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 0000 Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (the
"COMPANY"), and the investors listed on the Schedule of Investors attached
hereto (individually, a "INVESTOR" and collectively, the "INVESTORS").
WHEREAS:
A. The Company and certain investors, including the Investors, have
entered into that certain Securities Purchase Agreement, dated as of December
23, 1999 (the "SECURITIES PURCHASE AGREEMENT"), pursuant to which certain
investors, including the Investors, purchased from the Company shares of the
Company's Series B Convertible Preferred Stock (the "PREFERRED STOCK"), which
are convertible into shares of the Company's common stock, par value $0.001 per
share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Articles of Amendment to the
Company's Articles of Incorporation filed with the Secretary of State of the
State of Florida on December 23, 1999 (the "ARTICLES OF AMENDMENT");
B. Each Investor is the holder of that number of shares of Preferred
Stock set forth opposite its name on the Schedule of Investors (each a
"PREFERRED SHARE" and, collectively, the "PREFERRED SHARES");
C. Each Investor wishes to exchange, upon the terms and conditions
stated in this Agreement, the warrants (the "OLD WARRANTS") issued to such
Investor pursuant to the Securities Purchase Agreement for a new warrant, in
substantially the form attached hereto as EXHIBIT A (the "EXCHANGED WARRANTS"),
to purchase the same number of shares of Common Stock (the "EXCHANGED WARRANT
SHARES") as were covered by the Old Warrant held by such Investor;
D. The Company wishes to redeem the Preferred Shares held by the
Investors and each of the Investors wishes to allow the Company to redeem, upon
the terms and conditions set forth in this Agreement, such Investor's Preferred
Shares, provided that the Company issue to such Investor new warrants, in
substantially the form attached hereto as EXHIBIT B (the "NEW WARRANTS" and,
collectively with the Exchanged Warrants, the "WARRANTS") to purchase the number
of shares of Common Stock set forth opposite such Investor's name on the
Schedule of Investors (the "NEW WARRANT SHARES" and, collectively with the
Exchanged Warrant Shares, the "WARRANT SHARES"; and the Warrants and the Warrant
Shares, collectively are referred to herein as the "SECURITIES");
E. The exchange of the Old Warrants for the Exchanged Warrants is being
made in reliance upon the exemption from registration provided by Section
3(a)(9) of
the Securities Act of 1933, as amended (the "1933 ACT") and the issuance of the
New Warrants is being made in reliance upon the exemption from registration
provided by Rule 506 of Regulation D as promulgated by the Securities and
Exchange Commission (the "SEC") under the 1933 Act; and
F. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Investor hereby agree as follows:
1. EXCHANGE AND ISSUANCE OF WARRANTS.
a. EXCHANGE OF OLD WARRANTS AND ISSUANCE OF NEW WARRANTS.
Subject to satisfaction (or waiver) of the conditions set forth in Sections 6(a)
and 7(a), (i) the Company shall issue to each Investor and each Investor
severally agrees to exchange its Old Warrant for an Exchanged Warrant to
purchase a number of Exchanged Warrant Shares equal to the number of shares of
Common Stock covered by the Old Warrant being exchanged by such Investor (the
"INITIAL CLOSING") and (ii) the Company shall issue to each Investor a New
Warrant to purchase up to that number of New Warrant Shares set forth opposite
such Investor's name on the Schedule of Investors. The date of the Initial
Closing (the "INITIAL CLOSING DATE") shall be the date of this Agreement, or
such later date as the Company and each Investor may agree. "BUSINESS DAY" means
any day other than Saturday, Sunday or other day on which commercial banks in
the city of New York are authorized or required by law to remain closed.
b. REDEMPTION OF PREFERRED SHARES. Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7, the Company shall
redeem from each Investor and each Investor shall allow the Company to redeem
from it on each Closing Date (as defined below) such Investor's pro rata portion
(based on the number of Preferred Shares set forth opposite such Investor's name
on the Schedule of Investors relative to 13,000 shares of Preferred Stock) of
the number of Preferred Shares to be redeemed on such Closing Date, which
aggregate number shall be as follows: (i) 4,000 shares of Preferred Stock at the
Initial Closing on the Initial Closing Date; (ii) 2,500 shares of Preferred
Stock on June 19, 2000; (iii) 2,500 shares of Preferred Stock on August 1, 2000;
(iv) 2,500 shares of Preferred Stock on August 31, 2000; and (v) 1,500 shares of
Preferred Stock on September 29, 2000 (each a "REDEMPTION CLOSING" and each such
date a "REDEMPTION CLOSING DATE"). The redemption price (the "REDEMPTION PRICE")
to be paid by the Company for each Preferred Share being redeemed at a
Redemption Closing shall be equal to 116.5% of the Conversion Amount (as defined
in the Articles of Amendment) of such Preferred Share on the applicable
Redemption Closing Date.
c. THE CLOSING DATE. The time of each of the Initial Closing
and the Redemption Closings (collectively, the "CLOSINGS") shall be 10:00 a.m.,
Eastern Time, on the applicable Initial Closing Date or Redemption Date
(collectively, the "CLOSING DATES"), subject to satisfaction (or waiver) of the
conditions to the applicable Closing set forth in Sections 6 and 7 (or such
later date as is mutually agreed to by the Company and each of the Investors).
Each Closing shall occur on the applicable Closing Date by facsimile, courier
and wire transfer. In the event any of the parties to a Closing send the other
parties written notice that a physical closing is desired, at least five (5)
Business Days prior to the applicable Closing Date, then such Closing shall
occur on the applicable Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx,
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
d. FORM OF PAYMENT. On the applicable Closing Date (i) the
Company shall pay the Redemption Price to each Investor for the Preferred Shares
being redeemed by the Company from such Investor at the respective Closing Date,
by wire transfer of immediately available funds in accordance with such
Investor's written wire transfer instructions, and (ii) each Investor shall
deliver to the Company, stock certificates (the "STOCK CERTIFICATES")
representing such number of the Preferred Shares which the Company is redeeming
from such Investor at such Closing, duly endorsed for transfer to the Company.
If the number of Preferred Shares represented by the Stock Certificate delivered
by an Investor to the Company in connection with a Closing is greater than the
number of Preferred Shares the Company is redeeming from such Investor at such
Closing, then the Company shall, as soon as practicable and in no event later
than five (5) Business Days after such Closing and at its own expense, issue and
deliver to such Investor a new Stock Certificate representing the number of
Preferred Shares not redeemed at such Closing.
e. CHANGE OF CONTROL. If on or before December 23, 2002, there
occurs a Change of Control (as defined below), then concurrent with the
consummation of such Change of Control the Company shall pay as a success fee an
amount in cash to each Investor equal to such Investor's pro rata portion (based
on the number of Preferred Shares set forth opposite such Investor's name on the
Schedule of Investors relative to 13,000 shares of Preferred Stock) of
$4,333,333 (the "CHANGE OF CONTROL SUCCESS FEE"). The Company shall pay the
respective Change of Control Success Fee to each Investor by wire transfer of
immediately available funds in accordance with each Investor's written wire
instructions. For purposes of this Section 1(e), "CHANGE OF CONTROL" means (i)
the consolidation, merger or other business combination of the Company with or
into another person (other than (A) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities, or (B) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company), (ii) the sale or transfer of all or substantially
all of the Company's assets, or (iii) a purchase, tender or
exchange offer made to and accepted by the holders of more than the 50% of the
outstanding shares of Common Stock. In addition, concurrent with the
consummation of any Change of Control, the Company shall redeem all Preferred
Shares held by the Investors immediately prior to such consummation for a price
per Preferred Share equal to the Redemption Price on such date and such date
shall be deemed for all purposes under this Agreement to be a Redemption Closing
Date.
2. INVESTOR'S REPRESENTATIONS AND WARRANTIES.
Each Investor represents and warrants with respect to only
itself that:
a. INVESTMENT PURPOSE. Such Investor (i) is acquiring the New
Warrants and (ii) upon exercise of the New Warrants, will acquire the New
Warrant Shares then issuable, for its own account for investment only and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the
1933 Act; provided, however, that by making the representations herein, such
Investor does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Investor is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Investor understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire such Securities.
d. INFORMATION. Such Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Investor. Such Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by such Investor or its advisors, if any, or its representatives shall
modify, amend or affect such Investor's right to rely on the Company's
representations and warranties contained in Sections 3 and 9(m) below. Such
Investor understands that its investment in the Securities involves a high
degree of risk. Such Investor has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
e. NO GOVERNMENTAL REVIEW. Such Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. TRANSFER OR RESALE. Such Investor understands that except
as provided in the Registration Rights Agreement: (i) the Securities have not
been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Investor shall have delivered to
the Company an opinion of counsel, in a form reasonably satisfactory to the
Company, to the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration, or (C) such Investor provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("RULE
144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to
register such Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
Notwithstanding the foregoing, the Securities may be pledged in connection with
a bona fide margin account or other loan secured by the Securities.
g. LEGENDS. Such Investor understands that the certificates or
other instruments representing the Warrants and, until such time as the sale of
the Warrant Shares have been registered under the 1933 Act as contemplated by
the Registration Rights Agreement, the stock certificates representing the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (i) such Securities are registered for sale under the 1933 Act, (ii)
in connection with a sale transaction, such holder provides the Company with an
opinion of counsel, in a form reasonably satisfactory to the Company, to the
effect that a public sale, assignment or transfer of such Securities may be made
without registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances that such Securities can be sold pursuant to
Rule 144. Such Investor acknowledges, covenants and agrees to sell Securities
represented by a certificate(s) from which the legend has been removed, only
pursuant to (i) a registration statement effective under the 1933 Act, or (ii)
advice of counsel to such holder that such sale is exempt from the registration
requirements of Section 5 of the 1933 Act.
h. AUTHORIZATION; ENFORCEMENT. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Investor and are valid and binding agreements of
such Investor enforceable against such Investor in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
i. RESIDENCY. Such Investor is a resident of that jurisdiction
specified on the Schedule of Investors.
j. FREE OF LIENS. Assuming that pursuant to the Securities
Purchase Agreement the Company issued such Investor the Preferred Shares held by
such Investor free and clear of any taxes, security interest, liens,
encumbrances, claims and demands of any kind whatsoever, at the time of the
applicable Closing such Investor shall hold the Preferred Shares to be redeemed
by the Company from such Investor at such Closing, and shall transfer such
shares to the Company, free and clear of any restrictions on transfer, taxes,
security interest, liens, encumbrances and demands of any kind whatsoever.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Investors
that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns 10% of the capital stock or holds an
equity or similar interest) are corporations duly organized and validly existing
in good standing
under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power and authorization to own properties and to carry on
their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE
EFFECT" means any material adverse effect on the business, properties, assets,
operations, results of operations or financial condition of the Company and its
Subsidiaries taken as a whole, or on the transactions contemplated hereby or by
the agreements and instruments to be entered into in connection herewith, or on
the authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). A complete list of entities in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest is set forth in SCHEDULE 3(A).
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in
Section 5), the Warrants and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "TRANSACTION DOCUMENTS"), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the execution
and delivery of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation the redemption of the Preferred Shares and the issuance of the
Warrants and the reservation for issuance and the issuance of the Warrant Shares
issuable upon exercise of the Warrants, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) the
Transaction Documents have been duly executed and delivered by the Company, and
(iv) this Agreement and the Registration Rights Agreement and, when executed and
delivered, the other Transaction Documents, constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
c. CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock, of which as of the date
hereof 18,332,913 shares are issued and outstanding (other than shares of Common
Stock issued pursuant to shares of the Preferred Stock converted on or prior to
the date hereof), 2,713,792 shares are issuable and reserved for issuance
pursuant to the Company's stock option and purchase plans and 967,933 shares are
issuable and
reserved for issuance pursuant to securities (other than the shares of Preferred
Stock, the Warrants, the warrants issued by the Company pursuant to the
Securities Purchase Agreement and shares of Common Stock issuable pursuant to
any Conversion Notice (as defined in the Articles of Amendment) delivered to the
Company on or prior to the date hereof) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 2,000,000 shares of preferred
stock, of which as of the date hereof, 15,000 shares are designated as Series B
Convertible Preferred Stock, of which 15,000 shares are issued and outstanding
(without giving effect to any Conversion Notices (as defined in the Articles of
Amendment) delivered to the Company on or prior to the date hereof). All of such
outstanding shares have been and are, or upon issuance will be, validly issued,
fully paid and nonassessable. Except as disclosed in SCHEDULE 3(C), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding debt securities issued by the Company;
(iii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or any of
its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries; (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement); (v) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Investor true and
correct copies of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "ARTICLES OF INCORPORATION"), and the Company's
By-laws, as in effect on the date hereof (the "BY-LAWS"), and the terms of all
securities (other than the Preferred Stock and the Old Warrants) convertible
into or exercisable for Common Stock and the material rights of the holders
thereof in respect thereto.
d. ISSUANCE OF SECURITIES. At least 1,343,333 shares of Common
Stock (subject to adjustment pursuant to the Company's covenant set forth in
Section 4(f) below) have been duly authorized and reserved for issuance upon
exercise of the Warrants. Upon exercise in accordance with the Warrants, the
Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
issuance by the Company of the
Securities is exempt from registration under the 1933 Act. The issuance by the
Company of the New Warrants is being made in reliance upon the exemption from
registration set forth in Rule 506 of Regulation D under the 1933 Act and is
only being made to "accredited investors" that meet the requirements of Rule
501(a) of Regulation D and similar exemptions under state law. The issuance by
the Company of the Exchanged Warrants is being made in reliance upon the
exemption from registration set forth in Section 3(a)(9) of the 1933 Act and
similar exemptions under state law.
e. NO CONFLICTS. Except as disclosed in SCHEDULE 3(E), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the redemption of the Preferred Shares
and the reservation for issuance and issuance of the Warrant Shares) will not
(i) result in a violation of the Articles of Incorporation, any articles of
amendment of any outstanding series of preferred stock of the Company or the
By-laws; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party; or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Except as disclosed in
SCHEDULE 3(E), neither the Company nor its Subsidiaries is in violation of any
term of (i) its Articles of Incorporation, any articles of amendment of any
outstanding series of preferred stock or its By-laws or their organizational
charter or by-laws, respectively, or (ii) any statute, rule or regulation
applicable to the Company or its Subsidiaries and neither the Company nor its
Subsidiaries is in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order, except for such
violations or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity except for such violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and except such as have been obtained as of the date hereof, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in SCHEDULE 3(E), all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof and such consents shall have been
obtained prior to the Closing. The Company and its Subsidiaries are unaware of
any facts or circumstances which might reasonably be expected to give rise to
any of the foregoing. The Company is not in violation of the
listing requirements of the Nasdaq National Market as in effect on the date
hereof and, except as disclosed in SCHEDULE 3(E), has no actual knowledge of any
facts which would reasonably lead to delisting or suspension of the Common Stock
by the Nasdaq National Market in the foreseeable future.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31,
1998, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act, (all of the foregoing filed after December 31,
1998 and prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). A
complete list of the Company's SEC Documents is set forth on SCHEDULE 3(F). As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year- end audit
adjustments). Neither the Company nor any of its Subsidiaries nor any of their
officers, directors, employees or agents have provided the Investors with any
material, nonpublic information. The Company meets the requirements for the use
of Form S-3 for registration of the resale of the Registrable Securities (as
defined in the Registration Rights Agreement) by each Investor.
g. ABSENCE OF CERTAIN CHANGES. Except as has previously been
publicly disclosed (or, in connection with determining compliance with this
representation being made on any Closing Date after the Initial Closing Date, as
may be publicly disclosed after the date of this Agreement and prior to such
Closing Date) by the Company, since December 31, 1999 there has been no material
adverse change and no material adverse development in the business, properties,
operations, financial condition, liabilities, results of operations or prospects
of the Company or its Subsidiaries, taken as a whole. The Company has not taken
any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law
nor does the Company or any of its Subsidiaries have any knowledge that its
creditors intend to initiate involuntary bankruptcy proceedings or any knowledge
of any fact which would reasonably lead a creditor to do so.
h. ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE
3(H), there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, except as expressly set forth
in SCHEDULE 3(H). Except as set forth in SCHEDULE 3(H), to the knowledge of the
Company none of the directors or officers of the Company have been involved in
securities related litigation during the past five years.
i. ACKNOWLEDGMENT REGARDING THE TRANSACTIONS. The Company
acknowledges and agrees that each of the Investors is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated thereby. The Company further acknowledges that
none of the Investors is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated thereby and any advice given by any of the
Investors or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to such Investor's investment in the Securities and the
Company's redemption of the Preferred Shares. The Company further represents to
each Investor that the Company's decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Company and
its representatives.
j. Intentionally omitted.
k. NO SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has paid or given, either directly or indirectly,
any commission or other remuneration to any person for soliciting the exchange
of the Old Warrants for the Exchanged Warrants or for any other transaction
contemplated by this Agreement.
l. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or, except for the offer and sale of the
shares of Preferred Stock and the related warrants pursuant to the Securities
Purchase Agreement, cause this offering of Securities to be integrated with
prior offerings by the Company for purposes of the
1933 Act or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Nasdaq National Market, nor
will the Company or any of its Subsidiaries take any action or steps that would
require registration of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.
m. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. None of the
Company's or its Subsidiaries' employees is a member of a union, neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer (as defined in Rule 501(f)
of the 0000 Xxx) 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 xxxx 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 xxxx 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 xxxx 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 xxxx
registrations, trade secrets or other infringement. Except as set forth on
SCHEDULE 3(N), the Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties except where
the failure to do so would not have either individually or in the aggregate a
Material Adverse Effect.
o. REGULATORY PERMITS. Except where the absence of which would
not
have a Material Adverse Effect, the Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses. Neither the Company nor any such Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
p. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
q. TAX STATUS. Except as set forth in SCHEDULE 3(Q), the
Company and each of its Subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and for which the
Company has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.
r. TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth on SCHEDULE 3(R) or in the SEC Documents filed at least ten days prior to
the date hereof and other than the grant or exercise of stock options disclosed
on SCHEDULE 3(C), none of the officers or directors of the Company and, to the
Company's knowledge, none of the employees of the Company is presently a party
to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
s. DILUTIVE EFFECT. The Company understands and acknowledges
that the number of Warrant Shares issuable upon exercise of the Warrants will
increase in
certain circumstances. The Company further acknowledges that its obligation to
issue Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
t. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or the laws of the
state of its incorporation which is or could become applicable to the Investors
as a result of the Investors and the Company fulfilling their obligations under
the Transaction Documents and the Articles of Amendment, including, without
limitation, the Company's issuance of the Securities and the Investors'
ownership of the Securities.
u. RIGHTS AGREEMENT. As of the date hereof, the Company has
not adopted a shareholder rights plan or similar arrangement relating to
accumulation of beneficial ownership of Common Stock or a change in control of
the Company.
v. YEAR 2000 COMPLIANCE. The Company believes that the
computer applications that are currently being used by its or any Subsidiary's
business and operations are reasonably expected to be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 other
than those applications whose inability to properly perform date- sensitive
functions would not have, either individually or in the aggregate, a Material
Adverse Effect.
w. TITLE. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE 3(W) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
x. INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiaries has any
reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations of
the Company and its Subsidiaries, taken as a whole.
y. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i)
are in compliance in all material respects with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, except where the
failure to receive such permits, licenses or approvals would not, individually
or in the aggregate, have a Material Adverse Effect and (iii) are in compliance
in all material respects with all terms and conditions of any such permit,
license or approval, except where the failure to be in compliance or receive
such permits, licenses or approvals would not, individually or in the aggregate,
have a Material Adverse Effect.
z. NO OTHER AGREEMENTS. The Company has not, directly or
indirectly, made any agreements with any Investor relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts to
satisfy timely each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. FORM D AND BLUE SKY. The Company agrees to file a Form D
with respect to the New Warrants and the New Warrant Shares as required under
Regulation D and to provide a copy thereof to each Investor promptly after such
filing. The Company shall, on or before the Initial Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for, or obtain exemption for the Securities for, sale to the
Investors at the Initial Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and shall
provide evidence of any such action so taken to the Investors on or prior to the
Initial Closing Date. The Company shall make all filings and reports relating to
the offer and sale of the Securities required under applicable securities or
"Blue Sky" laws of the states of the United States following the Initial Closing
Date.
c. REPORTING STATUS. Until the earlier of (i) the date which
is one year after the date on which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Warrant Shares without
restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto) and (ii) the date
on which (A) the Investors shall have sold all the Warrant Shares and (B) none
of the Warrants is outstanding (the "REPORTING PERIOD"), the Company shall file
all reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
d. RULE 144. The Company shall not, directly or indirectly,
dispute or otherwise interfere with any claim by a holder of the Exchanged
Warrants that such holder's holding period of any Exchanged Warrants for
purposes of Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("RULE 144") relates back (i.e., tacks) to the holding period for the
Old Warrants.
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Investor during the Reporting Period: (i) unless filed and
available through the SEC's XXXXX 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 Xxxxxx Capital Ltd. and Xxxxxxx Capital Ltd.
(each an Investor) or their designee an aggregate expense allowance of $15,000.
h. LISTING. The Company shall promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation system
(including the Nasdaq National Market), if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents. The Company shall maintain the Common Stock's
authorization for listing on the Nasdaq National Market, the Nasdaq SmallCap
Market, The American Stock Exchange, Inc. or any national securities exchange
(collectively, the "EXCHANGES" and each an "EXCHANGE"). Neither the Company nor
any of its Subsidiaries shall take any action which may result
in the delisting or suspension of the Common Stock on an Exchange (other than to
switch listings from one Exchange to another Exchange). The Company shall
promptly, and in no event later than the following Business Day, offer to
provide to each Investor copies of any notices it receives from an Exchange
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange, but only if such notices
shall not contain any material nonpublic information. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 4(h).
i. RESTRICTIONS ON CONVERSIONS. Subject to the exceptions
described below, each Investor severally agrees that it will not convert any
Preferred Shares held by such Investor during the period beginning on the date
of this Agreement and ending on and including September 29, 2000.
Notwithstanding the foregoing, the conversion restrictions set forth in this
Section 4(i) shall not apply on or after any of the following (each a
"CONVERSION RESTRICTION EXCLUSION EVENT DATE"): (a) any Redemption Closing Date
on which the Company fails to pay the Redemption Price for any Preferred Share
the Company is required to redeem on such Redemption Closing Date in a timely
manner and in accordance with Section 1; (b) any date on which there shall have
occurred an event constituting a Triggering Event (as defined in the Articles of
Amendment) or a Liquidity Default (as defined in the Articles of Amendment)
(other than (A) a Liquidity Default set forth in Section 3(g)(vi) of the
Articles of Amendment, provided that the Company files the proxy statement (or
an amendment to the proxy statement) referred to in Section 4(g) of the
Securities Purchase Agreement (the "PROXY STATEMENT") on or prior to May 10,
2000 which sets forth the terms of the transactions contemplated hereby and the
Company receives the Stockholder Approval (as defined in Section 4(g) of the
Securities Purchase Agreement) on or before the earlier of (x) July 17, 2000 and
(y) the date which is 40 days after the Company learns that no review of the
Proxy Statement will be made by the staff of the SEC or that the staff of the
SEC has no further comments on the Proxy Statement (the earlier of such dates is
referred to herein as the "MEETING DEADLINE"), (B) a Liquidity Default set forth
in Section 3(g)(iv) of the Articles of Amendment, (C) a Liquidity Default set
forth in Section 3(g)(vii) of the Articles of Amendment, (D) a Triggering Event
set forth in Section 3(b)(iii) of the Articles of Amendment, but only to the
extent such Triggering Event occurs prior to the Meeting Deadline, (E) a
Liquidity Default set forth in Section 3(g)(viii), and (F) a Liquidity Default
set forth in Section 3(g)(iii) of the Articles of Amendment occurring prior to
May 15, 2000, provided that the Company amends the registration statement
referred to in Section 3(g)(iii) of the Articles of Amendment or files a new
registration statement, on or before May 15, 2000 (such defaults described in
the immediately preceding clauses (A), (B), (C), (D), (E) and (F) are referred
to herein as "EXCLUDED LIQUIDITY DEFAULTS")) or an event that with the passage
of time and without being cured would constitute a Triggering Event or a
Liquidity Default (other than Excluded Liquidity Defaults); (c) the first date
on which the Company fails to comply with its obligations under Section 4(n) or
on or after the first of any of the dates set forth in Section 4(n) with respect
to which the Company has failed to publicly
announce (in a manner consistent with Rule 135c of the 0000 Xxx) its
satisfaction of its obligations under Section 4(n) as of such date in Section
4(n); or (d) the first date on which the Company breaches any representation,
warranty or covenant in this Agreement, the Registration Rights Agreement or any
of the Warrants or otherwise fails to comply in any respect with the terms of
this Agreement, the Registration Rights Agreement and the Warrants, except (A)
in the case of a covenant which is curable, only if such breach continues for a
period of at least five (5) Business Days and (B) a breach of the second
sentence of Section 4(h).
j. RESTRICTIONS ON EXERCISES. Subject to the exceptions
described below, each Investor severally agrees that it will not exercise any
Warrants held by such Investor during the period beginning on the date of this
Agreement and ending on and including the date which is 180 days after the date
of this Agreement. Notwithstanding the foregoing, the exercise restrictions set
forth in this Section 4(j) shall not apply on or after any of the following: (a)
any Conversion Restriction Exclusion Event Date; or (b) any date on which there
shall have been an announcement of a pending, proposed or intended Change of
Control.
k. TRANSACTIONS WITH AFFILIATES. So long as (i) any Warrants
are outstanding or (ii) any Investor owns Warrant Shares with a market value of
at least $500,000, the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of the
Common Stock, or Affiliates or with any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a "RELATED PARTY"),
except for (a) customary employment arrangements and benefit or stock option
programs on reasonable terms, (b) any agreement, transaction, commitment or
arrangement which is approved by a majority of the disinterested directors of
the Company or (c) any agreement, transaction, commitment or arrangement on an
arms-length basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party. For purposes hereof, any
director who is also an officer of the Company or any Subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment or arrangement. "AFFILIATE" for purposes hereof means,
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or entity, (ii)
has 5% or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
"CONTROL" or "CONTROLS" for purposes hereof means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
person or entity.
l. FILING OF FORM 8-K. On or before the second (2nd) Business
Day following the Initial Closing Date, the Company shall file a Form 8-K with
the SEC describing the terms of the transaction contemplated by the Transaction
Documents
and consummated at the Initial Closing, in the form required by the 1934 Act,
and attaching as exhibits to such Form 8-K copies of this Agreement (including
the Disclosure Schedules hereto (excluding annexes to the Disclosure
Schedules)), the Registration Rights Agreement, the form of Exchanged Warrant
and the form of New Warrant. If all the Preferred Shares required to be redeemed
by the Company at a Redemption Closing (after the Initial Closing) pursuant to
Section 1 are not redeemed by the Company on the applicable Closing Date, then
on or before the (1st) Business Day after such Redemption Closing Date the
Company shall file a Form 8-K with the SEC disclosing the failure of the Company
to redeem such Preferred Shares on such Closing Date.
m. CORPORATE EXISTENCE. So long as any Investor beneficially
owns any Warrants, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, except in the event
of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction
(i) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is listed for trading on an Exchange.
n. ADDITIONAL FINANCING. On or prior to June 17, 2000, the
Company shall consummate one or more financing(s) which provides aggregate net
proceeds of immediately available and unrestricted funds of at least $4,000,000
to the Company on or prior to June 17, 2000 and which financing(s) do not give
any person(s) the right to demand repayment or redemption at any time prior to
December 31, 2000. On or prior to July 31, 2000, the Company shall consummate
one or more financing(s) which, together with other financings consummated by
the Company after the date of this Agreement and on or prior to July 31, 2000,
provides aggregate net proceeds of immediately available and unrestricted funds
of at least $9,000,000 to the Company on or prior to July 31, 2000 and which
financing(s) do not give any person(s) the right to demand repayment or
redemption at any time prior to December 31, 2000. On or prior to August 30,
2000, the Company shall consummate one or more financing(s) which, together with
other financings consummated by the Company after the date of this Agreement and
on or prior to August 30, 2000, provides aggregate net proceeds of immediately
available and unrestricted funds of at least $13,000,000 to the Company on or
prior to August 30, 2000 and which financing(s) do not give any person(s) the
right to demand repayment or redemption at any time prior to December 31, 2000.
o. EXCEPTION FROM EXCLUSION OF SHORT SALE RESTRICTIONS. Until
the first of any Conversion Restriction Exclusion Event Dates, each Investor (i)
waives the effect of the Closing Sale Price (as defined in the Articles of
Amendment) of the Company's Common Stock being less than $4.21 for 10 trading
days out of 15 consecutive trading days, either prior to or following the date
of this Agreement, on Section 4(n) of the Securities Purchase Agreement, except
with respect to a number of shares of Common Stock equal to the aggregate number
of shares of Common Stock which such Investor and its affiliates have the right
to acquire upon exercise of the Warrants held by such Investor and its
affiliates (without regard to any limitations on exercises of the
Warrants), and (ii) waives the effect of any Excluded Liquidity Defaults on
Section 4(n) of the Securities Purchase Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Investor or its respective nominee(s), for the
Warrant Shares in such amounts as specified from time to time by each Investor
to the Company upon exercise of the Warrants (in the form attached hereto as
EXHIBIT D, the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS") unless such issuance
is prohibited by Section 2(g) of the Warrants. Prior to registration of the
Warrant Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Warrant Shares, prior to
registration of the Warrant Shares under the 0000 Xxx) will be given by the
Company to its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. If an Investor
provides the Company with an opinion of counsel, in a form reasonably
satisfactory to the Company, that registration of a resale by such Investor of
any of such Securities is not required under the 1933 Act or such Investor
provides the Company with reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, and, in the case of
the Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Investor and without any restrictive legends. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Investors by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 would be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 5, that the Investors shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
(a) The obligation of the Company hereunder to issue the
Warrants to each Investor at the Initial Closing and redeem the applicable
number of Preferred Shares (as set forth in Section 1(b)) from such Investor is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole discretion
by providing each Investor with prior written notice thereof:
(i) Such Investor shall have executed each of this Agreement
and the Registration Rights Agreement and delivered the same to the
Company.
(ii) Such Investor shall have delivered to the Company the
Stock Certificates representing the Preferred Shares to be redeemed by
the Company from such Investor at the Initial Closing with stock powers
duly endorsed in blank.
(iii) Such Investor shall have delivered to the Company the
original Old Warrant issued to such Investor pursuant to the Securities
Purchase Agreement.
(iv) The representations and warranties of such Investor
contained herein shall be true and correct as of the date when made and
as of the Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
such Investor shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor
at or prior to the Initial Closing Date.
(b) The obligation of the Company hereunder to redeem the
applicable number of Preferred Shares (as set forth in Section 1(b)) from an
Investor at a Redemption Closing after the Initial Closing is subject to the
satisfaction, at or before the applicable Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Investor with prior written notice thereof:
(i) Such Investor shall have delivered to the Company the
Stock Certificates representing the Preferred Shares to be redeemed by
the Company from such Investor at such Closing with stock powers duly
endorsed in blank.
(iii) The representations and warranties of such Investor
contained in paragraphs (h) and (j) of Section 2 shall be true and
correct as of the date when made and as of the applicable Closing Date
as though made at that time (except for representations and warranties
that speak as of a specific date), and such Investor shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed,
satisfied or complied with by such Investor at or prior to such Closing
Date.
7. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS AT CLOSING.
(a) The obligation of each Investor hereunder to permit the
Company to redeem the applicable number of Preferred Shares (as set forth in
Section 1(b)) at the Initial Closing is subject to the satisfaction, at or
before the Initial Closing Date, of
each of the following conditions, provided that these conditions are for such
Investor's sole benefit and may be waived by such Investor at any time in its
sole discretion by providing the Company and each Investor with prior written
notice thereof:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Investor.
(ii) The Common Stock shall be designated for quotation on or
listed on an Exchange and shall not have been suspended from trading on
or delisted from such Exchange nor shall delisting or suspension by
such exchanges have been threatened either (A) in writing by such
Exchange or (B) by falling below the minimum listing maintenance
requirements of such Exchange. The Company shall have complied with the
listing requirements of the Nasdaq National Market for the Warrant
Shares issuable upon exercise of the Warrants.
(iii) The representations and warranties of the Company
contained herein shall be true and correct as of the date when made and
as of the Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at
or prior to the Initial Closing Date. Such Investor shall have received
a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Initial Closing Date, to the foregoing effect and as to
such other matters as such Investor may reasonably request, including,
without limitation, an update as of the Initial Closing Date regarding
the representation contained in Section 3(c) above.
(iv) Such Investor shall have received the opinion of Holland
& Knight LLP dated as of the Initial Closing Date, in substantially the
form of EXHIBIT E, attached hereto.
(v) The Company shall have executed and delivered to such
Investor the Exchanged Warrant and the New Warrant to be issued to such
Investor (as set forth in Section 1(a)) at the Initial Closing.
(vi) The Company shall have delivered to such Investor the
Redemption Price for the number of Preferred Shares being redeemed by
the Company from such Investor (as set forth in Section 1(b)) at the
Initial Closing Date.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form
reasonably acceptable to such Investor (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting
the exercise of the Warrants, at least 1,343,333 shares of Common
Stock.
(ix) The Irrevocable Transfer Agent Instructions, in the form
of EXHIBIT D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Investor a
secretary's certificate, dated as of the Closing Date, certifying as to
(A) the Resolutions, (B) the Articles of Incorporation and (C) the
By-laws, each as in effect at the Initial Closing Date.
(xi) During the period beginning on the date of this Agreement
and ending on and including the Initial Closing Date no Triggering
Event (as defined in the Articles of Amendment) or Liquidity Default
(as defined in the Articles of Amendment), other than an Excluded
Liquidity Default, or an event that with the passage of time and
without being cured would constitute a Triggering Event or Liquidity
Default, other than an Excluded Liquidity Default, shall have occurred.
Such Investor shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Initial Closing Date,
to the foregoing effect.
(xii) The Company shall have delivered to the Investors such
other documents relating to the transactions contemplated by the
Transaction Documents as the Investors or their counsel may reasonably
request.
(b) The obligation of each Investor hereunder to permit the
Company to redeem the applicable number of Preferred Shares (as set forth in
Section 1(b)) at the applicable Closing (after the Initial Closing) is subject
to the satisfaction, at or before the applicable Closing Date, of each of the
following conditions, provided that these conditions are for such Investor's
sole benefit and may be waived by such Investor at any time in its sole
discretion by providing the Company and each Investor with prior written notice
thereof:
(i) The representations and warranties of the Company
contained in paragraphs (a), (b), (d), (e) (except for the last
sentence of such paragraph (e)), (f), (g) and (z) of Section 3 shall be
true and correct as of the date when made and as of the applicable
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date). The Company shall
have performed, satisfied and complied with the covenants, agreements
and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to such Closing
Date, other than the second sentence of Section 4(h). Such Investor
shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of such Closing Date, to the foregoing
effect and as to such other matters as such Investor may reasonably
request.
(ii) Such Investor shall have received the opinion of Holland
& Knight LLP dated as of the applicable Closing Date, in substantially
the form of EXHIBIT E, attached hereto.
(iii) The Company shall have delivered to such Investor the
Redemption Price for the number of Preferred Shares being redeemed by
the Company from such Investor (as set forth in Section 1(b)) at the
applicable Closing Date.
(iv) The Board of Directors of the Company shall have adopted,
and shall not have amended or rescinded, the Resolutions.
(v) The Irrevocable Transfer Agent Instructions shall be in
effect as of the applicable Closing Date.
(vi) The Company shall have delivered to such Investor a
secretary's certificate, dated as of the Closing Date, certifying as to
(A) the Resolutions, (B) the Articles of Incorporation and (C) the
By-laws, each as in effect at such Closing Date.
(vii) During the period beginning on the date of this
Agreement and ending on and including such Closing Date no Triggering
Event (as defined in the Articles of Amendment) or Liquidity Default
(as defined in the Articles of Amendment), other than an Excluded
Liquidity Default, or an event that with the passage of time and
without being cured would constitute a Triggering Event or Liquidity
Default, other than an Excluded Liquidity Default, shall have occurred.
Such Investor shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of such Closing Date, to the
foregoing effect.
(viii) The Company shall have delivered to the Investors such
other documents relating to the transactions contemplated by the
Transaction Documents as the Investors or their counsel may reasonably
request.
8. INDEMNIFICATION. In consideration of each Investor's execution and
delivery of the Transaction Documents and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless each Investor and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee (other than a cause of action, suit or claim
which is (x) brought or made by the Company and (y) is not a shareholder
derivative suit) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii) solely
the status of such Investor or holder of the Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws
of the State of Florida shall govern all issues concerning the relative rights
of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non- exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between the Investors, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein. This Agreement and the instruments referenced herein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Investor makes any representation, warranty,
covenant or undertaking with respect to such matters. Notwithstanding the
foregoing and except as otherwise specifically provided in the Transaction
Documents, the Securities Purchase Agreement, the registration rights agreement,
dated as of December 23, 1999, among the Company and the buyers named therein
(the "SERIES B REGISTRATION RIGHTS AGREEMENT") and the Articles of Amendment
shall remain in full force and effect with respect to the securities and the
transactions contemplated thereby. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the Investors
which received Warrants representing at least two-thirds (2/3) of the Warrant
Shares underlying the Warrants on the Initial Closing Date, or their assigns or,
if prior to the Initial Closing Date, the Investors listed on the Schedule of
Investors as holding at least two-thirds (2/3) of the Preferred Shares held by
all the Investors. No provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Preferred Shares or Warrants then outstanding. No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents.
f. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
ProxyMed, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer and Chief Legal Officer
With a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
If to the Transfer Agent:
North American Transfer Company
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Rostolter
If to an Investor, to it at the address and facsimile number
set forth on the Schedule of Investors, with copies to such Investor's
representatives as set forth on the Schedule of Investors, or at such other
address and/or facsimile number and/or to the attention of such other person(s)
as the recipient party has specified by written notice given to each other party
five days prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communications, (B) mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Warrants. The Company shall not assign
this Agreement or any rights or obligations hereunder, including by merger or
consolidation (except pursuant to a merger or consolidation with respect to
which the Company is in compliance with Section 4(m) of this Agreement and
Section 9(b) of the Warrants), without the prior written consent of the
Investors which received Warrants representing at least two-thirds (2/3) of the
Warrant Shares underlying the Warrants on the Closing Date, or their assigns. An
Investor or any Permitted Assignee (as defined below) may assign some or all of
its rights under this Agreement (i) to any person with the consent of the
Company, which consent shall not be unreasonably withheld, or (ii) without the
consent of the Company, to any person or entity which or who, immediately prior
to such assignment, is (A) an affiliate of such Investor or Permitted Assignee,
(B) an Investor which has executed this Agreement or (C) an entity or fund which
has the same principal investment adviser or manager as the Investor or
Permitted Assignee (each such person or entity described in the immediately
preceding clauses (A), (B) and (C) is referred to as a "PERMITTED ASSIGNEE");
provided, however, that any such assignment shall not release such Investor from
its obligations hereunder unless such obligations are assumed by such assignee
and the Company has consented to such assignment and assumption, which consent
shall not be unreasonably withheld. Notwithstanding anything to the contrary
contained in the Transaction Documents, Investors shall be entitled to pledge
the Securities in connection with a bona fide margin account or other loan
secured by the Securities.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Investors
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive each of the Closings. Each Investor shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and each Investor shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Investor, to make any press release or other public disclosure with respect to
such transactions as the Company reasonably believes, after consulting with its
counsel, to be required by applicable law and regulations (although each
Investor shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be
provided with a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Initial Closing shall
not have occurred with respect to an Investor on or before one (1) Business Day
after the date hereof due to the Company's or the Investor's failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the non-breaching
party's failure to waive such unsatisfied condition(s)), the non-breaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 9(l), the Company shall be obligated to make the
payment described in Section 4(g) on the date of such termination provided that
neither Xxxxxx Capital Ltd. nor Xxxxxxx Capital Ltd. shall have breached this
Agreement.
m. PLACEMENT AGENT. The Company acknowledges that it has not
engaged any placement agent in connection with the issuance of the Warrants or
redemption of the Preferred Shares. The Company shall be responsible for the
payment of any placement agent's fees or brokers' commissions relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Investor harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out of pocket expenses) arising in
connection with any such claim.
n. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
o. REMEDIES. Each Investor and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and,
except as otherwise specifically provided in the Transaction Documents, all
rights and remedies which such holders have been granted at any time under any
other agreement or contract (including, without limitation, the Securities
Purchase Agreement, the Series B Registration Rights Agreement and the Articles
of Amendment) and all of the rights which such holders have under any law. Any
person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.
p. PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to any Investor hereunder or pursuant to the Registration
Rights Agreement or the Warrants or such Investor enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
or to a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then, to the extent of any such restoration, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
* * * * * *
IN WITNESS WHEREOF, the Investors and the Company have caused this
Redemption and Exchange Agreement to be duly executed as of the date first
written above.
COMPANY: INVESTORS:
PROXYMED, INC. XXXXXX CAPITAL LTD.
By: /s/ Xxxx Xxxxxxx By:
Name: Xxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: President Its: Authorized Signatory
XXXXXXX CAPITAL LTD.
By:
Name: Xxxxxx X. Xxxxxxx
Its: Authorized Signatory
XXXXXXXX, L.P.
By: XXXXXX, XXXXXX & CO., L.P.
Its: General Partner
By:
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
ROYAL BANK OF CANADA
By: RBC DOMINION SECURITIES
CORPORATION
Its: Agent
By:
Name:
Its:
AND
By:
Name:
Its:
SCHEDULE OF INVESTORS
NUMBER OF
OLD WARRANT
SHARES /
NUMBER OF NEW
INVESTOR ADDRESS PREFERRED WARRANT INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER SHARES SHARES AND FACSIMILE NUMBER
-------------------------- ----------------------------- -------------- ----------- -----------------------------------
Xxxxxx Capital Ltd. c/o Citadel Investment Group, 2,480 132,267 / Xxxxxx Xxxxxx & Zavis
L.L.C. 124,000 000 X. Xxxxxx Xxxxxx, Xxxxx 0000
000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxxx, Esq.
Attention: Xxxxxx Xxxxxxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
Residence: Illinois
Xxxxxxx Capital Ltd. c/o Citadel Investment Group, 1,520 81,066 / Xxxxxx Xxxxxx & Xxxxx
L.L.C. 76,000 000 X. Xxxxxx Xxxxxx, Xxxxx 0000
000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxxx, Esq.
Attention: Xxxxxx Xxxxxxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
Residence: Illinois
Xxxxxxxx, L.P. c/o Xxxxxx, Xxxxxx & Co., L.P. 5,000 266,667 / Xxxxxx, Xxxxxx & Co., L.P.
000 Xxxx Xxxxxx - 00xx Xxxxx 250,000 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Ari Attention: Xxxx Xxxx or Xxx Xxxxxx
Xxxxxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
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
Xxx Xxxxxxx Xxxxx Xxx Xxxxxxx Xxxxx
165 Broadway 000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
SCHEDULES
Schedule of Investors
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - Conflicts
Schedule 3(f) - SEC Documents
Schedule 3(h) - Litigation
Schedule 3(n) - Intellectual Property
Schedule 3(q) - Tax Status
Schedule 3(r) - Transactions with Affiliates
Schedule 3(w) - Liens
EXHIBITS
Exhibit A - Form of Exchanged Warrant
Exhibit B - Form of New Warrant
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Irrevocable Transfer Agent Instructions
Exhibit E - Form of Company Counsel Opinion
PROXYMED, INC.
DISCLOSURE SCHEDULE TO REDEMPTION AND EXCHANGE AGREEMENT
This Disclosure Schedule is delivered pursuant to the Redemption and
Exchange Agreement, dated as of May 4, 2000 (the "Redemption and Exchange
Agreement"), by and among ProxyMed, Inc. (the "Company") and the investors
listed on the Schedule of Investors attached thereto (collectively, the
"Investors"). The section cross-references to the Redemption and Exchange
Agreement are included for convenience only and are not to be read as part of
the disclosures.
Capitalized terms used herein that are not otherwise defined herein
shall have the meanings set forth in the Redemption and Exchange Agreement, of
which this Disclosure Schedule is a part. This Disclosure Schedule supersedes
and replaces any other disclosure schedule or document list previously furnished
by the Company to the Investors.
* * *
SCHEDULE 3(A) - SUBSIDIARIES
STATE OF PERCENTAGE
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP
------------------ ------------- ---------
Key Communications Service, Inc. Indiana 100%
WPJ, Inc. d/b/a Integrated Medical Systems California 100%
SCHEDULE 3(C) - CAPITALIZATION
1. Attached hereto as ANNEX 3(C)(I) is a list setting forth the number of
outstanding stock options granted pursuant to the Company's Stock
Option Plans, including the holder of the stock option, the type of
stock option, the extent to which such stock option is vested and the
exercise price therefor, together with certain additional information
included for informational purposes without any representation or
warranty.
2. Attached hereto as ANNEX 3(C)(II) is a list setting forth the number of
warrants to purchase shares of the Company's Common Stock, including
the name of each holder thereof and the exercise price therefor,
together with certain additional information included for informational
purposes without any representation or warranty.
3. Shares of the Company's Common Stock may be issuable in accordance with
the anti-dilution provisions of certain of the Company's warrants as a
result of sales or issuances of shares at a price that were lower than
the exercise price per share under the applicable warrant.
4. The Company is required, commencing in June 2001, to register with the
SEC for resale the shares of the Company's Common Stock underlying the
warrant held by Walgreen Co. to purchase 200,000 shares of Company's
Common Stock. In addition, the Company regularly registers employee
stock options on Form S-8.
5. Reference is hereby made to the Preferred Stock and the warrants issued
in connection therewith and the Registration Rights Agreement dated
December 23, 1999 and the Securities Purchase Agreement dated December
23, 1999, entered into with the holders of the Preferred Stock.
SCHEDULE 3(E) - CONFLICTS
The Nasdaq National Market requires listed companies to maintain a minimum bid
price of $1.00 per share. In the event that the bid price for the Company's
Common Stock price falls below $1.00 per share, the Company's Common Stock would
be subject to suspension or delisting. The Company's Common Stock on the Nasdaq
National Market has recently traded at prices between $1.00 and $2.00.
SCHEDULE 3(F) - SEC DOCUMENTS
Attached hereto as ANNEX 3(F) is a complete list of the Company's SEC
Documents.
SCHEDULE 3(H) - LITIGATION
1. PROXYMED, INC. V. AETNA US HEALTHCARE AND ENVOY CORPORATION. On May 21,
1999, the Company filed Case No. 121990013799 with the American
Arbitration Association in Hartford, Connecticut, relating to amounts
due to the Company from such companies in the aggregate amount of
approximately $638,000 on account of services rendered, and Envoy
Corporation's counterclaim against the Company relating to amounts due
to Envoy from the Company in the aggregate amount of approximately
$354,000.
2. PROXYMED, INC. V. IDX SYSTEMS CORPORATION. On March 10, 2000, the
Company filed a complaint in the Circuit Court of the Seventeenth
Judicial Circuit in Broward County, Florida, Case No. 4302, against IDX
Systems Corporation. The Complaint alleges breach of two separate
business related contracts, breach of a confidentiality and
non-disclosure agreement, misappropriation of trade secrets and for
declaratory judgment. The Company seeks injunctive relief, unspecified
money damages, declaratory judgment and attorney fees and costs. The
Complaint has not been served upon the defendant as yet.
3. PROXYMED, INC. V. XXXXXX.XXX, 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 Xxxx
Kelemenl filed for declaratory relief in the Superior Court of DeKalb
County, Georgia. On April 10, 2000, the Company removed the action to
the United States District Court for the Northern District of Georgia,
Civil Action File No. 1:00CV-0976. The matter is pending.
SCHEDULE 3(N) - INTELLECTUAL PROPERTY
NONE
SCHEDULE 3(Q) - TAX STATUS
NONE
SCHEDULE 3(R) - TRANSACTIONS WITH AFFILIATES AND EMPLOYEES
1. From time to time from 1995 to 1999, the Company has made unsecured
loans to Xxxx Xxxx Xxxxxx. The current balance of the loans is
approximately $51,000.
SCHEDULE 3(W) - LIENS
UCC FILINGS OF RECORD
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1. COLLATERAL: All Assets - Accounts receivable - Inventory - Products and proceeds
FILING NO.: 2269026
DATE FILED: 07/19/1999
SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION,
XXXXXXX OAKS, CALIFORNIA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, INDIANA
DEBTOR: PROXYMED, INC.
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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,
XXXXXXX OAKS, CALIFORNIA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA
DEBTOR: PROXYMED, INC.
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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,
XXXXXXX OAKS, CALIFORNIA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, CALIFORNIA
DEBTOR: WPJ, INC., SANTA ANA, CALIFORNIA
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---------------------------------- -----------------------------------------------------------------------------------
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,
XXXXXXX OAKS, CALIFORNIA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, CALIFORNIA
DEBTOR: PROXYMED, INC.
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5. COLLATERAL: Negotiable instruments - Inventory - Proceeds - Account(s)
FILING NO.: 03399012338
DATED FILED: 07/19/1999
SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION,
XXXXXXX OAKS, CALIFORNIA
FILED WITH: XXXX COUNTY SUPERIOR COURT, GEORGIA
DEBTOR: PROXYMED, INC.
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---------------------------------- -----------------------------------------------------------------------------------
6. COLLATERAL: Equipment
FILING NO.: 940000218695
DATED FILED: 10/27/1994
SEC. PARTY: T & W FINANCE CORP. III, FEDERAL WAY, WA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA
DEBTOR: PROXYMED, INC. and SUBSIDIARIES
---------------------------------- -----------------------------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------------------------
7. COLLATERAL: All Negotiable instruments including proceeds and products - All Accounts
receivable including proceeds and products - All inventory including proceeds and
products - All Account(s) including proceeds and products.
FILING NO.: 990000161579
DATED FILED: 07/16/1999
SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, XXXXXXX OAKS, CA PROXYCARE, INC.
FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA
DEBTOR: PROXYCARE, INC.
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---------------------------------- -----------------------------------------------------------------------------------
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, XXXXXXX OAKS, CA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA
DEBTOR: KEY COMMUNICATIONS SERVICE, INC.
---------------------------------- -----------------------------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------------------------
9. COLLATERAL: All Assets - Accounts receivable - Inventory - Products and proceeds.
FILING NO.: 2269025
DATED FILED: 07/19/1999
SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, XXXXXXX OAKS, CA
FILED WITH: SECRETARY OF STATE/UCC DIVISION, FLORIDA
DEBTOR: KEY COMMUNICATIONS SERVICE, INC.
---------------------------------- -----------------------------------------------------------------------------------
---------------------------------- -----------------------------------------------------------------------------------
10. COLLATERAL: Negotiable instruments - Inventory - Proceeds - Account(s)
FILING NO.: 067999009365
DATED FILED: 07/16/1999
SEC. PARTY: TRANSAMERICA BUSINESS CREDIT CORPORATION, XXXXXXX OAKS, CA
FILED WITH: GWINNETT COUNTY SUPERIOR COURT CLERK'S OFFICE, GEORGIA
DEBTOR: KEY COMMUNICATIONS SERVICE, INC.
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---------------------------------- -----------------------------------------------------------------------------------
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 XXXXX COUNTY, INDIANA
DEBTOR: KEY COMMUNICATIONS SERVICE, INC., NEW ALBANY, IN.
FILING NO.: 2046389 (Continuation)
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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.
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The Company owns no real property.
