) shall not apply to amounts paid in settlement of any Claim, if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Holders pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) with respect to any prospectus shall not inure to the benefit of an Indemnified Person if the untrue statement or omission of material fact contained in the prospectus was corrected in the prospectus and a new prospectus was delivered to each Holder prior to such Holder's first use of the prospectus. b. In connection with any Registration Statement in which an Holder is participating, each such Holder agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Holder will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Holder, which consent shall not be unreasonably withheld; provided, further, however, that the Holder shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Holders pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Holders holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. d. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. e. The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement. 8. REPORTS UNDER THE 1934 ACT. With a view to making available to the Holders the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Holders to sell securities of the Company to the public without registration ("RULE 144"), the Company agrees to: a. make and keep public information available, as those terms are understood and defined in Rule 144; b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 4(c) of the Redemption and Exchange Agreement) and the filing of such reports and other documents is required by the applicable provisions of Rule 144; and c. furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents as may be necessary to qualify under Rule 144, and (iii) such other information as may be reasonably requested to permit the Holders to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be automatically assignable by the Holders to any transferee of all or any portion of Registrable Securities if: (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Redemption and Exchange Agreement. 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Holders who then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment orwaiver effected in accordance with this Section 10 shall be binding upon each Holder and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement. 11. MISCELLANEOUS. a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. b. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, Florida 33317 Telephone: (954) 473-1001 Facsimile: (954) 473-0620 Attention: Chief Executive Officer and Chief Legal Officer With a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, Florida 33131 Telephone: 305-374-8500 Facsimile: 305-789-7799 Attention: Steven Sonberg, Esq. If to Legal Counsel: Katten Muchin & Zavis 525 West Monroe Street, Suite 1600 Chicago, Illinois 60661-3693 Telephone: 312-902-5200 Facsimile: 312-902-1061 Attention: Robert J. Brantman, Esq. If to an Investor, to its address and facsimile number on the Schedule of Investors attached hereto, with copies to such Investor's representatives as set forth on the Schedule of Investors or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. d. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. e. This Agreement, the Redemption and Exchange Agreement and the Warrants constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the Redemption and Exchange Agreement and the Warrants supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. Notwithstanding the foregoing and except as otherwise specifically provided in this Agreement, the Redemption and Exchange Agreement or the Warrants, the Securities Purchase Agreement (as defined in the Redemption and Exchange Agreement), the Series B Registration Rights Agreement (as defined in the Redemption and Exchange Agreement) and the Articles of Amendment (as defined in the Redemption and Exchange Agreement) shall remain in full force and effect with respect to the securities and the transactions contemplated thereby. f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto. g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. h. This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. i. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. j. All consents and other determinations to be made by the Holders pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by Holders holding a majority of the Registrable Securities, determined as if all of the Warrants then outstanding have been exercised for Registrable Securities without regard to any limitations on exercise of the Warrants. k. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party. l. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. * * * * * IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written. COMPANY: INVESTORS: PROXYMED, INC. FISHER CAPITAL LTD. By: /s/ John Okkerse By: Name: John Okkerse Name: Daniel J. Hopkins Its: President Its: Authorized Signatory WINGATE CAPITAL LTD. By: Name: Daniel J. Hopkins Its: Authorized Signatory LEONARDO, L.P. By: ANGELO, GORDON & CO., L.P. Its: General Partner By: Name: Michael L. Gordon Its: Chief Operating Officer ROYAL BANK OF CANADA By: RBC DOMINION SECURITIES CORPORATION Its: Agent By: Name: Its: AND By: Name: Its: SCHEDULE OF INVESTORS
INVESTOR NAME INVESTOR ADDRESS INVESTOR'S REPRESENTATIVES' ADDRESS AND FACSIMILE NUMBER AND FACSIMILE NUMBER - ----------------------------- ----------------------------------------- ------------------------------------- Fisher Capital Ltd. c/o Citadel Investment Group, L.L.C. Katten Muchin & Zavis 225 West Washington Street 525 W. Monroe Street, Suite 1600 Chicago, Illinois 60606 Chicago, Illinois 60661-3693 Attention: Daniel Hopkins Attention: Robert J. Brantman, Esq. Facsimile: (312) 338-0780 Facsimile: (312) 902-1061 Telephone: (312) 696-2100 Telephone: (312) 902-5200 Residence: Illinois Wingate Capital Ltd. c/o Citadel Investment Group, L.L.C. Katten Muchin & Zavis 225 West Washington Street 525 W. Monroe Street, Suite 1600 Chicago, Illinois 60606 Chicago, Illinois 60661-3693 Attention: Daniel Hopkins Attention: Robert J. Brantman, Esq. Facsimile: (312) 338-0780 Facsimile: (312) 902-1061 Telephone: (312) 696-2100 Telephone: (312) 902-5200 Residence: Illinois Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. Angelo, Gordon & Co., L.P. 245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor New York, New York 10167 New York, New York 10167 Attention: Gary Wolf or Ari Storch Attention: Gary Wolf or Ari Storch Facsimile: (212) 867-6449 Facsimile: (212) 867-6449 Telephone: (212) 692-2035 Telephone: (212) 692-2035 Residence: Cayman Islands Royal Bank of Canada Royal Bank of Canada Royal Bank of Canada c/o RBC Dominion Securities Corporation c/o RBC Dominion Securities One Liberty Plaza Corporation 165 Broadway One Liberty Plaza New York, New York 10006 165 Broadway Attention: Kevin A. Felix New York, New York 10006 Facsimile: (212) 858-7437 Attention: Kevin A. Felix Telephone: (212) 858-7384 Facsimile: (212) 858-7437 Telephone: (212) 858-7384
EXHIBIT A FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT [TRANSFER AGENT] ATTN: Re: PROXYMED, INC. Ladies and Gentlemen: We are counsel to ProxyMed, Inc., a Florida corporation (the "COMPANY"), and have represented the Company in connection with that certain Redemption and Exchange Agreement (the "REDEMPTION AND EXCHANGE Agreement") entered into by and among the Company and the Investors named therein (collectively, the "HOLDERS") pursuant to which the Company issued to the Holders warrants (the "WARRANTS") to purchase shares of the Company's common stock, par value $0.001 per share (the "COMMON STOCK"). Pursuant to the Redemption and Exchange Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon exercise of the Warrants, under the Securities Act of 1933, as amended (the "1933 ACT"). In connection with the Company's obligations under the Registration Rights Agreement, on ____________ ____, the Company filed a Registration Statement on Form S-3 (File No. 333-_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder. In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement. Very truly yours, [ISSUER'S COUNSEL] By: cc: [LIST NAMES OF HOLDERS] EX-10.27 5 EXHIBIT 10.27 REDEMPTION AND EXCHANGE AGREEMENT REDEMPTION AND EXCHANGE AGREEMENT (the "AGREEMENT"), dated as of May 4, 2000, by and among ProxyMed, Inc., a Florida corporation, with headquarters located at 2555 Davie Road, Suite 110, Fort Lauderdale, Florida 33317 (the "COMPANY"), and the investors listed on the Schedule of Investors attached hereto (individually, a "INVESTOR" and collectively, the "INVESTORS"). WHEREAS: A. The Company and certain investors, including the Investors, have entered into that certain Securities Purchase Agreement, dated as of December 23, 1999 (the "SECURITIES PURCHASE AGREEMENT"), pursuant to which certain investors, including the Investors, purchased from the Company shares of the Company's Series B Convertible Preferred Stock (the "PREFERRED STOCK"), which are convertible into shares of the Company's common stock, par value $0.001 per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the terms of the Company's Articles of Amendment to the Company's Articles of Incorporation filed with the Secretary of State of the State of Florida on December 23, 1999 (the "ARTICLES OF AMENDMENT"); B. Each Investor is the holder of that number of shares of Preferred Stock set forth opposite its name on the Schedule of Investors (each a "PREFERRED SHARE" and, collectively, the "PREFERRED SHARES"); C. Each Investor wishes to exchange, upon the terms and conditions stated in this Agreement, the warrants (the "OLD WARRANTS") issued to such Investor pursuant to the Securities Purchase Agreement for a new warrant, in substantially the form attached hereto as EXHIBIT A (the "EXCHANGED WARRANTS"), to purchase the same number of shares of Common Stock (the "EXCHANGED WARRANT SHARES") as were covered by the Old Warrant held by such Investor; D. The Company wishes to redeem the Preferred Shares held by the Investors and each of the Investors wishes to allow the Company to redeem, upon the terms and conditions set forth in this Agreement, such Investor's Preferred Shares, provided that the Company issue to such Investor new warrants, in substantially the form attached hereto as EXHIBIT B (the "NEW WARRANTS" and, collectively with the Exchanged Warrants, the "WARRANTS") to purchase the number of shares of Common Stock set forth opposite such Investor's name on the Schedule of Investors (the "NEW WARRANT SHARES" and, collectively with the Exchanged Warrant Shares, the "WARRANT SHARES"; and the Warrants and the Warrant Shares, collectively are referred to herein as the "SECURITIES"); E. The exchange of the Old Warrants for the Exchanged Warrants is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the "1933 ACT") and the issuance of the New Warrants is being made in reliance upon the exemption from registration provided by Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission (the "SEC") under the 1933 Act; and F. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. NOW THEREFORE, the Company and the Investor hereby agree as follows: 1. EXCHANGE AND ISSUANCE OF WARRANTS. a. EXCHANGE OF OLD WARRANTS AND ISSUANCE OF NEW WARRANTS. Subject to satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a), (i) the Company shall issue to each Investor and each Investor severally agrees to exchange its Old Warrant for an Exchanged Warrant to purchase a number of Exchanged Warrant Shares equal to the number of shares of Common Stock covered by the Old Warrant being exchanged by such Investor (the "INITIAL CLOSING") and (ii) the Company shall issue to each Investor a New Warrant to purchase up to that number of New Warrant Shares set forth opposite such Investor's name on the Schedule of Investors. The date of the Initial Closing (the "INITIAL CLOSING DATE") shall be the date of this Agreement, or such later date as the Company and each Investor may agree. "BUSINESS DAY" means any day other than Saturday, Sunday or other day on which commercial banks in the city of New York are authorized or required by law to remain closed. b. REDEMPTION OF PREFERRED SHARES. Subject to satisfaction (or waiver) of the conditions set forth in Sections 6 and 7, the Company shall redeem from each Investor and each Investor shall allow the Company to redeem from it on each Closing Date (as defined below) such Investor's pro rata portion (based on the number of Preferred Shares set forth opposite such Investor's name on the Schedule of Investors relative to 13,000 shares of Preferred Stock) of the number of Preferred Shares to be redeemed on such Closing Date, which aggregate number shall be as follows: (i) 4,000 shares of Preferred Stock at the Initial Closing on the Initial Closing Date; (ii) 2,500 shares of Preferred Stock on June 19, 2000; (iii) 2,500 shares of Preferred Stock on August 1, 2000; (iv) 2,500 shares of Preferred Stock on August 31, 2000; and (v) 1,500 shares of Preferred Stock on September 29, 2000 (each a "REDEMPTION CLOSING" and each such date a "REDEMPTION CLOSING DATE"). The redemption price (the "REDEMPTION PRICE") to be paid by the Company for each Preferred Share being redeemed at a Redemption Closing shall be equal to 116.5% of the Conversion Amount (as defined in the Articles of Amendment) of such Preferred Share on the applicable Redemption Closing Date. c. THE CLOSING DATE. The time of each of the Initial Closing and the Redemption Closings (collectively, the "CLOSINGS") shall be 10:00 a.m., Eastern Time, on the applicable Initial Closing Date or Redemption Date (collectively, the "CLOSING DATES"), subject to satisfaction (or waiver) of the conditions to the applicable Closing set forth in Sections 6 and 7 (or such later date as is mutually agreed to by the Company and each of the Investors). Each Closing shall occur on the applicable Closing Date by facsimile, courier and wire transfer. In the event any of the parties to a Closing send the other parties written notice that a physical closing is desired, at least five (5) Business Days prior to the applicable Closing Date, then such Closing shall occur on the applicable Closing Date at the offices of Katten Muchin & Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693. d. FORM OF PAYMENT. On the applicable Closing Date (i) the Company shall pay the Redemption Price to each Investor for the Preferred Shares being redeemed by the Company from such Investor at the respective Closing Date, by wire transfer of immediately available funds in accordance with such Investor's written wire transfer instructions, and (ii) each Investor shall deliver to the Company, stock certificates (the "STOCK CERTIFICATES") representing such number of the Preferred Shares which the Company is redeeming from such Investor at such Closing, duly endorsed for transfer to the Company. If the number of Preferred Shares represented by the Stock Certificate delivered by an Investor to the Company in connection with a Closing is greater than the number of Preferred Shares the Company is redeeming from such Investor at such Closing, then the Company shall, as soon as practicable and in no event later than five (5) Business Days after such Closing and at its own expense, issue and deliver to such Investor a new Stock Certificate representing the number of Preferred Shares not redeemed at such Closing. e. CHANGE OF CONTROL. If on or before December 23, 2002, there occurs a Change of Control (as defined below), then concurrent with the consummation of such Change of Control the Company shall pay as a success fee an amount in cash to each Investor equal to such Investor's pro rata portion (based on the number of Preferred Shares set forth opposite such Investor's name on the Schedule of Investors relative to 13,000 shares of Preferred Stock) of $4,333,333 (the "CHANGE OF CONTROL SUCCESS FEE"). The Company shall pay the respective Change of Control Success Fee to each Investor by wire transfer of immediately available funds in accordance with each Investor's written wire instructions. For purposes of this Section 1(e), "CHANGE OF CONTROL" means (i) the consolidation, merger or other business combination of the Company with or into another person (other than (A) a consolidation, merger or other business combination in which holders of the Company's voting power immediately prior to the transaction continue after the transaction to hold, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), (ii) the sale or transfer of all or substantially all of the Company's assets, or (iii) a purchase, tender or exchange offer made to and accepted by the holders of more than the 50% of the outstanding shares of Common Stock. In addition, concurrent with the consummation of any Change of Control, the Company shall redeem all Preferred Shares held by the Investors immediately prior to such consummation for a price per Preferred Share equal to the Redemption Price on such date and such date shall be deemed for all purposes under this Agreement to be a Redemption Closing Date. 2. INVESTOR'S REPRESENTATIONS AND WARRANTIES. Each Investor represents and warrants with respect to only itself that: a. INVESTMENT PURPOSE. Such Investor (i) is acquiring the New Warrants and (ii) upon exercise of the New Warrants, will acquire the New Warrant Shares then issuable, for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. b. ACCREDITED INVESTOR STATUS. Such Investor is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. c. RELIANCE ON EXEMPTIONS. Such Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Investor's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire such Securities. d. INFORMATION. Such Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Investor. Such Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors, if any, or its representatives shall modify, amend or affect such Investor's right to rely on the Company's representations and warranties contained in Sections 3 and 9(m) below. Such Investor understands that its investment in the Securities involves a high degree of risk. Such Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. e. NO GOVERNMENTAL REVIEW. Such Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. f. TRANSFER OR RESALE. Such Investor understands that except as provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Investor shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Investor provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("RULE 144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan secured by the Securities. g. LEGENDS. Such Investor understands that the certificates or other instruments representing the Warrants and, until such time as the sale of the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificates representing the Warrant Shares, except as set forth below, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY SATISFACTORY TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if (i) such Securities are registered for sale under the 1933 Act, (ii) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that a public sale, assignment or transfer of such Securities may be made without registration under the 1933 Act, or (iii) such holder provides the Company with reasonable assurances that such Securities can be sold pursuant to Rule 144. Such Investor acknowledges, covenants and agrees to sell Securities represented by a certificate(s) from which the legend has been removed, only pursuant to (i) a registration statement effective under the 1933 Act, or (ii) advice of counsel to such holder that such sale is exempt from the registration requirements of Section 5 of the 1933 Act. h. AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered on behalf of such Investor and are valid and binding agreements of such Investor enforceable against such Investor in accordance with their terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. i. RESIDENCY. Such Investor is a resident of that jurisdiction specified on the Schedule of Investors. j. FREE OF LIENS. Assuming that pursuant to the Securities Purchase Agreement the Company issued such Investor the Preferred Shares held by such Investor free and clear of any taxes, security interest, liens, encumbrances, claims and demands of any kind whatsoever, at the time of the applicable Closing such Investor shall hold the Preferred Shares to be redeemed by the Company from such Investor at such Closing, and shall transfer such shares to the Company, free and clear of any restrictions on transfer, taxes, security interest, liens, encumbrances and demands of any kind whatsoever. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Investors that: a. ORGANIZATION AND QUALIFICATION. The Company and its "SUBSIDIARIES" (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns 10% of the capital stock or holds an equity or similar interest) are corporations duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power and authorization to own properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on the business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below). A complete list of entities in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest is set forth in SCHEDULE 3(A). b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5), the Warrants and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the redemption of the Preferred Shares and the issuance of the Warrants and the reservation for issuance and the issuance of the Warrant Shares issuable upon exercise of the Warrants, have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) the Transaction Documents have been duly executed and delivered by the Company, and (iv) this Agreement and the Registration Rights Agreement and, when executed and delivered, the other Transaction Documents, constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. c. CAPITALIZATION. The authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which as of the date hereof 18,332,913 shares are issued and outstanding (other than shares of Common Stock issued pursuant to shares of the Preferred Stock converted on or prior to the date hereof), 2,713,792 shares are issuable and reserved for issuance pursuant to the Company's stock option and purchase plans and 967,933 shares are issuable and reserved for issuance pursuant to securities (other than the shares of Preferred Stock, the Warrants, the warrants issued by the Company pursuant to the Securities Purchase Agreement and shares of Common Stock issuable pursuant to any Conversion Notice (as defined in the Articles of Amendment) delivered to the Company on or prior to the date hereof) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 2,000,000 shares of preferred stock, of which as of the date hereof, 15,000 shares are designated as Series B Convertible Preferred Stock, of which 15,000 shares are issued and outstanding (without giving effect to any Conversion Notices (as defined in the Articles of Amendment) delivered to the Company on or prior to the date hereof). All of such outstanding shares have been and are, or upon issuance will be, validly issued, fully paid and nonassessable. Except as disclosed in SCHEDULE 3(C), (i) no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding debt securities issued by the Company; (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries; (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement); (v) there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement; and (vii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. The Company has furnished to the Investor true and correct copies of the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "ARTICLES OF INCORPORATION"), and the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"), and the terms of all securities (other than the Preferred Stock and the Old Warrants) convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto. d. ISSUANCE OF SECURITIES. At least 1,343,333 shares of Common Stock (subject to adjustment pursuant to the Company's covenant set forth in Section 4(f) below) have been duly authorized and reserved for issuance upon exercise of the Warrants. Upon exercise in accordance with the Warrants, the Warrant Shares will be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance by the Company of the Securities is exempt from registration under the 1933 Act. The issuance by the Company of the New Warrants is being made in reliance upon the exemption from registration set forth in Rule 506 of Regulation D under the 1933 Act and is only being made to "accredited investors" that meet the requirements of Rule 501(a) of Regulation D and similar exemptions under state law. The issuance by the Company of the Exchanged Warrants is being made in reliance upon the exemption from registration set forth in Section 3(a)(9) of the 1933 Act and similar exemptions under state law. e. NO CONFLICTS. Except as disclosed in SCHEDULE 3(E), the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the redemption of the Preferred Shares and the reservation for issuance and issuance of the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation, any articles of amendment of any outstanding series of preferred stock of the Company or the By-laws; (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party; or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the principal market or exchange on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Except as disclosed in SCHEDULE 3(E), neither the Company nor its Subsidiaries is in violation of any term of (i) its Articles of Incorporation, any articles of amendment of any outstanding series of preferred stock or its By-laws or their organizational charter or by-laws, respectively, or (ii) any statute, rule or regulation applicable to the Company or its Subsidiaries and neither the Company nor its Subsidiaries is in default under any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order, except for such violations or defaults which would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance or regulation of any governmental entity except for such violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and except such as have been obtained as of the date hereof, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance with the terms hereof or thereof. Except as disclosed in SCHEDULE 3(E), all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof and such consents shall have been obtained prior to the Closing. The Company and its Subsidiaries are unaware of any facts or circumstances which might reasonably be expected to give rise to any of the foregoing. The Company is not in violation of the listing requirements of the Nasdaq National Market as in effect on the date hereof and, except as disclosed in SCHEDULE 3(E), has no actual knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock by the Nasdaq National Market in the foreseeable future. f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 1998, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act, (all of the foregoing filed after December 31, 1998 and prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC DOCUMENTS"). A complete list of the Company's SEC Documents is set forth on SCHEDULE 3(F). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. None of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year- end audit adjustments). Neither the Company nor any of its Subsidiaries nor any of their officers, directors, employees or agents have provided the Investors with any material, nonpublic information. The Company meets the requirements for the use of Form S-3 for registration of the resale of the Registrable Securities (as defined in the Registration Rights Agreement) by each Investor. g. ABSENCE OF CERTAIN CHANGES. Except as has previously been publicly disclosed (or, in connection with determining compliance with this representation being made on any Closing Date after the Initial Closing Date, as may be publicly disclosed after the date of this Agreement and prior to such Closing Date) by the Company, since December 31, 1999 there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, liabilities, results of operations or prospects of the Company or its Subsidiaries, taken as a whole. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries have any knowledge that its creditors intend to initiate involuntary bankruptcy proceedings or any knowledge of any fact which would reasonably lead a creditor to do so. h. ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3(H), there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any of the Company's Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or directors in their capacities as such, except as expressly set forth in SCHEDULE 3(H). Except as set forth in SCHEDULE 3(H), to the knowledge of the Company none of the directors or officers of the Company have been involved in securities related litigation during the past five years. i. ACKNOWLEDGMENT REGARDING THE TRANSACTIONS. The Company acknowledges and agrees that each of the Investors is acting solely in the capacity of arm's length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that none of the Investors is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any of the Investors or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to such Investor's investment in the Securities and the Company's redemption of the Preferred Shares. The Company further represents to each Investor that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives. j. Intentionally omitted. k. NO SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Securities. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has paid or given, either directly or indirectly, any commission or other remuneration to any person for soliciting the exchange of the Old Warrants for the Exchanged Warrants or for any other transaction contemplated by this Agreement. l. NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or, except for the offer and sale of the shares of Preferred Stock and the related warrants pursuant to the Securities Purchase Agreement, cause this offering of Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the Nasdaq National Market, nor will the Company or any of its Subsidiaries take any action or steps that would require registration of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings. m. EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened. None of the Company's or its Subsidiaries' employees is a member of a union, neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company's Board of Directors that such officer intends to leave the Company or otherwise terminate such officer's employment with the Company and the Company does not expect to terminate any such officer during the six months following the date of this Agreement. n. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except as set forth on SCHEDULE 3(N), none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights have expired or terminated, or are expected to expire or terminate within two years from the date of this Agreement, except where such expiration or termination would not have either individually or in the aggregate a Material Adverse Effect. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademarks, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secrets or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except as set forth on SCHEDULE 3(N), no claim, action or proceeding has been made or brought against, or to the Company's knowledge, has been threatened against, the Company or its Subsidiaries regarding trademarks, trade name rights, patents, patent rights, inventions, copyrights, licenses, service names, service marks, service mark registrations, trade secrets or other infringement. Except as set forth on SCHEDULE 3(N), the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties except where the failure to do so would not have either individually or in the aggregate a Material Adverse Effect. o. REGULATORY PERMITS. Except where the absence of which would not have a Material Adverse Effect, the Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses. Neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. p. INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. q. TAX STATUS. Except as set forth in SCHEDULE 3(Q), the Company and each of its Subsidiaries has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which the Company has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. r. TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth on SCHEDULE 3(R) or in the SEC Documents filed at least ten days prior to the date hereof and other than the grant or exercise of stock options disclosed on SCHEDULE 3(C), none of the officers or directors of the Company and, to the Company's knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. s. DILUTIVE EFFECT. The Company understands and acknowledges that the number of Warrant Shares issuable upon exercise of the Warrants will increase in certain circumstances. The Company further acknowledges that its obligation to issue Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. t. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the state of its incorporation which is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations under the Transaction Documents and the Articles of Amendment, including, without limitation, the Company's issuance of the Securities and the Investors' ownership of the Securities. u. RIGHTS AGREEMENT. As of the date hereof, the Company has not adopted a shareholder rights plan or similar arrangement relating to accumulation of beneficial ownership of Common Stock or a change in control of the Company. v. YEAR 2000 COMPLIANCE. The Company believes that the computer applications that are currently being used by its or any Subsidiary's business and operations are reasonably expected to be able to perform properly date-sensitive functions for all dates before and after January 1, 2000 other than those applications whose inability to properly perform date- sensitive functions would not have, either individually or in the aggregate, a Material Adverse Effect. w. TITLE. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in SCHEDULE 3(W) or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries. x. INSURANCE. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its Subsidiaries, taken as a whole. y. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in compliance in all material respects with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses, except where the failure to receive such permits, licenses or approvals would not, individually or in the aggregate, have a Material Adverse Effect and (iii) are in compliance in all material respects with all terms and conditions of any such permit, license or approval, except where the failure to be in compliance or receive such permits, licenses or approvals would not, individually or in the aggregate, have a Material Adverse Effect. z. NO OTHER AGREEMENTS. The Company has not, directly or indirectly, made any agreements with any Investor relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. 4. COVENANTS. a. BEST EFFORTS. Each party shall use its best efforts to satisfy timely each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. b. FORM D AND BLUE SKY. The Company agrees to file a Form D with respect to the New Warrants and the New Warrant Shares as required under Regulation D and to provide a copy thereof to each Investor promptly after such filing. The Company shall, on or before the Initial Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for, or obtain exemption for the Securities for, sale to the Investors at the Initial Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of any such action so taken to the Investors on or prior to the Initial Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the Initial Closing Date. c. REPORTING STATUS. Until the earlier of (i) the date which is one year after the date on which the Investors (as that term is defined in the Registration Rights Agreement) may sell all of the Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) and (ii) the date on which (A) the Investors shall have sold all the Warrant Shares and (B) none of the Warrants is outstanding (the "REPORTING PERIOD"), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination. d. RULE 144. The Company shall not, directly or indirectly, dispute or otherwise interfere with any claim by a holder of the Exchanged Warrants that such holder's holding period of any Exchanged Warrants for purposes of Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("RULE 144") relates back (i.e., tacks) to the holding period for the Old Warrants. e. FINANCIAL INFORMATION. The Company agrees to send the following to each Investor during the Reporting Period: (i) unless filed and available through the SEC's EDGAR system, within two (2) Business Days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments thereto filed pursuant to the 1933 Act; (ii) on the same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries (or the day after, if released through a recognized wire service) and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. f. RESERVATION OF SHARES. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the number of shares of Common Stock needed to provide for the issuance of the Warrant Shares (without regard to any limitations on exercise thereof). g. EXPENSES. Subject to Section 9(l) below, at the Initial Closing, the Company shall pay to Fisher Capital Ltd. and Wingate Capital Ltd. (each an Investor) or their designee an aggregate expense allowance of $15,000. h. LISTING. The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system (including the Nasdaq National Market), if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Common Stock's authorization for listing on the Nasdaq National Market, the Nasdaq SmallCap Market, The American Stock Exchange, Inc. or any national securities exchange (collectively, the "EXCHANGES" and each an "EXCHANGE"). Neither the Company nor any of its Subsidiaries shall take any action which may result in the delisting or suspension of the Common Stock on an Exchange (other than to switch listings from one Exchange to another Exchange). The Company shall promptly, and in no event later than the following Business Day, offer to provide to each Investor copies of any notices it receives from an Exchange regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange, but only if such notices shall not contain any material nonpublic information. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(h). i. RESTRICTIONS ON CONVERSIONS. Subject to the exceptions described below, each Investor severally agrees that it will not convert any Preferred Shares held by such Investor during the period beginning on the date of this Agreement and ending on and including September 29, 2000. Notwithstanding the foregoing, the conversion restrictions set forth in this Section 4(i) shall not apply on or after any of the following (each a "CONVERSION RESTRICTION EXCLUSION EVENT DATE"): (a) any Redemption Closing Date on which the Company fails to pay the Redemption Price for any Preferred Share the Company is required to redeem on such Redemption Closing Date in a timely manner and in accordance with Section 1; (b) any date on which there shall have occurred an event constituting a Triggering Event (as defined in the Articles of Amendment) or a Liquidity Default (as defined in the Articles of Amendment) (other than (A) a Liquidity Default set forth in Section 3(g)(vi) of the Articles of Amendment, provided that the Company files the proxy statement (or an amendment to the proxy statement) referred to in Section 4(g) of the Securities Purchase Agreement (the "PROXY STATEMENT") on or prior to May 10, 2000 which sets forth the terms of the transactions contemplated hereby and the Company receives the Stockholder Approval (as defined in Section 4(g) of the Securities Purchase Agreement) on or before the earlier of (x) July 17, 2000 and (y) the date which is 40 days after the Company learns that no review of the Proxy Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on the Proxy Statement (the earlier of such dates is referred to herein as the "MEETING DEADLINE"), (B) a Liquidity Default set forth in Section 3(g)(iv) of the Articles of Amendment, (C) a Liquidity Default set forth in Section 3(g)(vii) of the Articles of Amendment, (D) a Triggering Event set forth in Section 3(b)(iii) of the Articles of Amendment, but only to the extent such Triggering Event occurs prior to the Meeting Deadline, (E) a Liquidity Default set forth in Section 3(g)(viii), and (F) a Liquidity Default set forth in Section 3(g)(iii) of the Articles of Amendment occurring prior to May 15, 2000, provided that the Company amends the registration statement referred to in Section 3(g)(iii) of the Articles of Amendment or files a new registration statement, on or before May 15, 2000 (such defaults described in the immediately preceding clauses (A), (B), (C), (D), (E) and (F) are referred to herein as "EXCLUDED LIQUIDITY DEFAULTS")) or an event that with the passage of time and without being cured would constitute a Triggering Event or a Liquidity Default (other than Excluded Liquidity Defaults); (c) the first date on which the Company fails to comply with its obligations under Section 4(n) or on or after the first of any of the dates set forth in Section 4(n) with respect to which the Company has failed to publicly announce (in a manner consistent with Rule 135c of the 1933 Act) its satisfaction of its obligations under Section 4(n) as of such date in Section 4(n); or (d) the first date on which the Company breaches any representation, warranty or covenant in this Agreement, the Registration Rights Agreement or any of the Warrants or otherwise fails to comply in any respect with the terms of this Agreement, the Registration Rights Agreement and the Warrants, except (A) in the case of a covenant which is curable, only if such breach continues for a period of at least five (5) Business Days and (B) a breach of the second sentence of Section 4(h). j. RESTRICTIONS ON EXERCISES. Subject to the exceptions described below, each Investor severally agrees that it will not exercise any Warrants held by such Investor during the period beginning on the date of this Agreement and ending on and including the date which is 180 days after the date of this Agreement. Notwithstanding the foregoing, the exercise restrictions set forth in this Section 4(j) shall not apply on or after any of the following: (a) any Conversion Restriction Exclusion Event Date; or (b) any date on which there shall have been an announcement of a pending, proposed or intended Change of Control. k. TRANSACTIONS WITH AFFILIATES. So long as (i) any Warrants are outstanding or (ii) any Investor owns Warrant Shares with a market value of at least $500,000, the Company shall not, and shall cause each of its Subsidiaries not to, enter into, amend, modify or supplement, or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any Subsidiary's officers, directors, persons who were officers or directors at any time during the previous two years, stockholders who beneficially own 5% or more of the Common Stock, or Affiliates or with any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a "RELATED PARTY"), except for (a) customary employment arrangements and benefit or stock option programs on reasonable terms, (b) any agreement, transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company or (c) any agreement, transaction, commitment or arrangement on an arms-length basis on terms no less favorable than terms which would have been obtainable from a person other than such Related Party. For purposes hereof, any director who is also an officer of the Company or any Subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment or arrangement. "AFFILIATE" for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a 5% or more equity interest in that person or entity, (ii) has 5% or more common ownership with that person or entity, (iii) controls that person or entity, or (iv) shares common control with that person or entity. "CONTROL" or "CONTROLS" for purposes hereof means that a person or entity has the power, direct or indirect, to conduct or govern the policies of another person or entity. l. FILING OF FORM 8-K. On or before the second (2nd) Business Day following the Initial Closing Date, the Company shall file a Form 8-K with the SEC describing the terms of the transaction contemplated by the Transaction Documents and consummated at the Initial Closing, in the form required by the 1934 Act, and attaching as exhibits to such Form 8-K copies of this Agreement (including the Disclosure Schedules hereto (excluding annexes to the Disclosure Schedules)), the Registration Rights Agreement, the form of Exchanged Warrant and the form of New Warrant. If all the Preferred Shares required to be redeemed by the Company at a Redemption Closing (after the Initial Closing) pursuant to Section 1 are not redeemed by the Company on the applicable Closing Date, then on or before the (1st) Business Day after such Redemption Closing Date the Company shall file a Form 8-K with the SEC disclosing the failure of the Company to redeem such Preferred Shares on such Closing Date. m. CORPORATE EXISTENCE. So long as any Investor beneficially owns any Warrants, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose common stock is listed for trading on an Exchange. n. ADDITIONAL FINANCING. On or prior to June 17, 2000, the Company shall consummate one or more financing(s) which provides aggregate net proceeds of immediately available and unrestricted funds of at least $4,000,000 to the Company on or prior to June 17, 2000 and which financing(s) do not give any person(s) the right to demand repayment or redemption at any time prior to December 31, 2000. On or prior to July 31, 2000, the Company shall consummate one or more financing(s) which, together with other financings consummated by the Company after the date of this Agreement and on or prior to July 31, 2000, provides aggregate net proceeds of immediately available and unrestricted funds of at least $9,000,000 to the Company on or prior to July 31, 2000 and which financing(s) do not give any person(s) the right to demand repayment or redemption at any time prior to December 31, 2000. On or prior to August 30, 2000, the Company shall consummate one or more financing(s) which, together with other financings consummated by the Company after the date of this Agreement and on or prior to August 30, 2000, provides aggregate net proceeds of immediately available and unrestricted funds of at least $13,000,000 to the Company on or prior to August 30, 2000 and which financing(s) do not give any person(s) the right to demand repayment or redemption at any time prior to December 31, 2000. o. EXCEPTION FROM EXCLUSION OF SHORT SALE RESTRICTIONS. Until the first of any Conversion Restriction Exclusion Event Dates, each Investor (i) waives the effect of the Closing Sale Price (as defined in the Articles of Amendment) of the Company's Common Stock being less than $4.21 for 10 trading days out of 15 consecutive trading days, either prior to or following the date of this Agreement, on Section 4(n) of the Securities Purchase Agreement, except with respect to a number of shares of Common Stock equal to the aggregate number of shares of Common Stock which such Investor and its affiliates have the right to acquire upon exercise of the Warrants held by such Investor and its affiliates (without regard to any limitations on exercises of the Warrants), and (ii) waives the effect of any Excluded Liquidity Defaults on Section 4(n) of the Securities Purchase Agreement. 5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates, registered in the name of each Investor or its respective nominee(s), for the Warrant Shares in such amounts as specified from time to time by each Investor to the Company upon exercise of the Warrants (in the form attached hereto as EXHIBIT D, the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS") unless such issuance is prohibited by Section 2(g) of the Warrants. Prior to registration of the Warrant Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Warrant Shares, prior to registration of the Warrant Shares under the 1933 Act) will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. If an Investor provides the Company with an opinion of counsel, in a form reasonably satisfactory to the Company, that registration of a resale by such Investor of any of such Securities is not required under the 1933 Act or such Investor provides the Company with reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by such Investor and without any restrictive legends. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investors by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 would be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5, that the Investors shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. 6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. (a) The obligation of the Company hereunder to issue the Warrants to each Investor at the Initial Closing and redeem the applicable number of Preferred Shares (as set forth in Section 1(b)) from such Investor is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Investor with prior written notice thereof: (i) Such Investor shall have executed each of this Agreement and the Registration Rights Agreement and delivered the same to the Company. (ii) Such Investor shall have delivered to the Company the Stock Certificates representing the Preferred Shares to be redeemed by the Company from such Investor at the Initial Closing with stock powers duly endorsed in blank. (iii) Such Investor shall have delivered to the Company the original Old Warrant issued to such Investor pursuant to the Securities Purchase Agreement. (iv) The representations and warranties of such Investor contained herein shall be true and correct as of the date when made and as of the Initial Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and such Investor shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Initial Closing Date. (b) The obligation of the Company hereunder to redeem the applicable number of Preferred Shares (as set forth in Section 1(b)) from an Investor at a Redemption Closing after the Initial Closing is subject to the satisfaction, at or before the applicable Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Investor with prior written notice thereof: (i) Such Investor shall have delivered to the Company the Stock Certificates representing the Preferred Shares to be redeemed by the Company from such Investor at such Closing with stock powers duly endorsed in blank. (iii) The representations and warranties of such Investor contained in paragraphs (h) and (j) of Section 2 shall be true and correct as of the date when made and as of the applicable Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and such Investor shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to such Closing Date. 7. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS AT CLOSING. (a) The obligation of each Investor hereunder to permit the Company to redeem the applicable number of Preferred Shares (as set forth in Section 1(b)) at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for such Investor's sole benefit and may be waived by such Investor at any time in its sole discretion by providing the Company and each Investor with prior written notice thereof: (i) The Company shall have executed each of the Transaction Documents, and delivered the same to such Investor. (ii) The Common Stock shall be designated for quotation on or listed on an Exchange and shall not have been suspended from trading on or delisted from such Exchange nor shall delisting or suspension by such exchanges have been threatened either (A) in writing by such Exchange or (B) by falling below the minimum listing maintenance requirements of such Exchange. The Company shall have complied with the listing requirements of the Nasdaq National Market for the Warrant Shares issuable upon exercise of the Warrants. (iii) The representations and warranties of the Company contained herein shall be true and correct as of the date when made and as of the Initial Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Initial Closing Date. Such Investor shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Initial Closing Date, to the foregoing effect and as to such other matters as such Investor may reasonably request, including, without limitation, an update as of the Initial Closing Date regarding the representation contained in Section 3(c) above. (iv) Such Investor shall have received the opinion of Holland & Knight LLP dated as of the Initial Closing Date, in substantially the form of EXHIBIT E, attached hereto. (v) The Company shall have executed and delivered to such Investor the Exchanged Warrant and the New Warrant to be issued to such Investor (as set forth in Section 1(a)) at the Initial Closing. (vi) The Company shall have delivered to such Investor the Redemption Price for the number of Preferred Shares being redeemed by the Company from such Investor (as set forth in Section 1(b)) at the Initial Closing Date. (vii) The Board of Directors of the Company shall have adopted resolutions consistent with Section 3(b)(ii) above and in a form reasonably acceptable to such Investor (the "RESOLUTIONS"). (viii) As of the Initial Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of the Warrants, at least 1,343,333 shares of Common Stock. (ix) The Irrevocable Transfer Agent Instructions, in the form of EXHIBIT D attached hereto, shall have been delivered to and acknowledged in writing by the Company's transfer agent. (x) The Company shall have delivered to such Investor a secretary's certificate, dated as of the Closing Date, certifying as to (A) the Resolutions, (B) the Articles of Incorporation and (C) the By-laws, each as in effect at the Initial Closing Date. (xi) During the period beginning on the date of this Agreement and ending on and including the Initial Closing Date no Triggering Event (as defined in the Articles of Amendment) or Liquidity Default (as defined in the Articles of Amendment), other than an Excluded Liquidity Default, or an event that with the passage of time and without being cured would constitute a Triggering Event or Liquidity Default, other than an Excluded Liquidity Default, shall have occurred. Such Investor shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Initial Closing Date, to the foregoing effect. (xii) The Company shall have delivered to the Investors such other documents relating to the transactions contemplated by the Transaction Documents as the Investors or their counsel may reasonably request. (b) The obligation of each Investor hereunder to permit the Company to redeem the applicable number of Preferred Shares (as set forth in Section 1(b)) at the applicable Closing (after the Initial Closing) is subject to the satisfaction, at or before the applicable Closing Date, of each of the following conditions, provided that these conditions are for such Investor's sole benefit and may be waived by such Investor at any time in its sole discretion by providing the Company and each Investor with prior written notice thereof: (i) The representations and warranties of the Company contained in paragraphs (a), (b), (d), (e) (except for the last sentence of such paragraph (e)), (f), (g) and (z) of Section 3 shall be true and correct as of the date when made and as of the applicable Closing Date as though made at that time (except for representations and warranties that speak as of a specific date). The Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to such Closing Date, other than the second sentence of Section 4(h). Such Investor shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of such Closing Date, to the foregoing effect and as to such other matters as such Investor may reasonably request. (ii) Such Investor shall have received the opinion of Holland & Knight LLP dated as of the applicable Closing Date, in substantially the form of EXHIBIT E, attached hereto. (iii) The Company shall have delivered to such Investor the Redemption Price for the number of Preferred Shares being redeemed by the Company from such Investor (as set forth in Section 1(b)) at the applicable Closing Date. (iv) The Board of Directors of the Company shall have adopted, and shall not have amended or rescinded, the Resolutions. (v) The Irrevocable Transfer Agent Instructions shall be in effect as of the applicable Closing Date. (vi) The Company shall have delivered to such Investor a secretary's certificate, dated as of the Closing Date, certifying as to (A) the Resolutions, (B) the Articles of Incorporation and (C) the By-laws, each as in effect at such Closing Date. (vii) During the period beginning on the date of this Agreement and ending on and including such Closing Date no Triggering Event (as defined in the Articles of Amendment) or Liquidity Default (as defined in the Articles of Amendment), other than an Excluded Liquidity Default, or an event that with the passage of time and without being cured would constitute a Triggering Event or Liquidity Default, other than an Excluded Liquidity Default, shall have occurred. Such Investor shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of such Closing Date, to the foregoing effect. (viii) The Company shall have delivered to the Investors such other documents relating to the transactions contemplated by the Transaction Documents as the Investors or their counsel may reasonably request. 8. INDEMNIFICATION. In consideration of each Investor's execution and delivery of the Transaction Documents and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Investor and each other holder of the Securities and all of their stockholders, officers, directors, employees and direct or indirect investors and any of the foregoing persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "INDEMNITEES") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee (other than a cause of action, suit or claim which is (x) brought or made by the Company and (y) is not a shareholder derivative suit) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities or (iii) solely the status of such Investor or holder of the Securities as an investor in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 9. GOVERNING LAW; MISCELLANEOUS. a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of the State of Florida shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each party hereby irrevocably submits to the non- exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. b. COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. c. HEADINGS. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. d. SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oral or written agreements between the Investors, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Investor makes any representation, warranty, covenant or undertaking with respect to such matters. Notwithstanding the foregoing and except as otherwise specifically provided in the Transaction Documents, the Securities Purchase Agreement, the registration rights agreement, dated as of December 23, 1999, among the Company and the buyers named therein (the "SERIES B REGISTRATION RIGHTS AGREEMENT") and the Articles of Amendment shall remain in full force and effect with respect to the securities and the transactions contemplated thereby. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investors which received Warrants representing at least two-thirds (2/3) of the Warrant Shares underlying the Warrants on the Initial Closing Date, or their assigns or, if prior to the Initial Closing Date, the Investors listed on the Schedule of Investors as holding at least two-thirds (2/3) of the Preferred Shares held by all the Investors. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares or Warrants then outstanding. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents. f. NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, Florida 33317 Telephone: (954) 473-1001 Facsimile: (954) 473-0620 Attention: Chief Executive Officer and Chief Legal Officer With a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, Florida 33131 Telephone: 305-374-8500 Facsimile: 305-789-7799 Attention: Steven Sonberg, Esq. If to the Transfer Agent: North American Transfer Company 147 West Merrick Road Freeport, New York 11520 Telephone: (516) 379-8501 Facsimile: (516) 379-8525 Attention: Mildred Rostolter If to an Investor, to it at the address and facsimile number set forth on the Schedule of Investors, with copies to such Investor's representatives as set forth on the Schedule of Investors, or at such other address and/or facsimile number and/or to the attention of such other person(s) as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communications, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder, including by merger or consolidation (except pursuant to a merger or consolidation with respect to which the Company is in compliance with Section 4(m) of this Agreement and Section 9(b) of the Warrants), without the prior written consent of the Investors which received Warrants representing at least two-thirds (2/3) of the Warrant Shares underlying the Warrants on the Closing Date, or their assigns. An Investor or any Permitted Assignee (as defined below) may assign some or all of its rights under this Agreement (i) to any person with the consent of the Company, which consent shall not be unreasonably withheld, or (ii) without the consent of the Company, to any person or entity which or who, immediately prior to such assignment, is (A) an affiliate of such Investor or Permitted Assignee, (B) an Investor which has executed this Agreement or (C) an entity or fund which has the same principal investment adviser or manager as the Investor or Permitted Assignee (each such person or entity described in the immediately preceding clauses (A), (B) and (C) is referred to as a "PERMITTED ASSIGNEE"); provided, however, that any such assignment shall not release such Investor from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary contained in the Transaction Documents, Investors shall be entitled to pledge the Securities in connection with a bona fide margin account or other loan secured by the Securities. h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. i. SURVIVAL. Unless this Agreement is terminated under Section 9(l), the representations and warranties of the Company and the Investors contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8, shall survive each of the Closings. Each Investor shall be responsible only for its own representations, warranties, agreements and covenants hereunder. j. PUBLICITY. The Company and each Investor shall have the right to approve before issuance any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Investor, to make any press release or other public disclosure with respect to such transactions as the Company reasonably believes, after consulting with its counsel, to be required by applicable law and regulations (although each Investor shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof). k. FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. l. TERMINATION. In the event that the Initial Closing shall not have occurred with respect to an Investor on or before one (1) Business Day after the date hereof due to the Company's or the Investor's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the non-breaching party's failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party; provided, however, that if this Agreement is terminated pursuant to this Section 9(l), the Company shall be obligated to make the payment described in Section 4(g) on the date of such termination provided that neither Fisher Capital Ltd. nor Wingate Capital Ltd. shall have breached this Agreement. m. PLACEMENT AGENT. The Company acknowledges that it has not engaged any placement agent in connection with the issuance of the Warrants or redemption of the Preferred Shares. The Company shall be responsible for the payment of any placement agent's fees or brokers' commissions relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Investor harmless against, any liability, loss or expense (including, without limitation, attorneys' fees and out of pocket expenses) arising in connection with any such claim. n. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. o. REMEDIES. Each Investor and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and, except as otherwise specifically provided in the Transaction Documents, all rights and remedies which such holders have been granted at any time under any other agreement or contract (including, without limitation, the Securities Purchase Agreement, the Series B Registration Rights Agreement and the Articles of Amendment) and all of the rights which such holders have under any law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. p. PAYMENT SET ASIDE. To the extent that the Company makes a payment or payments to any Investor hereunder or pursuant to the Registration Rights Agreement or the Warrants or such Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company or to a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then, to the extent of any such restoration, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. * * * * * * IN WITNESS WHEREOF, the Investors and the Company have caused this Redemption and Exchange Agreement to be duly executed as of the date first written above. COMPANY: INVESTORS: PROXYMED, INC. FISHER CAPITAL LTD. By: /s/ John Okkerse By: Name: John Okkerse Name: Daniel J. Hopkins Title: President Its: Authorized Signatory WINGATE CAPITAL LTD. By: Name: Daniel J. Hopkins Its: Authorized Signatory LEONARDO, L.P. By: ANGELO, GORDON & CO., L.P. Its: General Partner By: Name: Michael L. Gordon Its: Chief Operating Officer ROYAL BANK OF CANADA By: RBC DOMINION SECURITIES CORPORATION Its: Agent By: Name: Its: AND By: Name: Its: SCHEDULE OF INVESTORS
NUMBER OF OLD WARRANT SHARES / NUMBER OF NEW INVESTOR ADDRESS PREFERRED WARRANT INVESTOR'S REPRESENTATIVES' ADDRESS INVESTOR NAME AND FACSIMILE NUMBER SHARES SHARES AND FACSIMILE NUMBER - -------------------------- ----------------------------- -------------- ----------- ----------------------------------- Fisher Capital Ltd. c/o Citadel Investment Group, 2,480 132,267 / Katten Muchin & Zavis L.L.C. 124,000 525 W. Monroe Street, Suite 1600 225 West Washington Street Chicago, Illinois 60661-3693 Chicago, Illinois 60606 Attention: Robert J. Brantman, Esq. Attention: Daniel Hopkins Facsimile: (312) 902-1061 Facsimile: (312) 338-0780 Telephone: (312) 902-5200 Telephone: (312) 696-2100 Residence: Illinois Wingate Capital Ltd. c/o Citadel Investment Group, 1,520 81,066 / Katten Muchin & Zavis L.L.C. 76,000 525 W. Monroe Street, Suite 1600 225 West Washington Street Chicago, Illinois 60661-3693 Chicago, Illinois 60606 Attention: Robert J. Brantman, Esq. Attention: Daniel Hopkins Facsimile: (312) 902-1061 Facsimile: (312) 338-0780 Telephone: (312) 902-5200 Telephone: (312) 696-2100 Residence: Illinois Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. 5,000 266,667 / Angelo, Gordon & Co., L.P. 245 Park Avenue - 26th Floor 250,000 245 Park Avenue - 26th Floor New York, New York 10167 New York, New York 10167 Attention: Gary Wolf or Ari Attention: Gary Wolf or Ari Storch Storch Facsimile: (212) 867-6449 Facsimile: (212) 867-6449 Telephone: (212) 692-2035 Telephone: (212) 692-2035 Residence: Cayman Islands Royal Bank of Canada Royal Bank of Canada 4,000 213,333 / Royal Bank of Canada c/o RBC Dominion Securities 200,000 c/o RBC Dominion Securities Corporation Corporation One Liberty Plaza One Liberty Plaza 165 Broadway 165 Broadway New York, New York 10006 New York, New York 10006 Attention: Kevin A. Felix Attention: Kevin A. Felix Facsimile: (212) 858-7437 Facsimile: (212) 858-7437 Telephone: (212) 858-7384 Telephone: (212) 858-7384
SCHEDULES Schedule of Investors Schedule 3(a) - Subsidiaries Schedule 3(c) - Capitalization Schedule 3(e) - Conflicts Schedule 3(f) - SEC Documents Schedule 3(h) - Litigation Schedule 3(n) - Intellectual Property Schedule 3(q) - Tax Status Schedule 3(r) - Transactions with Affiliates Schedule 3(w) - Liens EXHIBITS Exhibit A - Form of Exchanged Warrant Exhibit B - Form of New Warrant Exhibit C - Form of Registration Rights Agreement Exhibit D - Form of Irrevocable Transfer Agent Instructions Exhibit E - Form of Company Counsel Opinion PROXYMED, INC. DISCLOSURE SCHEDULE TO REDEMPTION AND EXCHANGE AGREEMENT This Disclosure Schedule is delivered pursuant to the Redemption and Exchange Agreement, dated as of May 4, 2000 (the "Redemption and Exchange Agreement"), by and among ProxyMed, Inc. (the "Company") and the investors listed on the Schedule of Investors attached thereto (collectively, the "Investors"). The section cross-references to the Redemption and Exchange Agreement are included for convenience only and are not to be read as part of the disclosures. Capitalized terms used herein that are not otherwise defined herein shall have the meanings set forth in the Redemption and Exchange Agreement, of which this Disclosure Schedule is a part. This Disclosure Schedule supersedes and replaces any other disclosure schedule or document list previously furnished by the Company to the Investors. * * * SCHEDULE 3(A) - SUBSIDIARIES STATE OF PERCENTAGE NAME OF SUBSIDIARY INCORPORATION OWNERSHIP ------------------ ------------- --------- Key Communications Service, Inc. Indiana 100% WPJ, Inc. d/b/a Integrated Medical Systems California 100% SCHEDULE 3(C) - CAPITALIZATION 1. Attached hereto as ANNEX 3(C)(I) is a list setting forth the number of outstanding stock options granted pursuant to the Company's Stock Option Plans, including the holder of the stock option, the type of stock option, the extent to which such stock option is vested and the exercise price therefor, together with certain additional information included for informational purposes without any representation or warranty. 2. Attached hereto as ANNEX 3(C)(II) is a list setting forth the number of warrants to purchase shares of the Company's Common Stock, including the name of each holder thereof and the exercise price therefor, together with certain additional information included for informational purposes without any representation or warranty. 3. Shares of the Company's Common Stock may be issuable in accordance with the anti-dilution provisions of certain of the Company's warrants as a result of sales or issuances of shares at a price that were lower than the exercise price per share under the applicable warrant. 4. The Company is required, commencing in June 2001, to register with the SEC for resale the shares of the Company's Common Stock underlying the warrant held by Walgreen Co. to purchase 200,000 shares of Company's Common Stock. In addition, the Company regularly registers employee stock options on Form S-8. 5. Reference is hereby made to the Preferred Stock and the warrants issued in connection therewith and the Registration Rights Agreement dated December 23, 1999 and the Securities Purchase Agreement dated December 23, 1999, entered into with the holders of the Preferred Stock. SCHEDULE 3(E) - CONFLICTS The Nasdaq National Market requires listed companies to maintain a minimum bid price of $1.00 per share. In the event that the bid price for the Company's Common Stock price falls below $1.00 per share, the Company's Common Stock would be subject to suspension or delisting. The Company's Common Stock on the Nasdaq National Market has recently traded at prices between $1.00 and $2.00. SCHEDULE 3(F) - SEC DOCUMENTS Attached hereto as ANNEX 3(F) is a complete list of the Company's SEC Documents. SCHEDULE 3(H) - LITIGATION 1. PROXYMED, INC. V. AETNA US HEALTHCARE AND ENVOY CORPORATION. On May 21, 1999, the Company filed Case No. 121990013799 with the American Arbitration Association in Hartford, Connecticut, relating to amounts due to the Company from such companies in the aggregate amount of approximately $638,000 on account of services rendered, and Envoy Corporation's counterclaim against the Company relating to amounts due to Envoy from the Company in the aggregate amount of approximately $354,000. 2. PROXYMED, INC. V. IDX SYSTEMS CORPORATION. On March 10, 2000, the Company filed a complaint in the Circuit Court of the Seventeenth Judicial Circuit in Broward County, Florida, Case No. 4302, against IDX Systems Corporation. The Complaint alleges breach of two separate business related contracts, breach of a confidentiality and non-disclosure agreement, misappropriation of trade secrets and for declaratory judgment. The Company seeks injunctive relief, unspecified money damages, declaratory judgment and attorney fees and costs. The Complaint has not been served upon the defendant as yet. 3. PROXYMED, INC. V. ZIRMED.COM, INC., ET AL. On March 15, 2000, the Company filed a complaint, and a Temporary Retraining Order was issued in the Jefferson Circuit Court, Division (Eight), Kentucky, Case No. 00-C1-01855, against a former employee and his employer for violation of the former employee's post-termination no compete agreement with the Company. The matter is pending. On April 10, 2000, ZirMed and Mark Kelemenl filed for declaratory relief in the Superior Court of DeKalb County, Georgia. On April 10, 2000, the Company removed the action to the United States District Court for the Northern District of Georgia, Civil Action File No. 1:00CV-0976. The matter is pending. SCHEDULE 3(N) - INTELLECTUAL PROPERTY NONE SCHEDULE 3(Q) - TAX STATUS NONE SCHEDULE 3(R) - TRANSACTIONS WITH AFFILIATES AND EMPLOYEES 1. From time to time from 1995 to 1999, the Company has made unsecured loans to John Paul Guinan. The current balance of the loans is approximately $51,000. SCHEDULE 3(W) - LIENS UCC FILINGS OF RECORD
- ---------------------------------- ----------------------------------------------------------------------------------- 1. COLLATERAL: All Assets - Accounts receivable - Inventory - Products and proceeds FILING NO.: 2269026 DATE FILED: 07/19/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CALIFORNIA FILED WITH: SECRETARY OF STATE/UCC DIVISION, INDIANA DEBTOR: PROXYMED, INC. - ---------------------------------- ----------------------------------------------------------------------------------- 2. COLLATERAL: All negotiable instruments including proceedings and products - All accounts receivable including proceeds and products - All Inventory including proceeds and products - All Account(s) including proceeds and products FILING NO.: 990000161578 DATED FILED: 07/16/99 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CALIFORNIA FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA DEBTOR: PROXYMED, INC. - ---------------------------------- ----------------------------------------------------------------------------------- 3. COLLATERAL: Negotiable instruments including proceeds and products - Accounts receivable including proceeds and products - Inventory including proceeds and products - Assets including proceeds and products FILING NO.: 9920260488 DATED FILED: 07/15/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CALIFORNIA FILED WITH: SECRETARY OF STATE/UCC DIVISION, CALIFORNIA DEBTOR: WPJ, INC., SANTA ANA, CALIFORNIA - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 4. COLLATERAL: Negotiable instruments including proceeds and products - Accounts receivable including proceeds products - Inventory including proceeds and products - Assets including proceeds and products FILING NO.: 9920260476 DATED FILED: 07/15/99 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CALIFORNIA FILED WITH: SECRETARY OF STATE/UCC DIVISION, CALIFORNIA DEBTOR: PROXYMED, INC. - ---------------------------------- ----------------------------------------------------------------------------------- 5. COLLATERAL: Negotiable instruments - Inventory - Proceeds - Account(s) FILING NO.: 03399012338 DATED FILED: 07/19/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CALIFORNIA FILED WITH: COBB COUNTY SUPERIOR COURT, GEORGIA DEBTOR: PROXYMED, INC. - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 6. COLLATERAL: Equipment FILING NO.: 940000218695 DATED FILED: 10/27/1994 SEC. PARTY: T & W FINANCE CORP. III, FEDERAL WAY, WA FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA DEBTOR: PROXYMED, INC. and SUBSIDIARIES - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 7. COLLATERAL: All Negotiable instruments including proceeds and products - All Accounts receivable including proceeds and products - All inventory including proceeds and products - All Account(s) including proceeds and products. FILING NO.: 990000161579 DATED FILED: 07/16/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CA PROXYCARE, INC. FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA DEBTOR: PROXYCARE, INC. - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 8. COLLATERAL: All Assets including proceeds and products - All Negotiable instruments including proceeds and products - All Accounts receivable including proceeds and products - All Inventory including proceeds and products. FILING NO.: 990000161580 DATED FILED: 07/16/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CA FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA DEBTOR: KEY COMMUNICATIONS SERVICE, INC. - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 9. COLLATERAL: All Assets - Accounts receivable - Inventory - Products and proceeds. FILING NO.: 2269025 DATED FILED: 07/19/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CA FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA DEBTOR: KEY COMMUNICATIONS SERVICE, INC. - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 10. COLLATERAL: Negotiable instruments - Inventory - Proceeds - Account(s) FILING NO.: 067999009365 DATED FILED: 07/16/1999 SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, SHERMAN OAKS, CA FILED WITH: GWINNETT COUNTY SUPERIOR COURT CLERK'S OFFICE, GEORGIA DEBTOR: KEY COMMUNICATIONS SERVICE, INC. - ---------------------------------- -----------------------------------------------------------------------------------
- ---------------------------------- ----------------------------------------------------------------------------------- 11. COLLATERAL: Inventory including proceeds and products - Account(s) including proceeds and products - Computer equipment including proceeds and products - Fixtures including proceeds and products FILING NO.: 4948 DATED FILED: 05/01/1998 SEC. PARTY: THE FIFTH THIRD BANK OF KENTUCKY, INC., LOUISVILLE, KY FILED WITH: RECORDER OF FLOYD COUNTY, INDIANA DEBTOR: KEY COMMUNICATIONS SERVICE, INC., NEW ALBANY, IN. FILING NO.: 2046389 (Continuation) - ---------------------------------- ----------------------------------------------------------------------------------- 12. FILING NO.: 2046389 (Continuation) DATED FILED: 04/09/1996 (Continuation) ORIG. UCC FILED: 5/13/91 (1716116) SEC. PARTY: NATIONAL CITY BANK, SOUTHERN INDIANA, NEW ALBANY, IN FILED WITH: SECRETARY OF STATE/UCC DIVISION, IN DEBTOR: KEY COMMUNICATIONS SERVICES INC. - ---------------------------------- -----------------------------------------------------------------------------------
The Company owns no real property. EX-99.1 6 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contact: Frank M. Puthoff Chief Legal Officer ProxyMed, Inc. (954) 473-1001, ext. 300 PROXYMED ANNOUNCES STANDSTILL AGREEMENT WITH CERTAIN PREFERRED STOCKHOLDERS AND CHANGES IN STOCK OWNERSHIP FORT LAUDERDALE, Florida - May 2, 2000 - ProxyMed, Inc. (Nasdaq: PILL), a leading provider of eHealth physician solutions and business-to-business healthcare transaction services, today announced that it has entered into a standstill agreement with certain holders of its $15 million Series B Convertible Preferred Stock (the "Preferred Stock"), which was sold in December 1999. The standstill agreement is effective until 4:00 p.m. Eastern Daylight Time on Wednesday, May 3, 2000, and prohibits such holders from converting their shares of Preferred Stock into common stock until the expiration of the standstill agreement. The Company has been negotiating with the holders of the Preferred Stock to restructure certain terms relating to the Preferred Stock, which has been necessitated by the Company's stock price having closed lower than $4.21 yesterday for the tenth consecutive trading day. The Company believes that it will reach agreement with the holders of at least $13 million of the $15 million of the Preferred Stock with respect to the proposed restructuring prior to the expiration of the standstill agreement. However, there can be no assurance that the Company will be successful in reaching agreement with any of the holders prior to the expiration of the standstill agreement, or at all, or that the terms of any restructuring would be more favorable to the Company or its existing stockholders than the current terms and conditions of the Preferred Stock. The Company's failure to reach a restructuring agreement with the holders of the Preferred Stock on acceptable terms could result in substantial dilution to current stockholders and would have a material adverse effect on the Company, its ability to obtain third party financing and its stock price. The terms and conditions of the Preferred Stock are publicly available in the Form 8-K filed with the Securities and Exchange Commission on December 28, 1999, in the "Risk Factors" and "Description of Securities" sections of the Company's Registration Statement on Form S-3 (file no. 333-95883) filed with the SEC on February 1, 2000, and in the Company's Preliminary Proxy Statement filed with the SEC on April 26, 2000, all of which are available at the SEC's website at WWW.SEC.GOV. ProxyMed also announced it has been advised by its largest external stockholder that, as a result of margin calls, a significant number of shares of the Company's common stock owned by the stockholder have been sold into the market by brokerage firms. The Company was advised that the external stockholder continues to own a substantial number of shares that remain subject to possible margin calls. The Company cannot determine when margin sales on behalf of the external stockholder will be discontinued by the brokerage firms. In addition, the Company has been advised by the Chairman of its board of directors that also as a result of margin calls on a brokerage account maintained by him, shares of the Company's common stock owned by him have been sold into the market by the brokerage firm. The Chairman has advised the Company that, as a result of the margin calls, all of the Chairman's shares have been liquidated, except for a minimal number of shares owned by the Chairman's family members. ABOUT PROXYMED, INC. ProxyMed, Inc. is among the nation's largest and most experienced eHealth companies, supplying eSolutions to physicians and business-to-business healthcare electronic commerce services to healthcare information systems providers. The Company's desktop software and its WWW.PROXYMED.COM web site allow physicians to exchange clinical and financial messages with insurance companies, labs, pharmacies, suppliers, and patients in an efficient and secure manner - simplifying financial, administrative, and clinical processes and resulting in more cost-effective healthcare management and increased quality of patient care. THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY'S CURRENT EXPECTATIONS REGARDING FUTURE EVENTS. WHILE THESE STATEMENTS REFLECT THE COMPANY'S BEST CURRENT JUDGMENT, THEY ARE SUBJECT TO RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM PROJECTED RESULTS DUE TO A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO ASSUMPTIONS, BELIEFS AND OPINIONS RELATING TO PROXYMED'S GROWTH STRATEGY BASED UPON PROXYMED'S INTERPRETATION AND ANALYSIS OF HEALTHCARE INDUSTRY TRENDS AND MANAGEMENT'S ABILITY TO SUCCESSFULLY DEVELOP, MARKET, SELL AND IMPLEMENT ITS E-COMMERCE SOLUTIONS, CLINICAL AND FINANCIAL E-TRANSACTION SERVICES AND SOFTWARE APPLICATIONS TO PHYSICIANS, PHARMACIES, LABORATORIES, AND PAYERS. THESE FACTORS AND OTHER RISK FACTORS ARE MORE FULLY DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. PROXYMED EXPRESSLY DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS. MORE INFORMATION ON PROXYMED IS AVAILABLE ON ITS HOME PAGE AT WWW.PROXYMED.COM. EX-99.2 7 EXHIBIT 99.2 NEWS FOR ASSOCIATES PROXYMED ANNOUNCES AGREEMENT WITH HOLDERS OF PREFERRED STOCK FORT LAUDERDALE, Florida - May 5, 2000 - ProxyMed, Inc. (Nasdaq: PILL), a leading provider of eHealth physician solutions and business-to-business healthcare transaction services, today announced that it has successfully negotiated agreements to repurchase $13 million of its $15 million Series B Convertible Preferred Stock (the "Preferred Stock"), which was sold in December 1999. The Company had been negotiating with the holders of the Preferred Stock to restructure certain terms relating to the Preferred Stock, which was necessitated by the Company's stock price having closed lower than $4.21 for ten consecutive trading days. Under the terms of the agreements, ProxyMed will redeem the Preferred Stock over a five-month period through a series of cash payments and the issuance of additional warrants. Subject to compliance with the agreements, these shares of Preferred Stock will not be converted into common stock. To-date, ProxyMed has received conversion notices for 85% of the remaining $2 million of Preferred Stock. "Redemption of the Preferred Stock rectifies a difficult situation caused by recent market volatility," said John B. Okkerse, Jr., Ph.D., chief executive officer of ProxyMed, Inc. "We can now focus our full attention on completing our vision of delivering superior products and services to our customers." ABOUT PROXYMED, INC. ProxyMed, Inc. is among the nation's largest and most experienced eHealth companies, supplying eSolutions to physicians and business-to-business healthcare electronic commerce services to healthcare information systems providers. The Company's desktop software and its www.proxymed.com web site allow physicians to exchange clinical and financial messages with insurance companies, labs, pharmacies, suppliers, and patients in an efficient and secure manner - simplifying financial, administrative, and clinical processes and resulting in more cost-effective healthcare management and increased quality of patient care. THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY'S CURRENT EXPECTATIONS REGARDING FUTURE EVENTS INCLUDING THE COMPANY'S ABILITY TO REDEEM ITS PREFERRED STOCK. WHILE THESE STATEMENTS REFLECT THE COMPANY'S BEST CURRENT JUDGMENT, THEY ARE SUBJECT TO RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM PROJECTED RESULTS DUE TO A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO PROXYMED'S ABILITY TO ABIDE BY THE TERMS OF THE REDEMPTION AND RELATED AGREEMENTS, ASSUMPTIONS, BELIEFS AND OPINIONS RELATING TO PROXYMED'S GROWTH STRATEGY BASED UPON PROXYMED'S INTERPRETATION AND ANALYSIS OF HEALTHCARE INDUSTRY TRENDS AND MANAGEMENT'S ABILITY TO SUCCESSFULLY DEVELOP, MARKET, SELL AND IMPLEMENT ITS E-COMMERCE SOLUTIONS, CLINICAL AND FINANCIAL E-TRANSACTION SERVICES AND SOFTWARE APPLICATIONS TO PHYSICIANS, PHARMACIES, LABORATORIES, AND PAYERS. THESE FACTORS AND OTHER RISK FACTORS ARE MORE FULLY DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. PROXYMED EXPRESSLY DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS. More information on ProxyMed is available on its home page at www.proxymed.com. -----END PRIVACY-ENHANCED MESSAGE-----