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
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(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)
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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
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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.
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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
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Name: Bennett Marks
Title: Executive Vice President - Finance,
Chief Financial Officer
Dated: May 8, 2000
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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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.
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
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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
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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
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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.
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(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
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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.
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(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
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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)
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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
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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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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]
<PAGE>
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: __________________________
<PAGE>
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: __________________________
<PAGE>
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: _________________________________
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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]
<PAGE>
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: ___________________________
<PAGE>
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: ____________________________
<PAGE>
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: _______________________________
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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).
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
* * * * *
<PAGE>
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:
<PAGE>
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
INVESTOR NAME INVESTOR ADDRESS INVESTOR'S REPRESENTATIVES' ADDRESS
AND FACSIMILE NUMBER AND FACSIMILE NUMBER
- ----------------------------- ----------------------------------------- -------------------------------------
<S> <C> <C>
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
</TABLE>
<PAGE>
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]
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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.
<PAGE>
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)
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
* * * * * *
<PAGE>
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:
<PAGE>
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
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
- -------------------------- ----------------------------- -------------- ----------- -----------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
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.
* * *
<PAGE>
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%
<PAGE>
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.
<PAGE>
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.
<PAGE>
SCHEDULE 3(F) - SEC DOCUMENTS
Attached hereto as ANNEX 3(F) is a complete list of the Company's SEC
Documents.
<PAGE>
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.
<PAGE>
SCHEDULE 3(N) - INTELLECTUAL PROPERTY
NONE
<PAGE>
SCHEDULE 3(Q) - TAX STATUS
NONE
<PAGE>
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.
<PAGE>
SCHEDULE 3(W) - LIENS
UCC FILINGS OF RECORD
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------------------------------------------------------
<S> <C>
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.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>
The Company owns no real property.
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
<PAGE>
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.
<PAGE>
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.
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
<PAGE>
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.
